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For the first time since the formation of the new government led by the Rastriya Swatantra Party (RSP), Nepal and China have held bilateral talks at the foreign minister level.

The talks come at a time when Beijing remains skeptical about its security and strategic interests in Nepal, particularly following last year’s GenZ movement. Nepal’s Foreign Minister, Shisir Khanal, held bilateral talks with his Chinese counterpart, Wang Yi, in Beijing, focusing heavily on China’s core concerns alongside a wide range of other issues.

Khanal’s dialogue with the Chinese foreign minister follows his recent visit to India and a series of high-level visits from the United States to Nepal. A primary reason behind Beijing's invitation to Khanal was to secure firm assurances from the new government regarding China's core security and strategic anxieties.

According to The China Daily, Khanal reiterated Nepal's long-standing diplomatic positions during the meetings:

"Issues related to the Taiwan question and Xizang (Tibet) are China's internal affairs," Khanal stated, adding that Nepal firmly adheres to the One-China policy, supports China's complete reunification, and will never allow any force to use Nepali territory to undermine China's interests.

Meanwhile, The Kathmandu Post reported that the Chinese side expressed explicit concerns to Khanal regarding certain US initiatives, including the Millennium Challenge Corporation (MCC) and the State Partnership Program (SPP). 

With the formation of the new RSP-led government, Beijing is closely monitoring the evolving relationship between Nepal and Western countries. Chinese foreign policy observers note that Beijing remains highly sensitive to Western strategic projects and potential security cooperation in the region—agendas that consistently dominate the table whenever Kathmandu and Beijing sit down for bilateral talks.

During the meetings, the Chinese side sought a more conducive and fair business environment for Chinese investors in Nepal. For a long time, Beijing has complained that Chinese companies face persistent regulatory roadblocks and bureaucratic hurdles in the country.

The implementation of past pacts was another dominant theme. In Chinese diplomacy, whenever President Xi Jinping visits a country and signs an agreement, its execution stands as a top priority. Just as in previous engagements, Beijing placed heavy emphasis on executing the wide-ranging agreements signed during President Xi’s historic 2019 visit to Nepal, which originally elevated bilateral ties into a comprehensive strategic partnership.

Regarding the Belt and Road Initiative (BRI), while the two sides discussed the matter, no tangible breakthroughs or specific outcomes were highlighted in their official press releases.

 Last year, the two countries signed a framework agreement on the BRI, identifying 10 priority projects, but detailed discussions on these projects appeared limited during this visit. 

The Rastriya Swatantra Party and its government have largely maintained a quiet stance on their official position regarding the initiative. Previously, Nepal's traditional political parties had communicated to Beijing that the country strongly prefers grants over loans when finalizing investment modalities.

Beyond these strategic hurdles, the two sides engaged in an expansive dialogue aimed at practical, long-term economic cooperation. Currently, Nepal and China are actively cooperating in several core sectors:

·       Infrastructure and connectivity

·       Border management and energy

·       Trade and investment

·       Agriculture and technology transfer

·       Digitalization and tourism

Furthermore, China has proposed expanding this cooperation into new frontiers, including chemical fertilizer supply, petroleum and natural gas exploration, and artificial intelligence—areas in which both sides have now intensively engaged.

While in Beijing, Khanal also met with Liu Haixing, Minister of the International Department of the Central Committee of the Communist Party of China (CPC), to discuss party-to-party cooperation.

According to the Chinese readout, the CPC expressed a strong willingness to consolidate ties with the RSP, deepen strategic communication, enhance political mutual trust, and share governance experiences. The readout noted that China aims to utilize its "Party+" channel to promote cross-field cooperation and contribute political party strength to the broader China-Nepal relationship. In response, Khanal stated that the RSP is eager to learn from China's extensive experience in the party-building and governance processes.

Following a recent trip to India, Foreign Minister Shisir Khanal is set to visit Beijing. This marks Nepal’s first high-level outreach to China since last year’s GenZ protests that overthrew the KP Sharma Oli-led government.

Minister for Foreign Affairs Shisir Khanal will pay an official visit to China from June 14 to 17 at the invitation of Chinese Foreign Minister Wang Yi.

During the visit, Khanal will hold bilateral talks with Wang Yi in Beijing to discuss ways to further strengthen Nepal-China relations and enhance cooperation in areas of mutual interest. He is also scheduled to meet senior Chinese leaders, says Nepal’s Ministry of Foreign Affairs.

In Beijing, Khanal will outline the new administration's foreign policy priorities. He plans to place a heavy emphasis on economic diplomacy. While this focus is not entirely new, Khanal is prioritizing it much more aggressively.

