Nepal is experiencing a growing trade deficit with China, importing items like electronics, machinery, vehicles, and textiles while its exports to China remain minimal. In the first half of the financial year 2025-26, Nepal’s imports from China surpassed Rs 195 billion, far outweighing its exports to China.
The article highlights that Nepal’s participation in the Belt and Road Initiative since 2017 has exacerbated this trade gap between the two nations. Research from the World Bank reveals that over 60% of Chinese-funded Belt and Road projects globally are awarded to Chinese companies, intensifying the imbalance.
Nepali construction companies often play peripheral roles in domestic projects, with Chinese firms securing major equipment contracts and specialized engineering tasks. The manufacturing sector in Nepal, primarily focused on food processing, textiles, and some construction materials, faces challenges as Chinese imports erode market share in overlapping categories.
Both Nepal’s central bank and Finance Ministry have recognized the risks associated with heavy reliance on Chinese imports in their official planning documents. Addressing this issue necessitates diversifying import sources through alternative trade agreements or enhancing domestic production capabilities in sectors competing with imports, which currently require capital investments and skill development beyond Nepal’s current capacity.
