Nepal-China Relations

Political:

The relations between Nepal and the People’s Republic of China are age old and deep rooted. Nepal-China relations have always remained friendly and cordial. The historic and multi-faceted bilateral relations between the two countries have evolved since the days of Nepali monk and scholar Buddhabhadra (early 5th Century), Princess Bhrikuti (first half of the 7th Century) and Araniko (Anige, Second half of the 13th Century) and early visits of Chinese monks and scholars like Monk Fa Xian (Jin Dynasty), Monk Xuan Zang (Tang Dynasty) among others.

The two countries formalized their relations on 1 August 1955 by establishing diplomatic relations. The relations between the two countries have been marked by friendliness, understanding, mutual support, cooperation and respect for each other’s sensitivities. Both countries have relentless faith on the ideals of the Five Principles of Peaceful Co-existence.

Nepal is firmly committed to One China policy and is also committed not to allow its soil to be used for any inimical activities against China.

The two countries share a range of 1,414 kilometers border in the Himalayan range of the northern side of Nepal.

Nepal has its Embassy in Beijing, Consulates General in Lhasa, Hong Kong and Guangzhou and an Honorary Consul in Shanghai.

Exchange of visits:

Both countries have a long tradition of exchanging high-level visits on a regular basis which have been contributing to strengthening and consolidating bilateral ties. Both countries have been utilizing the bilateral, regional and multilateral forums to hold meetings between the leaders in order to maintain regular contacts and share views on the issues of mutual interests.

The Rt. Hon’ble Vice President Mr. Nanda Bahadur Pun visited People’s Republic of China (PRC) on 19-24 September 2018 to attend the 17th Western China International Fair in Chengdu of Sichuan Province. Earlier in July 2017, the Rt. Hon’ble Vice President visited China to attend the 23^rd Lanzhou China Investment and Trade Fair where Nepal was designated as the ‘Guest Country of Honor’. In June 2016, the Vice President also attended the 4^th China South Asia Exposition and 24^th China Kunming Import and Export Commodities organized by the People’s Government of Yunnan Province of China.

The Rt. Hon. Mr. K P Sharma Oli, Prime Minister of Nepal paid an official visit to China from June 19 to 24, 2018 at the invitation of H. E. Li Keqiang, Premier of the State Council of the PRC. The Prime Minister had separate delegation level talks with the President of China H. E. Mr. Xi Jinping and Premier H. E. Mr. Li Keqiang at the Great Hall of the People on 20 and 21 June 2018 respectively. During the bilateral talks, both sides held in-depth discussion covering all aspects of bilateral relations and reaffirmed their commitments to further widen and deepen the relations for mutual benefit in the days ahead.

During the visit of the Rt. Hon. Prime Minister to China in June 2018, a fourteen-point Joint Statement was issued by the two sides and fourteen agreements/MoUs/LoEs including Memorandum of Understanding on Cooperation in Railway Projects were signed between the two governments. Besides, nine agreements were signed between Nepali public and private enterprises/companies and their Chinese partners. The Prime Minister also had meetings and interactions with other central and provincial leaders, businessmen, academics, university administrators and students, media and members of the Nepali diaspora. As a part of the visit, the Prime Minister visited Lhasa, the capital city of Tibet Autonomous Region (TAR) of China where he held substantive discussions with the Chairman of the People’s Government of the TAR H.E. Mr. Qi Zhala.

Earlier in March 2016 also, the Rt. Hon. Mr. K P Sharma Oli, Prime Minister of Nepal paid an official visit to China at the invitation of H. E. Li Keqiang, Premier of the State Council of the PRC. Both sides signed various agreements and MoUs including the Agreement on Transit Transport.

The then Prime Minister Hon’ble Mr. Pushpa Kamal Dahal ‘Prachanda’ visited China on 23-29 March 2017 to attend the Annual Session of the Boao Forum for Asia (BFA) 2017 and held meetings with Chinese President H.E. Mr. Xi Jinping and other leaders of China in Beijing. He also addressed to the BFA’s Opening Session on 25 March 2017 on the theme “Globalization and Free Trade: The Asian Perspectives”. Earlier in October 2016, he had a meeting with the Chinese President on the sideline of the BRICS-BIMESTEC Outreach Summit in Goa, India.

The Rt. Hon. Mr. Krishna Bahadur Mahara, Speaker of the House of Representatives of the Federal Parliament of Nepal visited Lhasa, TAR of China from 7 to 11 September 2018 to attend the 4^th China, Tibet Tourism and Culture Expo.

At the invitation of H E. Mr. Wang Yi, State Councilor and Minister of Foreign Affairs of PRC, Minister for Foreign Affairs Hon. Mr. Pradeep Kumar Gyawali paid an official visit to China on 16-21 April 2018. During the visit, Foreign Minister Mr. Gyawali called on Vice-President of the PRC H. E. Mr. Wang Qishan and held official bilateral talks with State Councilor and Minister of Foreign Affairs, H.E. Mr. Wang Yi.

