Identifier
Created
Classification
Origin
10CHENGDU31
2010-02-04 11:20:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Consulate Chengdu
Cable title:  

NEPAL'S LHASA CG ON PRIME MINISTER'S VISIT TO CHINA

Tags:  PREL ETRD EINV ENRG SENV CH NP IN 
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SUBJECT: NEPAL'S LHASA CG ON PRIME MINISTER'S VISIT TO CHINA

REF: 09 CHENGDU 283

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TAGS: PREL ETRD EINV ENRG SENV CH NP IN
SUBJECT: NEPAL'S LHASA CG ON PRIME MINISTER'S VISIT TO CHINA

REF: 09 CHENGDU 283

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1. (U) This cable contains sensitive but unclassified
information. Not for Internet distribution.




2. (SBU) Summary. The unspoken quid pro quo during the December
26-31 visit of Nepal's Prime Minister to Lhasa and Beijing
appears to have been a public statement by Nepal that it would
not allow its territory to be used for anti-Chinese activity, in
return for Chinese promises of continued development aid, a
gradual reduction in tariffs, and promotion of Chinese
investment in, e.g. Nepal's hydropower and tourism sectors.
Nepal hopes to attract 100,000 Chinese tourists to Nepal in
2011, Nepal's Lhasa CG told Chengdu CG. End Summary.



Nepal PM Seeks Strong Bilateral Ties; China Seeks Stable Border

-------------- --------------




3. (SBU) Nepal Prime Minister Madhav Kumar Nepal made a
successful first official trip to China on December 26-31, with
stops in Lhasa, Xian, Beijing, and Shanghai, Nepal's Consul
General in Lhasa, Naindra Upadhaya, told Chengdu CG on January

31. The PM's visit to Lhasa, cut short by a plane delay,
included only two courtesy calls with Tibet Autonomous Region
(TAR) Party Secretary Zhang Qingli, and then TAR Governor Chamba
Phuntsog. While in Lhasa, the PM discussed how to "consolidate
bilateral relations," including promoting tourism, trade, and
investment. The Nepali delegation on this China visit included
Minister of Finance Surendra Pande and 25 businesspersons, only
two of whom were present in Lhasa, Upadhaya said.




4. (SBU) The Chinese official press portrayed the PM's initial
stop in Lhasa as a "signal" that Nepal was looking forward to
maintaining stability along its 1,400 km border with China, and
beefing up economic cooperation. The Chinese press further
quoted PM Nepal as having told 25 Nepali Parliamentarians before
his trip to China that Nepal would not allow anyone to use
Nepal's territory for anti-Chinese acts -- an oblique reference
to Tibetans that Beijing feels support the "Dalai Lama clique."
(Note: Nepal Deputy Prime Minister and Minister for Foreign

Affairs Jujata Koirala reaffirmed to Chinese Foreign Minister
Yang Jiechi on December 29 in Beijing that Nepal's policy was to
not allow the use of Nepalese territory for anti-Chinese
activity, per MOFA's website. End Note.)



Hydropower: Discussed, But No Deals Made?

--------------




5. (SBU) PM Nepal also discussed hydropower with relevant
Chinese officials during his stop in Beijing, Upadhaya said. He
was unaware of any hydropower agreements reached during this
visit, but noted that hydro deals had been concluded during
earlier high-level visits. (Note: Nepal Energy Minister Prakash
Sharan Mahat was also present during the Beijing stop. The
joint China-Nepal statement issued December 30 in Beijing said
that the Nepalese side welcomed "Chinese businesses to actively
participate in hydropower construction and development in
Nepal." End Note.)



Nepal: No Political Pressure to Repatriate Tibetans?

-------------- --------------




6. (SBU) Nepal's foreign policy toward China was to "be a good
neighbor" and "maintain friendly relations," Upadhaya explained.
At the same time, he added, Nepal had to maintain a balance
under which it did not lean to heavily toward either China or
India. Upadhaya claimed to be unaware of any pressure by China
to repatriate Tibetans from Nepal; Tibetans with valid visas
were allowed to stay, while in some cases Tibetans who
overstayed their Nepal visas had been repatriated to China. He
said that the Nepali Consulate General in Lhasa "always" issued

CHENGDU 00000031 002.2 OF 003


visas to Chinese, and believed that the Chinese Embassy in
Katmandu had similarly liberal visa policies concerning
Nepalese.



