Navigating the Himalayan Waters: Nepal’s Foreign Policy Between India and China

Abstract

Situated between India and China, Nepal occupies one of the world's most strategically significant geopolitical spaces, where its foreign policy is shaped by asymmetric dependence and intensifying great-power rivalry. This study examines how Nepal has navigated these dynamics from the 1950 Treaty of Peace and Friendship to the contemporary Indo-Pacific era, with particular emphasis on the post 2015 period. It explores how critical junctures including the 1950 Treaty, the 2015 border blockade, and China's Belt and Road Initiative (BRI) have reshaped Nepal's foreign policy and investigates the diplomatic, economic, and infrastructural strategies employed to maintain strategic autonomy while balancing relations with both neighbors. The study adopts a qualitative single-case research design using process tracing and thematic content analysis. Data are drawn from bilateral treaties, diplomatic communiques, government policy documents, parliamentary debates, economic statistics, and peer-reviewed literature covering 1950 to the present. The analysis is guided by the concepts of strategic hedging, issue-based alignment, and critical junctures. The findings show that Nepal is neither a passive buffer state nor an equidistant actor but a pragmatically adaptive small state that strategically hedges between India and China. While India remains Nepal's dominant economic and transit partner, Nepal has increasingly engaged China through transit diversification, infrastructure connectivity, and BRI cooperation to broaden its strategic options. However, domestic political instability, economic dependence, and regional security competition continue to constrain its policy autonomy. The study concludes that Nepal's foreign policy resilience depends on institutionalizing balanced engagement, strengthening domestic capacity, and converting geopolitical competition into opportunities for sustainable development. It contributes to small-state foreign policy scholarship by demonstrating that strategic hedging represents an adaptive strategy for managing asymmetric geopolitical relationships.