Following many infrastructure finance issues and a recent $500 million US offer to Kathmandu, China appears eager to improve relations with Nepal.

Chinese Foreign Minister Wang Yi visited Nepal over the weekend as part of his South Asia trip in a bid to solidify Sino-Nepal ties. During his visit, Wang held talks with Nepali President Bidya Devi Bhandari, Prime Minister Sher Bahadur Deuba and Foreign Minister Narayan Khadka.

Wang’s visit came just weeks after Nepal’s parliament approved a contentious $500 million (€456 million) grant from the United States.

“Nepal should become an example of cooperation between China and South Asia. China is glad to see Nepal develop amicable relations with all countries and play a bigger role in regional and international affairs,” China’s Foreign Ministry said in a statement on Saturday.

During Wang’s visit, Nepal and China signed a nine-point agreement focusing on economic and technical cooperation, as well as assistance with a feasibility study of cross-border rail between the neighbors, who share a 1,389-kilometer (863-mile) border along the Himalayas.

In addition, China and Nepal will conduct a feasibility study to build a high-voltage power transmission line across the Himalayas to facilitate the exchange of electric power, officials said.

Beijing casts doubts over US infrastructure grant

Wang’s visit comes a month after Nepal’s Parliament approved the $500 million infrastructure grant from the United States.

The Himalayan nation’s current coalition government backed the controversial Millennium Challenge Corporation (MCC) grant.

Supporters of Nepal’s left-wing forces, however, including some allies of Nepal’s ruling alliance, questioned Washington’s motive over the MCC. They also expressed concerns that the US’s Indo-Pacific strategy is intended to encircle China.

Beijing, meanwhile, had warned the grant could be a “Pandora’s Box” and alleged that the US was playing “coercive diplomacy” in Nepal.

To ease political tensions both within Nepal and with China about the MCC, Khadka told reporters that he had reassured his Chinese counterpart over the weekend that the US grant “is purely for developmental objectives.”

“Nepal does not accept any project that comes with strings attached — political or any other,” he said.

Still, the Chinese Foreign Ministry said in a statement following Wang’s visit that Beijing “opposes attempts to undermine Nepal’s sovereignty and independence.”

Without specifying any country, the ministry added that it opposes efforts to “interfere in Nepal’s internal affairs, and play geopolitical games.”

Despite expectations, Nepal and China made no substantive progress on advancing infrastructure projects in the Himalayan country under China’s flagship Belt and Road Initiative (BRI).

During his latest meeting with the Chinese foreign minister, Nepal’s prime minister stressed that a loan is not what Nepal prefers at this point in time and sought more projects from China under grant assistance, according to the prime minister’s press coordinator, Govinda Pariyar.