Nepal is unlikely to receive the full subsidy it initially requested under China's global infrastructure development strategy, the Belt and Road Initiative (BRI). After China rejected Nepal's proposal for grants, both sides agreed to move forward with a compromise solution under the "BRI Cooperation Framework."
Nepal's Foreign Secretary Amrit Bahadur Rai and Liu Sushe, vice chairman of China's National Development and Reform Commission signed the agreement in Beijing during the recent visit of Prime Minister KP Sharma Oli to China. A senior government official revealed that during bilateral talks between Prime Minister KP Sharma Oli and Chinese Premier Li Qiang, the two leaders resolved the dispute over including the term "grant" in the framework. They instead agreed on the term "aid assistance financing," enabling Nepal to request loans or grants for specific projects, with China retaining the authority to determine the funding modality.
This agreement paves the way for Nepal to officially advance the BRI, which it joined in 2017. The ruling Nepali Congress had proposed renaming the implementation agreement as the "BRI Cooperation Framework." Prime Minister Oli’s party, the UML, agreed to the proposal to maintain coalition stability. The finalized framework was submitted to China on November 30. While China accepted the renaming, it firmly declined to provide full grants, citing concerns that such a move could encourage similar demands from other countries.
Nepal has identified ten projects under the framework, focusing on road infrastructure, urban development, industry, and trade. The list includes a city hall in Dadeldhura, the home district of NC President Sher Bahadur Deuba, and a sports complex in Jhapa, the home district of PM Oli.
Prime Minister Oli has described the agreement as a major success of his visit to China. Speaking at an event at the Beijing University, he expressed confidence that the BRI, initiated under President Xi Jinping’s visionary leadership, would strengthen Nepal-China relations and significantly contribute to Nepal's development.
Experts believe China’s refusal to provide full grants reflects a strategic decision to avoid setting a precedent that could lead other BRI participants to demand similar concessions.
