24 August 2020

ThinkChina China Study Project Policy Brief: Between the Dragon and the Tiger: Nepal’s Prospects as a Small State with Rival Great Power Neighbours


Recent clashes between Indian and Chinese soldiers in the high-altitude valleys of Ladakh has thrust the simmering geopolitical tensions between these two rising superpowers into sharp global focus. At the same time, India and China are making grand pitches for global leadership in a century that looks set to be dominated by Asia. China is promising generous loans to fund infrastructure led development in countries that crave modernization and prosperity, while India is looking to expand its influence outside of South Asia, focusing on issues like renewable energy to increase its presence in Africa and the Pacific.

Both states have come to recognize that appealing to the many small and developing states that make up the bulk of the international system is an important means by which great powers can maximize their global influence. One of these small states is Nepal, squeezed between the teeming plains of northern India and the desolate Tibetan plateau. With its strategic location and deep historical ties with its southern and northern neighbours, the small Himalayan kingdom has emerged as the scene of an intense struggle for influence between China and India. This Policy Brief examines Chinese and Indian influence in Nepal and applies small state theories to understand how Nepal has navigated its otherwise fraught position.

Key takeaways:

  • India and China’s enhanced competition for influence in Nepal is producing a surge of desperately needed economic investment and renewed political attention for the small Himalayan state.

  • Nepal has been relatively successful in leveraging its strategic position to secure concessions from both parties, in both economic and political terms.

  • China, with higher levels of economic prosperity, is coming to increasingly challenge India’s hegemonic position in Nepal. This has also been helped by the ruling Nepal Communist Party’s affinity for the Chinese economic model and its growing formal ties with the Chinese Communist Party.

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