New Delhi, April 26: Nepal is grappling with a continuously expanding trade deficit with China. The country imports a vast array of goods from its neighbor, including electronics, machinery, vehicles, and textiles, while its exports remain significantly lower.
This disparity is evident. According to an article published in Eurasia Review, Nepal’s imports from China exceeded 195 billion rupees in the first half of the fiscal year 2025-26, while its exports to China were minimal in comparison.
The article also highlights that the Belt and Road Initiative (BRI), which Nepal formally joined in 2017, further entrenches this structural imbalance between the two nations. Research from the World Bank indicates that over 60% of contracts for BRI projects funded by China globally are awarded to Chinese companies, while only about 30% of contracts for projects funded by non-Chinese institutions go to local firms.
Nepalese construction companies often play a limited role in domestic projects, as contracts for equipment supply and specialized engineering tasks are predominantly secured by Chinese firms.
The article states, “Nepal’s manufacturing sector is small by regional standards. Industrial production is mainly confined to food processing, textiles, and some construction materials. In sectors where competition with Chinese imports exists, the market share of Nepali producers is declining. This is partly due to competitiveness issues and partly due to policy-related challenges, as Chinese capital under foreign direct investment (FDI) brings additional competition into the domestic market.”
Both Nepal’s central bank and the finance ministry have identified reliance on imports from China as a structural risk in their public plans. To address this situation, Nepal must either diversify its sources of imports, necessitating new trade agreements and supply chain development, or enhance domestic production capabilities in competitive sectors. This would require substantial capital investment and skill development, which Nepal currently struggles to achieve with its available resources.
The article further notes that while Chinese capital is available for both options, the conditions ultimately lead back to the same situation.
My name is Ganpat Singh Choughan. I am an experienced content writer with 7 years of expertise in the field. Currently, I contribute to Daily Kiran, creating engaging and informative content across a variety of categories including technology, health, travel, education, and automobiles. My goal is to deliver accurate, insightful, and captivating information through my words to help readers stay informed and empowered.
Leave a Comment