China, explained.

Newly-elected Prime Minister of Nepal's interim government Sushila Karki, centre, along with officials, observes a moment of silence to pay her tribute to those who lost their lives in recent protests in Kathmandu (Prabin Ranabhat/AFP via Getty Images)

Nepal’s generational revolt catches China and India in the middle

Political upheaval in Kathmandu tests the limits of great power influence in South Asia.

Saima Afzal

18 September 20254 min read

China is closely watching the aftermath of protests that have swept Nepal. So too is India. Landlocked Nepal serves as a buffer zone between these two geopolitical contenders. Therefore, Nepal’s internal stability carries implications not only for Kathmandu but also for broader Himalayan security dynamics.

Over the past decade, China has extended its political and economic engagement with Nepal, emphasizing trade, infrastructure development, and connectivity projects under the Belt and Road Initiative (BRI).

India also has cultural, diplomatic and religious relations with Nepal, the only Hindu majority state in the neighbourhood. New Delhi views China’s infrastructure development close to its border as a security threat, believing that it could undermine its influence in the region.

Against this backdrop, both states are monitoring Nepal’s unfolding political crisis with heightened attention.

Protests led by Gen Z activists forced the resignation of Nepal’s Prime Minister K.P. Sharma Oli. The demonstrations started against a government ban on social media and soon transitioned into a much larger movement demanding accountability, transparency, and systemic reform. Since the political transition to democracy in 2008, one government after another in Nepal has disintegrated under pressure from political patronage and corruption, eroding public trust.

The ongoing unrest has raised concerns in Beijing about the durability of Nepal’s political institutions and the potential impact on BRI projects.

Oli had turned more to China in recent times. Breaking with the existing precedent for Nepalese leaders to visit India first, in December last year he made a four-day official visit to Beijing, his first bilateral trip to a neighbouring country. The trip resulted in the signing of the Framework for Belt and Road Cooperation. The agreement renewed commitments to the extension of connectivity across railways, aviation, power, and telecommunications, including the long-term China-Nepal cross-border railway project and the recently inaugurated Pokhara International Airport.

But Kathmandu depends on Indian exports, particularly oil and food, with annual bilateral trade between both states estimated at $8.5 billion. Beijing is Nepal’s second-largest trading partner after India, with exports to Nepal amounting to US$2.16 billion in 2024. Nepal’s exports to China, by contrast, remain limited, highlighting structural trade imbalances and Kathmandu’s dependence on Chinese goods.

However, the BRI in Nepal offers both immediate and long-term benefits. Infrastructure investments, including the Pokhara International Airport and planned rail projects, are expected to boost local economies, create jobs, and improve connectivity within the region. Energy collaboration through cross-border transmission lines and renewable energy projects could help Nepal leverage its natural resources for domestic development and export potential. Moreover, Nepal’s integration into regional transport and trade networks may enhance its role as a land-linked rather than landlocked country, facilitating economic opportunities and regional cooperation.

The cross-border railway, connecting Jilong in Tibet with Kathmandu, is emblematic of the BRI’s transformative potential for Nepal. The project promises to enhance trade efficiency, reduce transit costs, and facilitate the flow of Nepali goods such as cashmere, handicrafts, and organic agricultural products to Chinese markets. Complementary initiatives, including energy cooperation and cross-border power transmission lines, aim to harness Nepal’s abundant hydro resources while promoting renewable energy integration.

A man wears a scarf of a Nepalese flag during the last rites of Gen-Z protesters shot dead during deadly protests on 9 September, Kathmandu, Nepal (Ritesh Shukla/Getty Images)

Oli’s resignation did not come about as a consequence of his China ties. The leadership crisis instead reflected a generational demand for structural change of a political system that is perceived as self-serving and dysfunctional.

Yet domestic instability now complicates the outlook. The ongoing unrest has raised concerns in Beijing about the durability of Nepal’s political institutions and the potential impact on BRI projects. Chinese officials have adopted a cautious approach, emphasised stability while avoiding direct interference in Nepal’s domestic politics. China’s Foreign Ministry spokesperson Lin Jian stressed that “China and Nepal are traditionally friendly neighbours”, expressing hope that “all parties in Nepal can properly address domestic issues, and restore social order and national stability as soon as possible”.

Nepal is also significant for India because of its religious sites, such as the Mukti Nath temple in the trans-Himalayan mountains. Thousands of Hindu pilgrims from India visit the temple every year.

Though Nepal has always maintained a balanced relationship between India and China, India sees China’s influence in Nepal as a threat to its interests. The recent political unrest in Nepal came as a surprise for India, as Oli resigned just a week ahead of a scheduled visit to India.

Any unrest in Nepal is a cause for concern for India due to Nepal’s strategic location. Moreover, India hosts the largest Nepali diaspora who work in India without restriction under a 1950 treaty.

China’s priority is clear: ensure Nepal’s stability while safeguarding the progress of bilateral initiatives. Beijing hopes that dialogue between Nepal’s interim leadership and its citizens will resolve the current tensions, restore social order and enable continued cooperation under the BRI framework. For China, a stable Nepal is not only a strategic asset but also a demonstration of the potential for development partnerships that balance economic growth with political stability.

At the same time, India has had to play diplomatic catch-up after alienating neighbouring countries in recent times, including Bangladesh and the Maldives. In the Himalayan context, therefore, the trajectory of Nepal’s political stability will not only influence China’s regional engagement but also shape India’s ability to maintain influence in South Asia’s evolving strategic landscape.

About the author

Saima Afzal

Saima Afzal is a researcher specialising in South Asian security, counterterrorism, and broader geopolitical dynamics across the Middle East, Afghanistan, and the Indo-Pacific.

Topics

China India Nepal