Foreign Trade of Nepal With China Its Prospects and Challenges

Abstract

A country’s economy is very influenced by its neighboring countries and very much so for a landlocked country whose access to sea port is only through neighboring. Without flourishing trade a country’s economic growth will be in slow paced. In the globalizing world a country have to maintain good diplomatic relation with its neighboring countries. Many researches have conducted study on trade relation with India but found very few with China. So, this study is mainly focused on the trade relation between Nepal and China. Nepal and China has passed a long road of mutual cooperation and relation starting from 5th century to today. This relation has gone from strength to strength. This study aims to discuss the prospects and challenges of trade between Nepal and China. The objective of this study is to overview trade relations and import- export trade between these countries. The analysis covers the period from 2007/08 to 2016/17 where the volume of trade between these countries are discussed. Trade deficit has increased from 228 million to 1 billion from 2007/08 to 2016/17 which shows the huge gap between the countries. The finding suggests Nepal has huge prospects in trade in various sectors as agriculture, hydroelectricity, investment in financial sectors whereas challenges in trade are Nepal’s economy and its variables, infrastructures, political instability. But with new trade agreements and different ongoing and proposed plans with China, Nepal is continuously leading in the way of prosperity. Keywords: Economic growth, Balance of payment, Trade deficit, Import, Export, Trade determinants