2011 Tourism Goal: Welcome 100,000 Chinese Tourists

-------------- --------------




7. (SBU) In regards to tourism, Nepal's Government had recently
declared 2011 to be "Visit Nepal Year," Upadhaya explained, and
had set a goal of attracting 100,000 Chinese tourists. The
Nepali Consulate General in Lhasa organized a tourism promotion
event in 2009 for Chinese travel agents, airlines, and
government officials. (Note: The joint China-Nepal statement
discusses efforts to enhance land routes and air services
between the two countries, and specifically mentions the goal of
establishing more border trading points between Nepal and the
TAR. The statement also indicates that the Chinese side agreed
to "actively encourage Chinese businesses to invest in and
develop tourism infrastructure in Nepal." End Note.)



China-Nepal Trade: Talks about Duty-Free Access

-------------- --




8. (SBU) Nepal supports free trade with China, and has asked for
duty free access for certain Nepali goods, Upadhaya said. In
2008, the Chinese government rolled back a 50-percent reduction
in tariffs on certain goods from neighboring countries that had
existed for several years, he explained. While the Chinese
government rejected requests by Nepal's government not to roll
back these tariff reductions, he noted, Beijing did grant tariff
free trade for goods whose total value was under 8000 RMB (1173
USD) -- a move likely aimed to help small traders at border
crossings. Talks are continuing about another Nepali request
for lower tariffs; Upadhaya was hopeful that the Chinese
government would grant these requests. (Note: The December 30
joint statement indicated that China would "gradually provide to
Nepal zero-tariff treatment to 95 percent of the products (sic),
in accordance with its commitment made at the United Nations
High-Level Event on the Millennium Development Goals." End
Note.)



China-Nepal Trade: Beijing Enjoys a Surplus

--------------




9. (SBU) Nepali handicraft exports to China have been
increasing, Upadhaya said, but Nepal has been running a growing
trade deficit with China because its relatively simple export
base cannot compensate for increased imports. Bilateral trade
during the first 10 months of 2009 was $304 million, according
to the Chinese press. Besides handicrafts, Upadhaya said,
Nepal's exports to China include textile garments, wheat and
wheat flour, and rice and beaten rice - although rice exports
dropped to zero recently because supplies could not keep up with
domestic Nepali demand. China's exports to Nepal include raw
wool from Tibet and other parts of China, fresh apples, textile
garments, construction materials, and machine parts. At one
point, local Chinese customs officials instituted restrictions
on certain Nepali handicrafts, including metal statues - perhaps
as a way to squeeze bribes out of importers in exchange for
waivers of the "duties." After the Nepali CG complained to TAR
authorities about these arbitrary tariffs, Lhasa ordered Chinese
customs officials to return to the status quo ante.



Nepali Community in TAR is Small?

--------------




10. (SBU) The Nepali community in the TAR was actually quite
small, Upadhaya said, estimating it to be 300 persons in the
winter time (200 of whom were in Lhasa),with perhaps 100 more

CHENGDU 00000031 003.2 OF 003


in the summer months. Nepalese do not own many big enterprises,
but examples of companies in the Lhasa area include a dairy,
carpet company, handicrafts store, beauty parlor, and
restaurants. Nepalese tend to be either businesspersons, or
working as employees in those businesses; several have ethnic
Tibetan or Han spouses. (Comment: Because Nepalese do not tend
to register with their local consulate, per Upadhaya, he may
have significantly underestimated the number of his fellow
countrymen in the TAR. End Comment.)



Nepal CG: Tibet Seemed Stable in 2009

--------------




11. (SBU) Based on his travel outside of Lhasa to Ali and
Shigatsu, as well as from what he has heard from the Nepali
business community, Upadhaya felt Tibet was quite stable in 2009
(following a difficult 2008, when unrest in the TAR and other
Tibetan areas in March led to a severe Chinese government
crackdown.)
BROWN