Renewed Momentum in Strategic China-Nepal Railway Corridor

On July 26, a report from China’s state-run media revealed that exploration and survey work had begun on a proposed $300 million trans-Himalayan railway corridor connecting China to Nepal via Tibet. The railway network envisages lines from the Tibetan cities of Lhasa and Shigatse to Nepal’s capital city of Kathmandu, and further to the Nepali town of Lumbini, which is situated along the country’s border with India.

Since its inception in 2008, the trans-Himalayan railway project has experienced delays due to disagreements between China and Nepal on financing.  A new deadline for completion of the railway has been set for 2025, as seemingly renewed impetus for the railway corridor emerges against the backdrop of intensifying regional tensions between China and India and increasing competition between the two countries for influence in Nepal.

This competition is apparent in the country’s infrastructure sector, influence over which, could have broad dual-use implications for the country’s long-term regional alignment. Per reports, China is lobbying for the trans-Himalayan rail network through Nepal to be made compatible with China’s standard gauge rail model. In doing so, Nepal’s transport networks would likely become incompatible with alternative rail standards (such as the broad gauge standard used by Indian rail networks).

Earlier, in May 2020, Chinese state-owned rail companies launched rail-to-road freight services from Xi’an, China to Kathmandu (also via Tibet), and the maiden cargo transport of COVID-19 medical supplies activated the 2016 Nepal-China Transport Agreement.  Apart from establishing rail connectivity between the two countries, the agreement also grants Kathmandu direct land access to China’s eastern seaports and land ports. The agreement was signed in the aftermath of an Indian border blockade imposed by New Delhi on Nepal.