Dahal urged China to do more in allowing duty-free market access to Nepali goods and ensure investments promised by the Chinese investors turn into reality.
“Nepal’s growing trade deficit with China and the apparent gaps in commitment and actual FDI from China are some of the issues that a forum like this should try to address with a practical solution,” said Dahal. Nepal imported goods worth Rs 265bn from China during the fiscal year 2021/22 whereas Nepal’s exports to China stood at a meager Rs 810m, according to Trade and Export Promotion Centre (TPEC). “We have also requested the Chinese side to help enhance productive capacity in a range of products of our comparative advantage and enlist vegetables, meat products, tea, and herbal products in the General Administration of Customs of China (GACC),” said Dahal. He said that Nepal has also requested the Chinese side to include some 512 tradable Nepali products in the list of duty-free and quota-free (DFQF) facilities on a preferential basis. “These measures will be important to reduce Nepal’s trade deficit with China,” he added. Though China has accorded the DFQF facility for over 8,000 Nepali goods to enter China, Nepal has hardly been able to export those goods. Nepali exporters have long been complaining about non-tariff hurdles from the Chinese authorities. In the last three years, China didn’t open its border for the exports of Nepali goods citing the risk of Covid-19 as the northern neighbor adopted a strict zero Covid policy. Beijing allowed Nepal's exports to pass into China through the Kerung-Rasuwagadhi border only in late December 2022 after keeping it shut to two-way traffic for three years. Chinese goods have been entering Nepal intermittently through Kerung, one of the two international border points on the Nepal-China border, but it was no go in the other direction. As a result, Nepal’s exports to China suffered badly. Nepal’s private sector highlighted the massive trade deficit of Nepal with China during the event. “The growing trade deficit is becoming a challenge for Nepal. It is unlikely that the trade balance between the two countries will be achieved immediately. However, it can be reduced,” said Vishnu Kumar Agarwal, president of CNI. “We are also looking for Chinese investment for that (reducing trade deficit).” The Chinese side also appeared to acknowledge this fact. Zhang Shaogang, vice chairperson of CCPIT said despite having many attractive products in Nepal, their visibility is yet to be enhanced among Chinese consumers. “As China’s largest trade and investment promotion agency, CCPIT will continue to host more trade and investment promotion events, in order to boost imports of Nepal’s premium products, including artworks, wool products, garments, agricultural products, tea, and Chinese herbs,” he said. Despite being a neighbor next door, China does not even fall into the top 10 export destinations of Nepal. In the last fiscal year, China was the 12 largest export destination for Nepal, according to TEPC. During the event, the Nepali side called for the realization of Chinese investment commitments into actual investment. Though China has been topping the list in terms of FDI commitments in the last seven fiscal years, there have been gaps in commitment and actual investment. Prime Minister Dahal highlighted the apparent gaps in commitment and actual investment of FDI from China. He also highlighted the number of measures the government was adopting to attract foreign investment in Nepal while also assuring policy stability. Dahal claimed that Nepal has made major reforms in its investment regime that encourage, promote and protect FDIs. “Our tax slabs are one of the lowest and our position is fairly good in ease of doing business. Investment in any sector is profitable in our country given the nascent stage of our industrial development,” he added. Zhang said that Chinese enterprises could mainly invest in the areas of infrastructure. “Nepal has a huge demand for infrastructure development and investment in a wide range of areas like power stations, communications, and road construction,” he said, adding, “China has a sound industrial system and advantages in capital and technology.”