However, Beijing remains deeply anxious about its security and strategic interests in Nepal. The political upheaval of the past year has left Chinese officials worried that their stability in the region could be jeopardized.

 Political and administrative heads in Kathmandu have repeatedly promised that no anti-Chinese activities will be allowed on Nepali soil. Despite this, Beijing remains unconvinced. Chinese foreign policy watchers fear that some forces  might exploit the political transition to harm China’s interests.

The current government explicitly represents and takes ownership of the GenZ movement. However, this youth-led uprising delivered a profound shock to Beijing, triggering a sharp escalation of Chinese anxieties over its security interests in Nepal. 

Consequently, Beijing will demand a fresh, explicit commitment to the One-China principle, says a China watcher. This requirement creates a delicate diplomatic tightrope for Khanal. During his tenure as the international department head of the Rastriya Swatantra Party (RSP), he openly opposed the strict One-China principle over the more flexible One-China policy.

China is also using this visit to read the new government's broader geopolitical alignment. Beijing harbors doubts about securing deeper cooperation with the current dispensation in Kathmandu. In fact, Chinese leadership is mentally prepared for a potential cooling of bilateral ties. For now, they prefer to maintain a functional, working-level relationship rather than planning future high-level exchanges.

The implementation of the Belt and Road Initiative (BRI) will be a critical focal point for both nations. Under the previous tenure of KP Sharma Oli, the two countries signed a framework identifying ten specific BRI projects. Kathmandu is now expected to reiterate its stance against taking loans to execute these projects. 

The new government may ultimately treat the agreement as inherited political baggage. Paradoxically, this position contradicts the RSP's own election manifesto, which advocates for taking concessional Chinese loans to build world-class infrastructure.

To navigate these friction points, the Chinese Ambassador in Kathmandu has taken a highly proactive approach with the new cabinet. In recent meetings with government ministers, the Ambassador proposed specific areas for mutual cooperation. 

The embassy is also pushing initiatives like the Youth Pioneer Program to build civic networks among the Nepali youth. Additionally, the Ambassador has strongly urged the swift implementation of the bilateral agreements signed during President Xi Jinping’s 2019 visit to Nepal. Through these proposals, Beijing is attempting to bind the new government to past commitments while tightly monitoring its security assurances

Nepal government, acting through the Department of Foreign Employment in the Ministry of Labor, Employment and Social Security, has decided to resume the issuance of labor approval for several major destination countries within the Gulf Cooperation Council (GCC) and other West Asian states such as Saudi Arabia, the United Arab Emirates (UAE), Qatar, Kuwait, Bahrain, and Oman.

In terms of Human Resource Management (HRM) and international labor migration dynamics, this represents an important restoration of the international labor pipeline between Nepal, as a labor-exporting nation, and the GCC, as a labor-importing region. This decision signifies a resumption of normalcy in the overseas labor recruitment process.

The suspension of labor permits disrupted not only the labor migration process to other countries but also the overall ecosystem of foreign employment services. The pause in the issuance of such documents stopped the chain of recruitment processes, from verifying the demand, recruiting the candidates, selecting suitable individuals, sending them to host countries, and processing onboarding in their countries.

This disruption has had two-fold consequences for employment:

• Internationally speaking, many Nepalis looking forward to becoming migrant labor have been deprived of their chances, and thus the opportunity to improve their income status.
• Domestically speaking, the suspension of issuing such documents has practically paralysed the business operations of the country’s recruitment agencies. There are over 1,000 recruitment agencies functioning as intermediaries for international labor hiring; hence, such measures affected their business activities and incomes. This meant that the people working for these organisations (such as HR specialists and others) could not perform their regular duties.

As such, the suspension not only affected foreign employment but also caused a reduction in domestic employment associated with the migration industry, thereby demonstrating its multiplier effect on Nepal’s labor force.

The approval of labor flows will enable Nepal to resume its place in the global workforce supply chain. From the perspective of Nepali nationals, this means an ability to gain entry into the global market and benefit from regulated international employment, especially in labor-intensive industries like construction, hospitality, manufacturing, facilities management, and domestic service.

On the part of the host economy, the availability of manpower will enable the employer in GCC to plan his operations according to manpower needs and production schedules, which will help in avoiding labor shortage and maintaining efficiency in business operations.

As far as Human Resource Management is concerned, this step would ensure a balance between supply and demand for labor in Nepal and GCC economies.

