China & the BRI in Nepal: Project Status Tracker

The Belt and Road Initiative (BRI), launched by China in 2013, is a global infrastructure and connectivity programme spanning roads, railways, ports, energy and digital links. Nepal formally signed on to the BRI when it inked a Memorandum of Understanding (MoU) with China on 12 May 2017 (28 Baisakh 2074 BS). The MoU is a short framing document rather than a project contract; it renews automatically every three years unless either side gives three months' written notice to terminate.

The 2017 MoU committed the two governments to cooperation but did not, by itself, fund or build anything. Nepal initially proposed 35 projects for BRI support; at China's request the list was trimmed to nine, spanning cross-border transport, energy and one technical-institution project. For years afterward, disagreement over whether Chinese money would come as grants or as loans kept the pipeline largely frozen.

That deadlock was formally addressed on 5 December 2024, when Nepal and China signed a Framework for Belt and Road Cooperation in Beijing during Prime Minister K. P. Sharma Oli's visit. Nepal insisted the framework use 'aid financing' language and rule out projects carrying interest rates higher than those of established bilateral and multilateral donors. The framework is valid for three years and renewable, and it lists an updated set of ten proposed projects.

The Trans-Himalayan Multi-Dimensional Connectivity Network (THMDCN) is the umbrella concept that ties most China-Nepal projects together. It was proposed in June 2018 during PM Oli's visit to Beijing and elevated to a flagship bilateral initiative during Chinese President Xi Jinping's state visit to Nepal in October 2019 (Ashoj 2076 BS) - the first visit to Nepal by a Chinese president in 23 years.

The network is meant to knit Nepal and China together across ports, roads, railways, aviation, power transmission and communications, with the stated ambition of turning landlocked Nepal into a 'land-linked' country. Its components include the proposed cross-border railway, upgrades to the earthquake-damaged Araniko Highway, tunnel roads, dry ports at the border, cross-border transmission lines and an optical-fibre link.

In practice the THMDCN mixes projects financed as Chinese grants (which Nepal generally welcomes) with those that would require Chinese loans (which Nepal has resisted). The umbrella branding can blur which projects are actually part of the BRI: China often counts the Pokhara airport as a BRI project, while Nepali officials have at times distanced the airport from the BRI label because it predates the 2017 MoU as a signed loan.

The proposed Kerung-Kathmandu railway is the most talked-about China project in Nepal, but as of 2026 it remains only at the feasibility-study stage - no track has been laid. It would form the Nepali leg of a wider Trans-Himalayan line, extending from the Tibetan city of Shigatse to Kerung (Gyirong) on the border and then roughly 72-73 km down to Kathmandu. Because of the extreme terrain, the overwhelming majority of the Nepali section - by most estimates well over 90 percent - would have to run through tunnels and over bridges.

During Xi Jinping's 2019 visit, Nepal and China agreed that China would fund a feasibility study of the railway. China approved a grant of roughly RMB 180 million (about Rs 3.35-3.4 billion) for that study. A Chinese technical team carried out field and geological surveys, and Nepali officials have said the feasibility report is expected around mid-2026; timelines have repeatedly slipped, so this should be treated as indicative.

Cost estimates for actually building the line vary widely and are all pre-final: a pre-feasibility study put the Nepali section at about US$2.75 billion, while other engineering estimates run considerably higher because so much of the route is underground. Crucially, no financing model has been agreed for construction. Given Nepal's stated aversion to expensive loans, whether and how the railway is built will depend on whether China offers grant or highly concessional terms.

Pokhara International Airport (PIA), Nepal's third international airport, is the most tangible large China-financed project on the ground - and the clearest example of the loan model that makes Nepal cautious. It was built by China CAMC Engineering, with construction starting around 2016-2017 at an estimated cost of about Rs 22 billion (roughly US$216 million). It was inaugurated on 1 January 2023 (17 Poush 2079 BS) by then-Prime Minister Pushpa Kamal Dahal 'Prachanda'.

The airport was financed by a loan package from China's Export-Import (EXIM) Bank of about US$215-216 million. Around 25 percent of that was an interest-free loan channelled via China's Ministry of Commerce, while the larger share carried an annual interest rate of about 2 percent, repayable over 20 years with a 7-year grace period. This is a loan, not a grant - a distinction at the heart of Nepal's debt concerns.

The airport has struggled to generate revenue: it has run mostly domestic and a handful of chartered international flights, with limited regular scheduled international service. In August 2024 Nepal's Ministry of Finance formally asked China to convert the roughly Rs 26 billion EXIM Bank loan into a grant; China has not agreed to do so. A parliamentary Public Accounts Committee probe in 2025 also flagged large irregularities in the project. Whether PIA is 'a BRI project' is itself disputed - China lists it under BRI cooperation, while some Nepali officials note the loan predates the 2017 BRI MoU.

Not all China-Nepal projects are loans. Several smaller connectivity works have been built with Chinese grants, and these have generally moved faster and generated less controversy. The clearest completed grant project is the Nepal-China cross-border optical-fibre link, which began commercial operation on 12 January 2018, connecting Nepal Telecom's network to China Telecom via the Kerung (Gyirong)-Rasuwagadhi border point and giving Nepal a second international internet gateway alongside its Indian links.

At the Rasuwagadhi crossing, an integrated dry port is being built at Timure with Chinese grant assistance to handle cross-border cargo, with warehouses, inspection facilities and truck parking. By late 2024 it was reported to be over 70 percent complete. However, catastrophic flooding at the Rasuwagadhi border in July 2025 - which killed and displaced people and washed away the Nepal-China 'Miteri' friendship bridge - damaged the under-construction facility and threw its handover timeline into doubt.

Other border roads and corridor upgrades in the north (for example around the Araniko Highway and the Rasuwagadhi-Kathmandu route) also fall under the connectivity umbrella. These are mostly still under construction or improvement rather than complete, and their financing is a mix of grants, Nepali budget and, in some cases, proposed loans.

The single biggest political question about China projects in Nepal is not whether the projects are useful, but whether they arrive as grants or as loans. Grants carry no repayment obligation; loans, even concessional ones, add to Nepal's external debt and must be serviced regardless of whether the project earns money - as the Pokhara airport experience illustrates. This is why Nepal pushed for 'aid financing' language and a cap on interest rates in the 2024 framework.

The contrast is often drawn with the US-funded Millennium Challenge Corporation (MCC) Nepal Compact, which Nepal's Parliament ratified on 27 February 2022 (15 Falgun 2078 BS). The MCC provides US$500 million entirely as a grant (with a Nepali contribution of US$130 million) for electricity transmission lines and road maintenance. Because MCC money is 100 percent grant while BRI money has largely been offered as loans, the 'MCC vs BRI' comparison became a defining foreign-policy debate in Nepal.

As of 2026, the practical scorecard is modest: the 2017 MoU and 2024 framework are signed, but no flagship BRI loan project of the railway's scale has been completed. Grant-based works (optical fibre; the Timure dry port, pending flood repairs) have progressed, while the loan-based Pokhara airport is operational but financially strained. Readers should note that the status of any individual project can change as feasibility reports, financing agreements and construction milestones are announced.