China and Nepal's rail line must traverse mountains, geopolitical tensions, and enormous costs

An ambitious multi-billion dollar rail link between China and Nepal must address tough technical challenges as well as questions of economic viability before construction begins, experts say.

In August, Chinese Foreign Minister Wang Yi and his Nepalese counterpart Narayan Khadka agreed to fund a feasibility study for a large-scale infrastructure project, and Beijing said it would send experts to conduct a railway survey this year.

The railway will run from Gyarong County to Kathmandu in China's Tibet Autonomous Region, with some speculation that it may also be extended to the tourist destination of Pokhara near the Indian border and the southern city of Lumbini.

In 2019, President Xi Jinping said the project would transform Nepal "from a landlocked country to a landlocked country."

Technically, it will be one of the most difficult train line construction projects anywhere in the world," said Nischal Nath Pandey, director of the Center for South Asian Studies in Kathmandu. "The highest peaks on the planet are nearby."

The Nepalese government announced in 2019 that construction would begin within the next two years, but progress has been slow due to the coronavirus pandemic.

Former Prime Minister K.P. Sharma Oli, who supported stronger ties with China along with the more "pro-Indian" Sher Bahadur Deuba, has also cast doubt on its future.

Discussions on the project began in 2016, when the two countries signed a landmark trade and transport agreement that allowed Nepal to use Chinese routes for third-country trade.

Nepal wanted to reduce its dependence on neighboring India, which accounts for more than 61 percent of its imports, after a long-term blockade on the country in 2015 disrupted vital supplies of fuel and commodities.

However, the project has made slow progress so far, and there are still concerns about its cost and usefulness.

"If Nepal has this railway link, it will reduce its dependence on India," said Lin Minwang, deputy director of Fudan University's Center of South Asian Studies.

He said it has some "geoeconomic value" but of little strategic importance to China.

Shraddha Ghimire, a former research fellow at the Center for Social Inclusion and Federalism (CESIF), conducted a 2022 railway study that found Nepal to be a relatively small market for China's manufacturing sector.

Only by connecting China to the populous markets of India and Bangladesh, with Nepal acting as a transit and transshipment hub, the project would be economically viable for China.

Lin agreed that the railway would be strategic only if it could "connect Tibet with Kathmandu and New Delhi."

"It can connect the whole of South Asia from India to Bangladesh and Bhutan," he said.

However, given the geopolitical tensions between India and China, as well as the former's reluctance to support Beijing's signature Belt and Road Initiative, the idea may be unrealistic.

"India does not want China's economic influence to extend to its backyard in Nepal," Lin said.

Despite the fact that India and China have more than $100 billion in trade, New Delhi is looking to reduce it, according to former Nepalese ambassador to Denmark Vijay Kant Karn.

"Even if this route is more profitable for India, why would India want to use Kathmandu as a hub, especially given the difficult terrain?" Karma, who is also the executive chairman of CESIF, said

The rail route passes through the Himalayas, which have some of the highest mountains in the world and are prone to earthquakes and extreme weather.

According to Ghimire's study, most of the rail line in the Nepalese side of the border will be over tunnels and bridges, with the railway crossing the steep terrain from 1,400 meters in Kathmandu to about 4,000 meters in Tibet.

Ghimire, who spoke with engineers studying the difficult topography of the area, said the railway could be built, but it would be on unstable ground and "anything can happen along the track." He added that "heavy infrastructure cannot be maintained in the area." "I don't think it will be able to handle the traffic that the railways will bring."

However, this challenge has not deterred the project stakeholders. "This is not an easy project," said Aman Chitrakar, spokesman for Nepal's railway department. "However, China has achieved remarkable infrastructure milestones, so there is a lot of hope in Nepal."

Another significant hurdle will be the heavy cost of the railways, which in 2018 was estimated at US$5.5 billion in initial estimates.

This will be the biggest infrastructure investment ever in Nepal, a country with a GDP of $36 billion.

"Nepal does not have the capacity to run, manage and finance this project," Karna said. He said that such a huge debt would not be affordable for the country, which has been given to China in many high level meetings.

China has made no mention of funding for the project. "What will Nepal export to China if the railway is built?" Karna wondered. According to Nepal's embassy in Beijing, the majority of Nepal's exports to China are to Tibet and include items such as tea, herbs, and handicrafts. In 2021, China accounted for 0.5% of Nepal's total exports.

"If we had a huge mass industrial production, it would be a different story," Karna said, adding that the 200,000 to 300,000 Chinese tourists Nepal receives each year are "a small number."