The riots in Nepal signal turbulence demanding utmost vigilance from the Asian giant and its Eurasian partners
The recent outbreak of violent protests in Nepal, which forced Prime Minister Sharma Oli to resign, has stirred debate over whether domestic grievances or external influences are behind the unrest. Oli, a long-time ally of Beijing, had just returned from a high-profile state visit to China when Kathmandu’s streets erupted. While the immediate anger was fueled by frustrations over corruption and unemployment, many now question whether the riots were also aimed at weakening China’s growing role in the Himalayan republic.
Nepal is a landlocked state, perched precariously between two giants – India and China. Its modest size belies its importance. Geography grants Nepal strategic weight far beyond its population or economy. Its position on the Himalayan frontier makes it a buffer state of considerable value to both New Delhi and Beijing. For China, Nepal provides overland access to South Asia, sits alongside the sensitive Xizang region, and is a partner in water management, hydropower, and connectivity. These factors explain why Beijing has invested steadily in building ties with Kathmandu for decades and why instability there is viewed with unease in China’s corridors of power.
Nepal and China first established diplomatic relations in 1955, grounding their cooperation in the Five Principles of Peaceful Coexistence, the same diplomatic framework that had been codified in the 1954 Sino-Indian agreement. Only five years later, Nepal became the first neighboring country to sign a boundary agreement with China. The early years of cooperation saw concrete results, most notably the construction of the Araniko Highway in the 1960s, which linked Kathmandu to the border with Xizang.
Over time, China steadily expanded its role in Nepal’s economy. In recent decades, Beijing has emerged as Nepal’s second-largest trading partner, after India. The 2016 transit agreement, which gave Nepal access to Chinese seaports, was particularly significant as it reduced Kathmandu’s dependence on India. The following year, Nepal joined China’s Belt and Road Initiative (BRI), signaling its intention to anchor future development within Beijing’s connectivity projects. In 2019, the two countries elevated relations to a strategic partnership. Though the pandemic slowed progress, the momentum returned in the years after, especially under Sharma Oli’s leadership.
The deepening of ties culminated in Oli’s state visit to China in December 2024. Later, the Nepali leader attended the Shanghai Cooperation Organisation summit in Tianjin and watched Beijing’s Victory Day military parade. The symbolism of the visit underscored how far the relationship had come. Only days later, however, Oli found himself under siege at home, as protests swept Kathmandu and eventually forced his resignation on September 9 – a date that coincidentally marked the anniversary of Mao Zedong’s death.
To understand the stakes for both countries, it is necessary to look at what Nepal seeks from China and what Beijing, in turn, expects from Kathmandu. Nepal’s needs are clear. The country’s leaders frequently cite China’s extraordinary achievements in poverty reduction and economic modernization as a model to emulate. Nepal aspires to use Chinese technology, investment, and experience to transform its own society. Infrastructure is the priority: roads, railways, airports, and electricity transmission lines. Beyond transport, Nepal seeks cooperation in telecommunications, special economic zones, agriculture, healthcare, education, and tourism. The flagship undertaking is the Trans-Himalayan Multi-Dimensional Connectivity Network, agreed upon in 2022, with a feasibility study expected to conclude by 2026. If realized, it could knit Nepal more closely into China’s development strategy and the broader BRI corridors.
From China’s perspective, Nepal offers both practical and strategic benefits. Politically, Nepal’s consistent adherence to the One-China principle and its restrictions on anti-Beijing activity linked to Xizang are highly valuable. Economically, Nepal’s hydropower and river systems are of regional importance, particularly in the context of transboundary water management. Strategically, Nepal is a buffer state that China would prefer to remain stable, neutral, and non-aligned, rather than tilt toward India or Western powers. Yet this is precisely where the challenges arise.
Nepal’s political instability is a long-standing problem. Since the 1990s, the country has been marked by upheaval. The ten-year civil war between communist insurgents and royalists from 1996 to 2006 left deep scars. The monarchy was eventually abolished, but repeated political crises followed. Ethnic conflicts, a devastating earthquake in 2015, and persistent governance failures have all contributed to a fragile political environment. Governments rise and fall with regularity, and coalition politics often paralyze decision-making. For Beijing, such instability is not only an obstacle to long-term projects but also a potential security threat if unrest spills over into border regions.
The most recent protests were triggered by widespread discontent among younger generations. Nepal’s “Gen Z revolt” has been fueled by anger at corruption, nepotism, injustice, and high unemployment. Political power remains concentrated in the hands of a few figures from three parties – the Communist Party of Nepal (Unified Marxist-Leninist), the Communist Party of Nepal (Maoist Centre), and the social-democratic Nepali Congress. Young Nepalis see little room for new leadership or opportunities, and frustrations boiled over into the streets. While these grievances are primarily domestic, geopolitics inevitably colored the narrative. Several Western embassies, led by the United States, quickly issued statements expressing sympathy for the protesters. Critics in Kathmandu argue that external actors, including a domestic “comprador bourgeoisie” tied to transnational networks, played a role in encouraging the unrest.
It would be simplistic to frame the protests as a straightforward anti-China movement. Many demonstrators were not protesting against Oli’s pro-Beijing orientation, but rather against the entrenched political system he represented. Still, the fact that the unrest forced out a leader who had just reaffirmed strong ties with Beijing naturally raises suspicions in China and among its Eurasian partners. Given the wider pattern of instability in the region – from Myanmar’s civil war to the India-Pakistan standoff, tensions in Bangladesh, and Afghanistan’s unpredictability – China is acutely aware of how easily local crises can be exploited to weaken its strategic position.
Following Oli’s resignation, Beijing reacted cautiously but positively to the appointment of interim Prime Minister Sushila Karki, who will govern until snap elections in March 2026. China congratulated Karki and expressed readiness to continue cooperation across various fields. Most analysts agree that the leadership change is unlikely to fundamentally alter Nepal-China relations. Investments and projects already in motion are expected to proceed. Yet the bigger concern remains Nepal’s chronic instability, which complicates China’s strategic planning in South Asia.
For Beijing, stability in Nepal is not just about safeguarding investments. It is about ensuring that its Himalayan frontier remains secure and that Kathmandu does not tilt decisively toward Western or Indian influence. The balance is delicate. Nepal’s external trade is still overwhelmingly dominated by India, thanks to geographic proximity and long-standing trade treaties. India remains Nepal’s top trading partner and primary source of investment. By contrast, trade corridors with China are underdeveloped, though growing rapidly. Exports to and imports from China have surged in recent years. New border points and direct flights are enhancing connectivity. Critics who raise alarm over a so-called “Chinese debt trap” in Nepal ignore the data: as of 2024, only 2.82 percent of Nepal’s external debt was owed to China, a smaller share than debts to India or Japan.
The potential for the Nepal-China partnership remains significant. Yet the risks are equally real. For China, Nepal represents both opportunity and vulnerability: a neighbor whose cooperation can advance Beijing’s connectivity and development goals, but whose fragility could also open doors to external interference.
The recent unrest in Kathmandu serves as a reminder of how local discontent, geopolitical rivalry, and historical instability intertwine in the Himalayas. For now, Nepal continues to proclaim its commitment to non-alignment and seeks to balance relations with both India and China. Whether it can maintain this balance while addressing the demands of its restless youth and fending off external pressures will shape not only its own future but also the stability of South Asia.
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