Prospects of a Trilateral Trans-Himalayan Economic Cooperation Agreement (THECA): China, Nepal, and India

For decades, small countries in South Asia have had to rely on India for economic assistance and the trade and transit outlets. Sometimes, it was not uncommon for them to feel Indian leverage in matters related to national politics. For a long time, China had maintained a low key approach to dealing with these small neighbors in South Asia. China’s new found prosperity, its natural resources needs, and their pursuit to seek alternate maritime passages have all changed the South Asian dynamics in a significant way. This thesis argues that both India and China are much better off looking at these smaller neighbors as a land of opportunity rather than a platform for rivalry. We begin with Nepal as an example. With the enhanced growth and economic clout at the global stage, India and China are both forging various individual bilateral economic linkages with the smaller South Asian neighbors. A newly formed economic alliance between China and Sri Lanka to develop Hambantota port on the southern tip of the island is the latest example. Another SAARC member Bangladesh is collaborating with China to open a transportation outlet into Myanmar. India is also courting Bangladesh for natural gas supplies and looking into its transportation network within Bangladesh as a transit corridor to reach the north-eastern frontier states, and perhaps beyond into Myanmar. Oil explorations, transit rights, hydro development, and seaport access are other examples. So, a proposal from a transit corridor country like Nepal for a trilateral economic cooperation with India and China should be welcomed as a natural economic reality made possible by the unprecedented growth trajectories of the two rising economic giants