Deputy Prime Minister and Minister for Foreign Affairs Hon. Mr. Krishna Bahadur Mahara paid an official visit to the PRC from 6-11 September, 2017 at the invitation of H.E. Mr. Wang Yi, Minister of Foreign Affairs of China. During his visit, he held meetings with the Premier of China H.E. Li Keqiang and State Councilor H.E. Yang Jiechi.

Deputy Prime Minister and Finance Minister Hon’ble Krishna Bahadur Mahara visited China, leading a Nepali delegation to attend the ‘Belt and Road Forum for International Cooperation’ organized in Beijing on 14-15 May 2017. He also visited China in July 2016 as special envoy of the Government of Nepal and in September 2016 to attend the China’s Tibet Tourism and Culture Expo in Lhasa.

Vice Premier of the State Council of the PRC H.E. Mr. Wang Yang paid an official visit to Nepal on 14-17 August 2017. During the visit, both sides held an official meeting led by Hon.  Bijay Kumar Gachhadar, Deputy Prime Minister and Minister for Federal Affairs and Local Development from Nepali side and H.E. Mr. Wang Yang, Vice-Premier of the State Council of China from the Chinese side. Three documents were signed namely (i)Agreement on Economic and Technical Cooperation, (ii) Framework Agreement on Promotion of Investment and Economic Cooperation, and (iii) Letters of Exchange for Oil and Gas Resources Exploration in Nepal

The Premier of China H.E. Mr. Wen Jiabao visited Nepal on 14 January 2012. State Councilor of the PRC, H.E. Mr. Yang Jiechi also paid a visit to Nepal on 24-25 June, 2013. Foreign Minister H.E. Mr. Wang Yi visited Nepal in June 2015 to attend the ‘International Conference on Nepal’s Reconstruction.’ H.E. Mr. Liu Qibao, Member of Political Bureau and Secretariat of Communist Party of China (CPC) Central Committee and Chief of the CPC Publicity Department of PRC visited Nepal in December 2016 to attend the 7th China Cultural Festival jointly organized by Ministry of Culture, Tourism and Civil Aviation of Nepal, Ministry of Culture of China and the Chinese Embassy in Kathmandu. General Chang Wanquan, State Councilor and Defense Minister of China visited Nepal in March 2017. Minister for Culture and Tourism of China H.E. Mr. Luo Shugang visited Nepal from 12-15 November 2018 to attend 8^th China Festival in Nepal and Exhibition of China’s Cultural and Creative Products in the New Era. H.E. Mr. Shugang held a meeting with Minister for Culture, Tourism and Civil Aviation of Nepal Hon. Mr. Rabindra Adhikari.

Bilateral Mechanisms:

There are a number of bilateral mechanisms between Nepal and China. Nepal-China Joint Consultation Mechanism is one of them, which is led by the Foreign Secretary of Nepal and the Vice Minister of the Foreign Ministry of China. This forum is instrumental in discussing entire realm of bilateral relations. The 12^th Meeting of Nepal-China Joint Consultation Mechanism was held in Beijing on 13 December 2018. During the meeting, there was comprehensive discussion on all important matters of bilateral relations and both sides reviewed the progress made in relation to previous agreements, understandings and commitments.

Besides, there are other bilateral mechanisms, which include Nepal-China Inter-Governmental Economic and Trade Committee, Nepal-China Joint Committee on Agriculture Cooperation, Border Law Enforcement Cooperation, Border Customs Meeting, Joint Tourism Co-ordination Committee, Nepal-China’s Tibet Trade Facilitation Committee (NTTFC), Energy Cooperation Mechanism, Mechanism for Facilitation on the Implementation of China-Nepal Cooperation Programmes and Projects in Nepal etc. The 8^th meeting of NTTFC was held on 5-6 July 2018 in Kathmandu. The first Energy Cooperation Mechanism Meeting was held in Kathmandu on 28 September 2018. The First meeting of the Mechanism for Facilitation on the Implementation of China-Nepal Cooperation Programmes and Projects in Nepal was held in Kathmandu on 3 December 2018.

Economic Cooperation:

Nepal-China economic cooperation dates back to the formalization of bilateral relations in 1950’s. The first “Agreement between China and Nepal on Economic Aid” was signed in October 1956. From the mid-80s, the Chinese Government has been pledging grant assistance to the Government of Nepal under the Economic and Technical Cooperation Program in order to implement mutually acceptable development projects.

Chinese assistance to Nepal falls into three categories: Grants (aid gratis), interest free loans and concessional loans. The Chinese financial and technical assistance to Nepal has greatly contributed to Nepal’s development efforts in the areas of infrastructure building, industrialization process, human resources development, health, education, water resources, sports and the like.