Foreign employment is an important aspect of Nepal’s macroeconomic policy regime. Remittances are a major component of the nation’s GDP and are one of the largest sources of foreign currency earnings. The suspension of the system created disruptions in the economic cycle, since migration and remittances have been delayed. This had impacts at the household level in terms of lowering disposable incomes, restricting consumption, and increasing the level of economic vulnerability for families residing in rural and remittance-oriented areas.

Now that the labor permits have resumed, the remittance flow should start returning to normal levels, thus stabilising household incomes and fostering domestic consumption. Furthermore, the resumption of activities of the recruitment agencies creates economic activity through various commissions and taxes as well as job creation.

With regard to the resumption of mobility, there is a need for governance of the overseas recruitment process. A regulated system of migration is needed to address the issue of unregulated recruitment that poses threats such as overpricing, contract switching, and informal recruitment.

Since recruitment agencies are key intermediaries in human resource management, there is a need to observe ethical standards such as transparency in pricing, employment contracts, and bilateral labor agreements. There is also a need to strengthen pre-departure orientation and skills assessment programs.

Nepal’s GCC economies have always relied on expatriate workers to ensure development and economic diversification. Nepali nationals, with their flexibility and dedication, continue to be a popular choice in various industries. With the relaxation of the ban, GCC-based companies can again have access to a steady supply of talent, allowing them to fulfil their manpower needs with ease. This move will further strengthen the established labor ties between Nepal and GCC economies.

Role of institutions and coordination among stakeholders

The activation of the sector of foreign employment involves the following:

• The government institutions should work toward providing stability, efficiency, and supervision of policies.
• The recruitment agencies should be responsible for their actions, ensuring professionalism and financial soundness.
• The training institutions should focus their programs on meeting international labor market needs.
• The employers in the destination countries should respect workers’ rights and provide a safe working environment.
• Coordination among the above stakeholders will help in developing a strong migration regime.

Toward a sustainable and skill-based approach for migration

In addition, there is another positive move toward shifting away from a quantitative approach to migration toward a more sustainable skill-based approach to migration. This will enable Nepali workers to develop their skills through technical and language learning programs in order to improve their competitiveness at work. From an HRM standpoint, it is important to note that this strategy reflects the changing world trend in which talent mobility becomes a priority. The cancellation of the suspension on labor permits is a fresh start for the international recruitment sector in Nepal. It restores the functioning of the international recruitment market, opens up opportunities for migrant workers and recruitment firms who had their activities hampered due to the suspension.

Most significantly, this policy decision recognises that foreign employment is not a standalone activity but a complete economic system involving the workers, their family members, recruitment agencies, and employers globally. The previous suspension had affected various components of the economic system involving labor migration and employment in the recruitment industry. It is essential to pay attention to the improvement of the management, increase ethical recruitment policies, and train Nepali workers to be more successful in the foreign job market. Taking an all-round perspective will allow Nepal to optimise the benefits associated with migration and support its population. Overall, this policy decision marks a new chapter in foreign labor migration and the operation of the Nepali recruitment industry.

Have the people of South Asia ever been asked about their feelings on regional cooperation and integration? Every time the Yusof Ishak Institute (ISEAS), one of the most prominent Asian think tanks focused on international relations, releases its annual State of Southeast Asia Survey Report—the latest edition of which was issued just weeks ago—this is the question I inevitably find myself asking.

As a European who strongly believes in the process of regional integration as demonstrated by the EU, I cannot stop thinking about how much better off South Asia as a whole would be if a stronger regional integration process existed. The fact that India and Pakistan do not get along, and the persistent state of tension between the two nations, has long been seen as a structural impediment to deeper regional cooperation. 

Realistically speaking, it is undeniable that the nature of this semi-permanent hostility between Islamabad and New Delhi is genuinely problematic for fostering what remains an unfinished and very incomplete process of bringing the nations of South Asia and their people closer together.

Yet at the same time, it has also become something of a convenient excuse to stop thinking about regional cooperation altogether.

Acknowledging the improbability of a political reset—one that might resuscitate the near-moribund South Asian Association for Regional Cooperation (SAARC)—should not foreclose a pan-South Asian conversation about it.

The interests of the people of the region, especially its youth, may at this moment be overtaken by more pressing daily concerns such as the fight against corruption or the pursuit of a more equitable economy. But they could, once again, become galvanized around the tangible gains of a stronger, more united South Asia. The current impasse, caused by the fraught India-Pakistan relationship, should not be a barrier to imagining what deeper cooperation—and perhaps, one day, even integration—might look like across the region.

