Beijing bets on tourism diplomacy with Nepal as soft power tool

As soon as the borders opened, and the China-funded international airport in Pokhara was inaugurated, optimism was high. Before the pandemic, market insiders predicted a dramatic surge in Chinese tourists, who were Nepal’s second-largest source market after India before the Covid-19 pandemic.

Sangam Prasain

Sangam Prasain

The Kathmandu Post


China has started organising its famous Dragon Boat festivals in Nepal. PHOTO: THE KATHMANDU POST

June 28, 2024

KATHMANDU – On March 15 last year, China reopened its borders for travel, ending a three-year closure during the Covid pandemic.

As soon as the borders—land and air—opened, and the China-funded international airport in Pokhara was inaugurated, optimism was high. Before the pandemic, market insiders predicted a dramatic surge in Chinese tourists, who were Nepal’s second-largest source market after India before the Covid-19 pandemic.

It didn’t happen.

Nepal received 60,878 Chinese tourists in 2023, a recovery by a third from the pre-pandemic level when Chinese tourists boomed in Nepal.

In the first five months (January–May) of this year, Nepal received 46,671 Chinese, with the highest arrival of 12,093 recorded in March.

While Chinese arrivals slowed, Indian tourists boomed in Nepal, reaching an all-time high of 319,936 individuals, according to the Department of Immigration. Among Indians, only those who come by air are counted as tourists in Nepal.

In the first five months, Nepal has received 148,861 Indian tourists, the highest number of 38,288 recorded in May.

Before the pandemic, India and China were competing neck-to-neck. Now, there is a huge imbalance between the south and north.

Will it change?

On Monday, during the 16th round of the Nepal-China diplomatic consultation mechanism meeting held in Kathmandu, Beijing made a surprise announcement.

It announced plans to promote Nepali tourism in China as part of celebrating 2025 as ‘Visit Nepal Year in China’, which Nepal’s top travel trade entrepreneurs say is a “big statement.” They say they had never before heard China favour any country with such soft power diplomacy.

Will 2025 be the year for the potential great return of Chinese tourists then?

“So far, I haven’t heard or seen Beijing promote any country’s tourism inside China. This is, in fact, a good gesture of neighbourliness,” said Kishore Raj Pandey, chairman of Saathi Nepal Travel and Tours, who was the first person to bring Chinese tourists to Nepal in 2001.

“If it has been announced, Beijing indeed has some policy to encourage Chinese citizens to travel to Nepal.”

Tourism is vital for Nepal’s economy. According to the recently released annual World Travel and Tourism Council research report, Nepal’s tourism sector generated Rs327.9 billion ($2.5 billion) in revenue and supported 1.19 million jobs directly and indirectly last year. The report forecasts that Nepal will generate 1.22 million jobs in 2024. Last year, the country received 1 million tourists.

Some critics say it’s a lofty promise.

Before Monday’s meeting, during the third Nepal Investment Summit held in Kathmandu on April 28, Luo Zhaohui, chairman of the China International Development Cooperation Agency, announced the waiver of visa fees for Nepalis.

It was implemented on May 1. There was another announcement, too.

“The Chinese government is making arrangements to start new flights from China to Nepal’s two new international airports—Pokhara and Lumbini,” Luo said while addressing the summit.

Nepal’s $216 million international airport in Pokhara, the country’s tourism capital, opened in January last year. Beijing financed it.

Similarly, Nepal’s second international airport in Bhairahawa, built by Chinese contractors, started operating in May 2022 after four years of construction delays. The objectives of both projects are to decentralise economic activities in the new federal setup, attract more tourists, and prevent Nepalis from going abroad.

But only some international flights are operating in the two new shiny airports.

“Under Beijing’s renewed diplomacy, there is a possibility of the operation of these two new international airports,” said Basant Raj Mishra, a senior tourism entrepreneur. “Once flights from China come, it will create competition.”

He said Beijing’s announcement represents a great opportunity for Nepal. “We should be prepared for joint marketing and promotional activities. With a proper policy, we can attract 1 million tourists from China alone in 2025. And for this, we need enhanced flight connectivity.”