Some of the major on-going projects under Chinese assistance include:

1. Upper Trishuli Hydropower Project- Power station and Transmission Line Projects
2. Food/ Material Assistance in northern 15 bordering districts.
3. Kathmandu Ring Road Improvement Project
4. Larcha (Tatopani) and Timure (Rasuwagadi) Frontier Inspection Station Project
5. Pokhara International Regional Airport
6. Upgradation of Syaprubensi- Rasuwagadhi Road
7. Upgradation of Civil Service Hospital
8. Upgradation of Kodari Highway and restoration of bordering bridges at Kodari and Rasuwagadhi

With the signing of the Memorandum of Understanding on Cooperation under the Belt and Road Initiative on 12 May 2017 in Kathmandu between Nepal and China, new avenues for bilateral cooperation in the mutually agreed areas are expected to open. The major thrust of the MoU is to promote mutually beneficial cooperation between Nepal and China in various fields such as economy, environment, technology and culture. The MoU aims at promoting cooperation on policy exchanges, infrastructure connectivity, trade connectivity, financial integration and connectivity of people.

The Government of the People’s Republic of China provided substantial and spontaneous support in search, relief and rescue efforts of Nepal following the devastating earthquakes of 2015. China provided 3 billion Yuan on Nepal’s reconstruction to be used in the mutually selected 25 major projects for the period of 2016-2018. The two countries signed three separate bilateral Agreements on Economic and Technical Cooperation on 23 December 2016, 15 August 2017 and 21 June 2018 for providing Chinese grant of one billion Yuan each to Nepal for implementing post-disaster reconstruction projects, livelihood projects and other mutually agreed projects.

Trade, Tourism and Investment:

China is the second largest trading partner of Nepal. In 2017/18, total exports to China stood above US$ 23 million. During the same period, import from China stood above US$ 1.5 billion. Trade deficit of Nepal with China has been in an increasing trend. Although, China has given zero tariff entry facility to over 8,000 Nepali products since 2009, Nepal hasn’t been able to bring the trade deficit down. Nepal regularly participates in various trade fairs and exhibitions organized in China. Nepal-China’s Tibet Economic and Trade Fair is the regular biannual event hosted by either side alternatively to enhance business interaction and promote economic cooperation between Nepal and TAR, China. Nepal participated in the China International Import Expo held in Shanghai in November 2018. The 16^th Nepal-China’s Tibet Economic and Trade Fair was held in Lhasa on 24-29 October 2018.

Nepal-China Non-Governmental Cooperation Forum was established in 1996 which is led by the President of the Federation of the Nepali Chambers of Commerce and Industry (FNCCI) from the Nepali side and the Vice Head of the All-China Federation of Industry and Commerce (ACFIC) from the Chinese side. It is an initiative to mobilize the apex business organization of both sides to enhance cooperation between the private sectors of two sides. The 14^th meeting of the Forum was held in Kathmandu on 25-26 May 2017.

China is the largest source of Foreign Direct Investment in Nepal. Chinese investors committed to spend over $ 8.3 billion in Nepal during the Nepal Investment Summit concluded in Kathmandu in March 2017. China has topped in FDI pledges to Nepal in FY 2015-16, 2016-17 and in 2017-18 with the growing investment pledges from the Chinese companies in hydropower, cement, herbal medicine and tourism.

China is the second largest source of foreign tourists to Nepal. During the year 2018, 164,694 Chinese tourists visited Nepal. The Government of Nepal has waived visa fees for the Chinese tourist effective from 1 January 2016. The Chinese Government had announced the year 2017 as Nepal Tourism Promotion Year in China. In view of upcoming Visit Nepal Year 2020, both sides have been carrying out joint efforts to promote Nepal in China and encourage Chinese enterprises to invest in Nepal’s tourism sectors. Nepal has road connectivity via Rasuwagadhi and Tatopani for trade and international travelers. There are four other border points designated for bilateral trade. Nepal has direct air link with Lhasa, Chengdu, Kunming, Guangzhou and Hong Kong SAR of China.

Education and Cultural Cooperation:

China provides scholarships every year not exceeding a total of 100 Nepalese students studying in China. Besides, the Chinese side has been providing Chinese language training for 200 tourism entrepreneurs (40 per year) of Nepal for five years as per the understanding reached between two sides in March 2016. So far, 120 Nepali tourism professionals have graduated 6-month long Chinese language training, each 40 professionals in 2016, 2017 and 2018. Both sides have been carrying out activities in culture and youth sectors as per the provisions of the MoU on Cultural Cooperation-1999 and MoU on Youth Exchange-2009. Both sides have been promoting people-to-people relations through regular hosting of cultural festival, friendly visits of the peoples of different walks of public life, exhibition, cultural and film show, food festivals etc. Sister city relations between the cities of two countries are growing. These relations are basically meant for carrying out exchanges and cooperation in the fields of economy, trade, transportation, science and technology, culture, tourism, education, sports and health, personnel, etc.

Regional and International Affairs:

Nepal is the founding member of the AIIB and holds the status of Dialogue Partner in the Shanghai Cooperation Organization (SCO). Both countries are also the members of the Asia Cooperation Dialogue. China is the observer of the SAARC. Both countries have been cooperating each other in various UN forums on matters of common concerns.

North East Asia Division
Ministry of Foreign Affairs
As of February 2019