So is there anything the current chair of SAARC—which, owing to the dysfunction of the regional cooperation process, remains Nepal—could do? It is true that the Balen Shah administration is wholly focused on internal reforms. But from a practical standpoint, not merely a symbolic one, Kathmandu could and should invest in reactivating a conversation about a more cooperative and potentially more united South Asia.

At this juncture, symbolism matters enormously, and this is where Shishir Khanal, Nepal’s new Foreign Affairs Minister, could make his mark. Imagine the following scenario. It is early morning, and preparations at the central campus of Tribhuvan University are underway to host the inaugural Future of South Asia Lecture, organized by the Department of International Relations and Diplomacy (DIRD). The keynote speaker is not the Secretary General of SAARC but Minister Khanal himself, who uses the occasion to lay out the government’s vision for reactivating the regional cooperation process.

Rather than confining the discussion to SAARC, it might make more sense to think beyond traditional frameworks and focus on what could be achieved if the nations of the region worked more—and more effectively—together.

To be clear: I am a supporter of SAARC. I am, in fact, more enthusiastic about a holistic regional process than about placing too much weight on minilateral mechanisms among select member states. Trilateral arrangements such as those between India, Nepal, and Bangladesh, or quadrilateral initiatives like the Bangladesh-Bhutan-India-Nepal (BBIN) framework to boost sub-regional transportation, are practical and worthwhile. But can these formats truly substitute for the more structural, overarching, and ambitious process that encompasses all SAARC nations?

There is considerable evidence that when nations work together, their economies grow substantially—and the benefits extend well beyond trade to encompass the many dimensions of cooperation that deepen people-to-people ties.

Yet reactivating the public imagination around regional cooperation solely through the lens of SAARC may not be effective, given the objections many would raise—chief among them, the lack of political will in New Delhi to even utter the word ‘SAARC’.

Focusing on the vision rather than the vehicle to achieve it can be a smart way to navigate, for now, what is perceived in New Delhi as a taboo subject. Minister Khanal could use his address to articulate a long-term dream for the region—one in which people’s mobility is greatly enhanced, doing business across South Asian borders is seamless, and a new generation of young people can participate in a pan-regional student exchange program.

In the second part of his speech, Minister Khanal could sketch out practical confidence-building measures to restart the dialogue on regional cooperation. As I have argued before, Nepal could convene a regional summit outside the purview of SAARC, inviting all South Asian leaders to Kathmandu for a frank conversation on concrete ways to work together. Even if India or Pakistan declined, others might still attend.

This requires audacity, but that is precisely why Prime Minister Shah chose to seek national office.

In this imagined lecture, Minister Khanal could announce that Kathmandu will prioritize both a national and a regional conversation on cooperation—branded as the “Nepal for South Asia” Initiative: the most ambitious foreign affairs undertaking Kathmandu has ever conceived.

Beyond the bold announcement of a regional summit, the initiative could encompass a range of complementary activities: an annual South Asia Essay Competition for students; a fellowship program for young scholars from across the region to spend a year in Kathmandu, hosted by local think tanks, working on South Asian issues; a master's and PhD program in South Asian Studies run by DIRD; a People-to-People South Asian Summit bringing together civil society voices from across the region; and, perhaps most significantly, the first-ever State of South Asia Survey Report—gauging what the people of the region actually think and feel about their shared future.

Minister Khanal should also encourage SAARC’s current leadership to do more to highlight the bloc's ongoing activities. SAARC is on life support, but it is not dead. Its institutions—regional research centers and thematic initiatives—are not entirely paralyzed, but they need support, even moral support. Reactivating a conversation about South Asia could also help build incremental trust between India and Pakistan, one step at a time.

Nepal can take the lead in restarting the project of regional cooperation. SAARC as an institution may eventually be rebooted, rebranded, or superseded by an entirely new pan-South Asian mechanism. What matters now is beginning the conversation.

The stakes are too high, the potential too vast, and the benefits of a cooperative South Asia too significant to let timidity prevail.

Will Minister Khanal and the Balen administration play bold, or will they retreat into a focus on purely national priorities? Perhaps the new government in Kathmandu should not forget that Nepal’s national interests are inextricably rooted in a prosperous and more united South Asia.

I would like to imagine the closing words of Minister Khanal’s address: “Nepal can pursue its national goals of prosperity, inclusivity, and wellbeing by freeing our politics from corruption and bringing people closer to decision-making through a new compact of good governance. Yet our future—our destiny—is also inextricably tied to our sisters and brothers across South Asia. Engaging our regional partners is not only an economic imperative. It is a moral duty to build a stronger, more connected, and more united South Asia.”