Eying India, China raises Nepal aid 5 folds

In what appears to be a straight competition for influence with India, China has increased its official aid to Nepal by more than five times. China has also promised to build electricity infrastructure in Nepal worth $1.6 billion to counter an Indian offer of soft loan for the power sector.

Chinese aid to the Himalayan nation will rise from the present level of $24 million to $128 million in 2015-16. The announcement came after talks between Chinese foreign minister Wang Yi and his Nepali counterpart Mahendra Bahadur Pandey in Kathmandu on Friday.

Besides, Beijing is building a police academy for Nepal as a special gift. This is probably because Nepalese police help control the flow of Tibetan refugees trying to enter India through Nepal.

"As neighbors China and Nepal have common security needs ... we need to work together to crack down on illegal border crossings and transnational crimes," Wang said.

Nepali elite have for sometime complained that India has taken its relationship with the country for granted, and has not done enough to meet its development aspirations. China appears to be filling in the gap besides competing with Indian companies in Nepal's power sector.

India has announced a $1 billion soft loan to built the country's infrastructure including power projects. Nepal's hydropower sector has a potential to generate up to 42,000MW of electricity.

China has responding with a $1.6 billion power project, which will be built by the government-owned Three Gorges International Corp over the Seti River in western Nepal. It is expected to generate 750MW of electricity.

"Nepal has power shortages and electricity is essential for Nepal's efforts to industrialize, to create more jobs, to build its capacity in independent development and to raise quality of lives of its people," Wang told reporters in Katmandu, Nepal's capital.

Relationship between the two neighbors is expected to further intensify as Chinese president Xi Jinping is due to visit the Himalayan nation next year.

Direct train connection from Nepal to Tibet in China is expected to become a reality in a year or so. China has begun extending the Tibet rail line in the 167km stretch from Lahsa and Xigaze, which brings it closer to the Nepal border.