China is facing many economic obstacles, but Beijing remains optimistic about growth.

Reports show that Chinese tourists hit the road in significant numbers during the recent five-day Labor holidays in May but kept a tight grip on their wallets, reflecting still-weak sentiment in the world’s second-largest economy.

According to a statement from China’s Ministry of Culture and Tourism, travellers made 28.2 percent more trips, but spending only rose 13.5 percent from the 2019 break.

“Of all the countries, China has the largest number of airlines connecting Nepal but brings the lowest number of tourists,” said Vijay Shrestha, vice president (Administration) at Himalaya Airlines, the Nepal-Tibet joint venture.

There are five airlines currently connecting China. “The traffic is low,” said Shrestha. “It may be due to low consumer confidence.”

Himalaya Airlines has suspended Kathmandu-Beijing flights, and Kathmandu-Shanghai flights are also irregular due to low passenger traffic. Besides, in the other three sectors, the average occupancy is 40 percent,” said Shrestha. “The announcement from Beijing to promote Nepal in China could change that.”

Nepal and China established formal diplomatic relations in 1955, and Nepal-Tibet trade goes a long way back. In 1956, four cities of Tibet, namely Lhasa, Shigatse, Gyantse, and Yatung, were designated as major trading cities for Nepali traders.

Between the founding of the People’s Republic of China in 1949 and 1982, few residents of China travelled to foreign destinations other than government officials, students, and a few businessmen.

In 1983, China allowed citizens from Guangdong Province to travel to the British colony of Hong Kong on organised tours to visit family.

Beginning in 1995, the Chinese National Tourism Administration formalised China’s Approved Destination Status (ADS) policy.

The history of Chinese tourism in Nepal is not long either. Nepal first participated in the China International Travel Fair in 2000 to promote its tourism sector. Before 2000, the Chinese could only travel to Nepal on official visits.

The Chinese government had permitted ADS for Chinese outbound travellers in November 2001. The two countries signed an initial memorandum of understanding on an implementation plan for outbound travel by Chinese people to Nepal on April 16, 2001, laying the groundwork for the ADS.

Nepal was given the Approved Destination Status (ADS) by its northern neighbour in 2002, and in June of the same year, Chinese citizens began visiting Nepal officially for the first time as tourists. Nepal was the 18th nation to receive the status and first in South Asia. In 2002, Nepal got 8,715 Chinese tourists.

Subsequently, the central banks of the two countries signed an agreement on bilateral cooperation that allowed the Chinese currency to be converted into Nepali rupees in a bid to boost bilateral trade, tourism, and economic cooperation.

However, immediately after Nepal received the ADS, arrivals from China fell due to a violent conflict that intensified over 2002-2004, reaching Nepal’s main cities and tourist destinations. Nepal eventually started witnessing a constant growth in Chinese arrivals after June 2009.

Chinese arrivals to Nepal crossed the 100,000 mark for the first time in 2013, mainly due to the improved air links between the two countries. According to the tourism ministry’s statistics, around 93 percent of Chinese tourists were first-time visitors to Nepal.

In 2014, Nepal received 123,805 Chinese visitors.

The 2015 earthquake and India’s blockade led to arrivals from China dropping to a four-year low of 64,675 individuals in 2015, down 47.76 percent from 2014.

The surface road at the Tatopani border point, where Nepal used to receive many Chinese tourists, was also blocked.

On December 25, 2015, Nepal announced ‘free visa’ for Chinese tourists, giving them the same treatment accorded to South Asian visitors. In a bid to revive flagging arrivals, the scheme was implemented in January 2016.

Thereon, tourist arrivals from China started rising steadily, and Nepal saw the strongest growth, 46.8 percent, in tourist arrivals from China, with the overall number reaching 153,633 visitors in 2018.

In 2019, Nepal received a record 169,543 Chinese tourists.

The number fell to 19,257 in 2020. In 2021 and 2022, there were 6,198 and 9,599 Chinese tourists in Nepal—mainly diplomats and those stranded in third countries—who came to Nepal when Beijing enforced never-ending lockdowns.

When the Chinese economy started to boom again, Nepali investors pumped money into luxury hotels, which too have multiplied.

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