For seven long years, Nepal’s Belt and Road Initiative (BRI) deal with China remained little more than an idea on paper. The Memorandum of Understanding (MoU) signed in 2017 laid the foundation, but it wasn’t until December 4, 2024, that Nepal and China took a significant step forward by signing the much-anticipated Framework for Belt and Road Cooperation.

This landmark agreement, unveiled during Prime Minister KP Sharma Oli’s visit to China, has been celebrated as a path to progress. But here’s the twist — the details of the deal were kept secret from the public. It wasn’t until US Assistant Secretary of State Donald Lu raised concerns about transparency during his Kathmandu visit that the government was finally pressured to reveal the framework’s contents.

So, why did Nepal keep the BRI deal a secret? And what does the framework really mean for the country? Let’s dive into the heart of the matter.

What is Nepal's BRI Deal with China?

The Belt and Road Initiative (BRI) is a global infrastructure development strategy launched by China in 2013. It aims to build roads, railways, ports, and connectivity projects around the world, linking Asia, Africa, and Europe into a vast economic network.

For Nepal, the BRI deal was initially signed as a Memorandum of Understanding (MoU) in 2017. However, it wasn’t until December 4, 2024, that this MoU evolved into a formal Framework for Belt and Road Cooperation.

Here’s the key point:

• The Framework is Not Legally Binding: It’s more of a "blueprint" than a contract. It outlines potential areas of cooperation but doesn’t impose legal obligations on either party.
• Non-Exclusive Agreement: The framework allows Nepal to pursue development partnerships with other countries like the United States, India, or Japan, while also working with China.

Analogy: Think of the framework as planning a family vacation. You agree on destinations, activities, and possible routes—but no one is "legally bound" to follow through. It’s a guide, not a contract.

According to Nepal’s Ministry of Foreign Affairs, the framework promotes freedom, flexibility, and sovereignty, but skeptics believe this approach leaves room for hidden obligations, especially in the form of loans disguised as aid financing.

What Projects Are on Nepal’s BRI Wishlist?

The BRI framework includes a mix of infrastructure, connectivity, and education projects that could potentially transform Nepal’s economy. Here are some of the key projects on the table:

1. China-Nepal Cross-Border Railway

A railway connecting Kathmandu to China’s border through Kerung (Gyirong) could be a game-changer for Nepal's trade, tourism, and logistics. Imagine being able to board a train in Kathmandu and reach the Chinese border within hours.

2. Tokha-Chhahare Tunnel

This tunnel will reduce travel time between Kathmandu and the outskirts, enhancing urban mobility and decongesting traffic.

3. Hilsa-Simikot Road

Located in Karnali Province, this road will connect remote areas to trade routes, bringing tourism and business opportunities to previously isolated communities.

4. Kimathanka-Khandbari Road and Bridge

This project will improve east-west connectivity in eastern Nepal, making it easier to move goods and people.

5. Madan Bhandari University of Science and Technology

Nepal aims to boost its education sector with the establishment of a world-class university named after the late leader Madan Bhandari.

Why Did Nepal Keep Its BRI Deal with China Secret?

When Nepal signed the BRI framework on December 4, 2024, it was expected that the government would immediately share the details with the public. Instead, the contents remained hidden from the public.

The silence was broken when US Assistant Secretary of State Donald Lu visited Nepal shortly after the signing. During his visit, Lu raised questions about the framework’s transparency. He highlighted the global need for openness, especially when dealing with large-scale development projects like those under the BRI.

Faced with growing public pressure and diplomatic scrutiny, the Government of Nepal released the framework's details only after Donald Lu's intervention.

Key Takeaway: If Donald Lu hadn’t spoken up, would the framework details ever have been revealed?

This event raises serious questions about the government's commitment to transparency and accountability. Citizens and civil society organizations are now questioning whether the government is being honest about the financial implications of the framework—specifically, whether Nepal might be exposed to hidden debt obligations.

Is “Aid Financing” Just a Fancy Word for Loans?

One of the most controversial terms in the BRI framework is “aid financing.”

• Initially, Nepal had pushed for all projects to be grant-based.
• China, however, insisted on using the broader term “aid financing”, which can include both grants and loans.
• After negotiations, the term “grant financing” was dropped, and “aid financing” was adopted.

Why it matters: "Aid financing" can mean anything from zero-interest grants to high-interest loans. This ambiguity has sparked fears that Nepal might be signing up for future debt, similar to what happened with Sri Lanka's Hambantota Port.

While the government insists that the BRI framework does not impose loans, skeptics believe that aid financing leaves the door open for future debt obligations.

Geopolitical Implications: Balancing China, India, and the United States

The role of Donald Lu in this saga highlights the geopolitical tightrope that Nepal must walk. By working with China on large infrastructure projects, Nepal risks straining its ties with India and the United States. Both countries have repeatedly warned against getting caught in China’s "debt trap diplomacy."

The intervention by Donald Lu was significant. His emphasis on transparency wasn’t just about the BRI—it was a subtle reminder that Nepal’s decisions are being watched closely by global powers. If Nepal fails to be transparent, it risks losing trust and credibility on the world stage.

The Geopolitical Balancing Act:

• China wants to secure its influence in Nepal through infrastructure and trade deals.
• The US and India are concerned that these deals could make Nepal financially dependent on China.
• Nepal must walk a fine line to maintain sovereignty and avoid getting caught in the crossfire.

What’s at Stake for Nepal?

Benefits

1. Modern Infrastructure: Roads, railways, and tunnels will reduce transportation costs and improve trade.
2. Economic Growth: Better connectivity could boost tourism, exports, and the overall economy.
3. Technological Advancement: Universities, scientific centers, and knowledge hubs will enhance Nepal's technological capacity.

Risks

1. Debt Trap Concerns: The term “aid financing” raises fears that grants may eventually become loans.
2. Lack of Transparency: The government initially hid the framework, only releasing it after diplomatic pressure from the United States.
3. Geopolitical Risk: Balancing relations with India, China, and the US is becoming increasingly complicated.

Final Verdict: Opportunity or Risk?

The BRI framework is a bold step toward modernization, but it also exposes Nepal to significant risks. The delayed release of the framework only after Donald Lu’s intervention raises questions about the government’s commitment to transparency.

While the BRI offers opportunities for growth, the term "aid financing" remains a red flag. Without proper oversight and public accountability, Nepal could face the same fate as other countries that took on too much BRI debt.

What Do You Think?

Is Nepal’s BRI deal a pathway to prosperity or a risky gamble? Do you think the government should have revealed the framework earlier? Let us know in the comments below!