A Study on Nepalese Foreign Trade with China

Abstract

This study entitled “A Study on Nepalese Foreign Trade with China” has been carried out in partial fulfillment for the degree of Master of Arts in Economics. The study analyzes the volume ,composition and direction of total foreign trade of Nepal as well as composition and direction of Nepal’s trade with China. Secondary data have been collected from national and international sources for analysis. The data are presented in tables, figures, percentage and ratios.

Foreign trade plays a significant role in the economic growth and development of nation. China is one of the biggest trading partner of Nepal. The bilateral trade between these two countries is in increasing trend but export trade is lower than the import trade. Consequently, Nepal is facing higher trade deficit problem in recent years. The major issues that arise in research study are: How is the overall foreign trade situation of Nepal? What is the position of China in Nepal’s total trade? What is the composition and direction of Nepal’s trade with China?

The trend analysis covers the period from FY 1956/57 to FY 2012/13.During the study period i.e. 1956/57 – 2012/13, the total export to India was 579616.7 million rupees (54.64 percent of total export) while the total import from India constituted 2302648.3 million rupees (55.96 percent of the total import) widening the huge trade deficit 1723031.5 million rupees. The total export trade of Nepal to other countries was 481130.8 million rupees(45.35 percent of total export) whereas import volume was 1812026 million rupees(44.03 percent of total import) having the total trade deficit of 1330895.2 million rupees. Similarly, the total trade of Nepal with China in 2010/11-2012/13 was 171737.9 million rupees. The export and import values of Nepal’s trade with China in 2010/11- 2012/13 were 4520.9 and 167217 million rupees respectively. The value of import from China was 37 times higher than the value of export in 2010/11- 2012/13. It is clear that Nepal has been facing huge trade deficit every years in its foreign trade with China. The trade deficit with China in 2010/11- 2012/13 was 162696.1 million rupees.

The bilateral trade between Nepal and China is not in favour of Nepal in the study period. Though the value of trade still is in increasing trend, export has been dominating over import. Consequently, the balance of payment situation has become higher and higher due to the lack of proper vision of government in terms of foreign trade. Thus, Nepal has been facing trade problems with China.