To see the conclusion of a diplomatic goodwill meeting between Nepalese Prime Minister Sushil Koirala and Indian Prime Minister Narendra Modi is to see the big white elephant in the room: China. 

Nepal, a Himalayan nation between India and China, is increasingly finding itself in a squeeze between the two Asian superpowers. Blessed with abundant resources but plagued by a lack of infrastructure, Nepal finds itself in the unusual position of being wooed from all sides. 

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At the center is water. Containing 2.27 percent of the world's water supplies in the form of 6,000 rivers, Nepal is seen by an electricity-hungry India as a source of hydroelectric power and by a heavily industrializing China as an oasis of unpolluted water. Both countries are eager to bring Nepal tightly into their sphere of influence. 

Relations between China and India took a severe downturn in 1962 when China invaded Arunachal Pradesh, a state in India's far east. Chinese forces withdrew a year later, but ever since, India has viewed its neighbor to the north as an adversary. Nepal's sudden appearance on the Sino-Indian radar is seen by some an an inevitable tussle between to countries largely considered Asia's two great power centers. 

"There are irritants in terms of border disputes. However, there's ample scope for India and China to work together and that message comes across. We shouldn't be victims of historical baggage," Nalin S Kohli, spokesperson for Modi's Bharatiya Janata Party (BJP), told RT.com.

He went on to say there should not be an influence-peddling competion between India and China over surrounding nations. 

For its part, warmer relations with Nepal fit neatly in Chinese diplomacy for reasons other than water. Although its Hindu religion binds it to India, Nepal is home to the second largest Tibetan population in the world. Stronger Sino-Nepalese ties would lend gravitas to China's claim over Tibet, which Nepal abuts along its entire northern border. A better relationship would also help manage border controls, and China has financed construction projects across Nepal.

Modi concluded his trip by extending Nepal a one-billion-dollar line of credit to aid construction of roads, along with and technology and communication projects. The Indian PM observed it is more expensive for him to call Nepal than the United States, and the two countries border each other. A second Indo-Nepalese summit is scheduled for this November. 

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