By Frank Jack Daniel
NEW DELHI (Reuters) - When eight South Asian leaders gather for a summit in Kathmandu on Wednesday, they will meet in a conference center donated by China to its cash-strapped Himalayan neighbor Nepal 27 years ago.
In the decades since it built the modernist brick and glass hall, China has massively stepped up its presence in South Asia, supplying ports, power stations and weapons.
China's advance has been aided by bickering between India and Pakistan that stymies almost all attempts at integration in a region that is home to a fifth of the world's population but has barely any shared roads, fuel pipes or power lines.
India's Prime Minister Narendra Modi has not welcomed Beijing's renewed suggestion its status be raised from "observer" in the South Asian Association for Regional Cooperation (SAARC), in which India is presently the only major power.
SAARC summits bring together leaders from Afghanistan, Bangladesh, Bhutan, India, the Maldives, Nepal, Pakistan and Sri Lanka.
Modi's hope of using the group as a counterweight to China is unlikely to gain traction at the two-day Kathmandu meeting, with officials saying Pakistan is blocking deals to increase transport and energy connections.
Pakistan mooted the idea of upgrading China's and South Korea's status in the organization at a meeting of SAARC foreign ministers on Tuesday. It was quickly rebuffed by India.
"We need to first deepen cooperation among SAARC, before we try and move it horizontally," an Indian foreign ministry spokesman said. He said several countries agreed.
China has sent Vice Foreign Minister Liu Zhenmin and is expected to make a statement during the summit.
Earlier in the week, the Kathmandu bureau of Chinese state news agency Xinhua distributed a newspaper that devoted several pages to promoting China's full membership.
The paper cited serving and former Nepali ministers expressing support for the proposal.
"China attaches great importance to SAARC's status and function," a Foreign Ministry spokeswoman told reporters in Beijing on Tuesday. "China is also willing to elevate the level of its relationship."
The geographical limits of South Asia are not fixed - Afghanistan was included as a member in 2007, while Myanmar, which borders India and Bangladesh, merely observes. But the Himalayas are generally seen as dividing China from the subcontinent.
"There are many other possibilities in between observer status and full membership, we are happy that China has shown interest," Nepal's communications minister Minendra Rijal told Reuters, adding the issue needed consensus.
(Additional reporting by Gopal Sharma; editing by Andrew Roche)