By Zarak Khan | 2025-09-15

The resignation of Nepali Prime Minister K.P. Sharma Oli, following days of deadly unrest, has reignited debate over the country's foreign policy orientation and the growing influence of China in the Himalayan nation.

Protests that erupted on September 8 over corruption, worsening economic conditions and a widely criticized social media ban left more than 70 people dead and hundreds more injured.

The turmoil culminated in Oli's resignation September 9, dissolution of parliament and appointment of former chief justice Sushila Karki as interim prime minister to lead a caretaker government until March elections.

Nepal's leadership now faces a deeper challenge: whether to maintain Oli's pro-Beijing tilt or balancing its foreign policy, say analysts.

The benefit of the second choice, if Nepal adheres to it, would be protecting national sovereignty and avoiding debt risks, in many opinions.

Oli's pro-Beijing tilt and domestic backlash

Nepal occupies a strategically sensitive position as a buffer state between China and India, and it traditionally has sought to balance ties with its giant neighbors.

But Oli broke with precedent.

He chose China, rather than India, for his first foreign visit following his fourth swearing-in in July. Historically, Nepali leaders prioritized visits to India.

In December, Nepali and Chinese officials signed an updated Belt and Road Initiative (BRI) Framework Agreement, reviving 10 connectivity projects, including rail, road and energy links. Oli secured $41 million in Chinese financial assistance.

The BRI is a Chinese initiative to build global infrastructure that will funnel poor countries' raw materials to China.

Oli's foreign policy generated friction with elements of Nepali society, regional neighbors and Western partners who perceived him as subordinating national interests to Beijing's strategic ambitions, said critics.

The Kathmandu Post, in an editorial on September 7, a day before the protests began, said that Oli had "alienated India," Western partners and Japan by aligning Nepal closely with China -- a shift the newspaper said could carry "long-lasting implications for Nepal's foreign policy."

Oli attended the recent Shanghai Cooperation Organisation (SCO) summit in Tianjin, China, and the September 3 Victory Day parade in Beijing.

The parade was a display of Chinese military power alongside strategic partners such as Russia and North Korea.

Oli's attendance at the Chinese parade has "firmly established Nepal in the anti-West, anti-US and anti-Japan camp from which it will be difficult for Nepal to extract itself," the Kathmandu Post said.

Challenging India, coddling China

During discussions with Chinese President Xi Jinping on the SCO's sidelines, Oli adopted a more assertive posture toward India, reaffirming Nepal's sovereignty claims over the Lipulekh Pass, a vital trade route through Uttarakhand state, India.

Oli described it as "territory that belongs to Nepal," according to a statement from Nepal's Foreign Ministry.

In 2020, Oli's then-government dismissed reports, including a leaked Agriculture Ministry document, alleging Chinese encroachment on 36 hectares across 10 border sites. Subsequent investigations by later governments confirmed unauthorized construction in several border districts, Khabarhub reported in 2023, citing officials.

"Much of the [public] opposition stemmed from foreign policy decisions made behind closed doors, particularly those linked to Beijing," Deepak Sharma, a Kathmandu-based political activist who took part in the recent protests, told Focus.

"Many people opposed taking on large, unsustainable Chinese loans, fearing the same debt dependency that triggered Sri Lanka's economic collapse in 2022," he added.

Beijing's involvement in Nepali politics

China clearly is concerned by the loss of a friendly leader in Kathmandu.

It urged all parties to restore order "as soon as possible," a move analysts say signals its close monitoring of Nepal at a time when India and Western powers may seek to reassert influence in Kathmandu.

"Oli has relatively close relations with China, so I believe this will certainly attract greater attention from China," Lin Minwang, a professor and vice dean at the Institute of International Studies at Fudan University in Shanghai, told the South China Morning Post September 10.

Since the abolition of Nepal's monarchy in 2008, China has cultivated ties with its political parties, making them key to its Himalayan strategy.

During a power struggle in 2020 between Oli and Pushpa Kamal Dahal alias Prachanda, China dispatched a senior Communist Party delegation to Kathmandu to mediate.

Though Beijing framed the mission as a stability builder, local analysts viewed it as an attempt to shape political outcomes.

"Beijing's intervention broke conventional diplomatic norms," Hari Adhikari, a Nepali scholar of Sino-Nepali relations, told Focus.

"Its direct involvement in domestic politics signaled a willingness to shape leadership decisions, undermining Nepal's sovereignty," he added.