Nepal and China Gear Up for Crucial Commerce Talks in Lhasa
Nepal and China are poised to convene a significant commerce secretary-level meeting in Lhasa next week, with a primary focus on enhancing trade facilitation, bolstering border infrastructure, and optimizing the management of critical transit points. This pivotal gathering, slated for January 20-21, marks the third iteration of the Nepal-China Coordination Mechanism on Border Trade and Cooperation.
Leading the Nepali delegation will be Commerce Secretary Ram Prasad Ghimire. The Chinese contingent will be represented by a vice chairman from the Lhasa municipal government. This meeting comes at a time when Nepali traders have voiced persistent concerns regarding the slow and irregular movement of goods through key border crossings.
Addressing Trade Bottlenecks at Key Crossings
A central objective for Nepal during these discussions will be to urge China to facilitate the dispatch of a greater volume of cargo containers through the Kerung and Tatopani border points. Officials from Nepal’s Ministry of Industry, Commerce and Supplies have highlighted that traders have consistently reported limitations on container dispatches from both Kerung and Tatopani. Consequently, Nepal intends to formally request an increase in container movement to alleviate these trade disruptions.
The Rasuwagadhi border point, a vital artery for Nepal-China trade, has recently resumed operations. This reopening followed the installation of a temporary Bailey bridge, a development that came after a significant disruption. The Miteri Bridge at Kerung, one of Nepal’s primary trade gateways to China, was tragically swept away by a flash flood in the Lhende River on July 8 of the previous year. The subsequent effort by China to construct a temporary replacement bridge spanned nearly six months. It is important to note that Nepal’s customs point at Rasuwagadhi is situated approximately 24 kilometres south of Kerung.
Despite the resumption of operations at Rasuwagadhi, traders report that the flow of cargo remains substantially below pre-disruption levels. A primary reason cited is the limitation imposed by the temporary bridge, which cannot accommodate the passage of larger containers. This constraint directly impacts the number of vehicles that can be cleared, thereby slowing down trade. Furthermore, traders have also raised concerns about the restricted issuance of border passes.
Streamlining Border Access and Infrastructure Development
Under the current work procedures, border passes are exclusively issued to local residents and migrants residing within the Rasuwa district. Nepal is expected to formally request China to broaden cross-border access to include traders from other districts, acknowledging the recurring demands for a more flexible pass system.
Beyond immediate operational concerns, Nepal is also set to advocate for China’s support in the construction of a permanent Miteri Bridge at Kerung. The strategic significance of this crossing as a major trade gateway underscores the urgency of this request.
In parallel, Kathmandu plans to seek Chinese assistance in enhancing road infrastructure at several border points. This includes proposed improvements at Olangchung Gola, Kimathanka, Hilsa, and Simkot, all of which play a role in facilitating cross-border commerce.
Advancing Dry Port Projects and Reconstructing Damaged Facilities
Another critical item on the agenda is the development of the dry port at the Korala border point in Mustang. Nepal will be urging China to expedite the revision and completion of the detailed project report (DPR) for this facility. The existing DPR, prepared by the Nepal Intermodal Transport Development Board, was previously submitted to Chinese officials. Approximately four months ago, Chinese counterparts indicated their intention to revise the report and propose a new design. The estimated cost for the Korala dry port project stands at Rs1.5 billion.
The discussions will also address the imperative of reconstructing the Rasuwa dry port. This facility suffered severe damage during the previous summer’s floods, leading China to halt construction. The flash flood reportedly destroyed over 90 percent of the under-construction infrastructure, leaving only a single building intact. At the time of the halt, the Chinese government had already invested approximately Rs1.5 billion, representing roughly half of the total projected cost of the project.
Trade Dynamics and Future Outlook
China remains a significant economic partner for Nepal, ranking as its second-largest trading partner after India. In the last fiscal year, Nepal’s total trade with China amounted to Rs343.73 billion. However, this figure is accompanied by a widening trade deficit, which reached Rs338.47 billion.
Data from the Department of Customs reveals a substantial increase in Nepal’s imports from China. During the fiscal year concluding in mid-July, imports rose by 14.16 percent to Rs341.10 billion. Key import categories include smartphones, electric vehicles, iron and steel coils, apples, diammonium phosphate, laptops and notebooks, dyed knitted or crocheted fabrics, garlic, readymade garments, and footwear. In contrast, Nepal’s exports to China saw a marginal increase of 1.93 percent, totalling Rs2.63 billion in the same period. The primary Nepali exports to China comprise carpets, scourers, felt products, tracing cloth, statues made of precious metals, medicinal herbs, wood, musical instruments, readymade garments, and yarsagumba.
Traders have expressed that the prolonged disruptions at Kerung and the restricted vehicle movement at Tatopani during the past year had a considerable impact on imports, including high-value items like electric vehicles, particularly during the festive season. Some traders have even characterized the situation as an de facto blockade. They report that essential food items, imported for festivals since the Teej celebration during the monsoon, have remained stranded on the Chinese side of the border due to the slow pace of container clearance. Despite repeated appeals from Nepali officials to ease trade and ensure regular vehicle movement, the challenges persist.
Nepal and China currently operate two primary trade routes: Rasuwagadhi-Kerung and Tatopani-Zhangmu (also known as Khasa). Kerung is located approximately 190 kilometres from Kathmandu, while Tatopani is situated around 115 kilometres away. The Tatopani-Khasa border point was reopened on May 29, 2019, after a four-year closure following the devastating 2015 earthquakes. The Rasuwagadhi-Kerung customs point, which has since been upgraded to an international checkpoint allowing the passage of third-country nationals, resumed operations in July 2020. The upcoming commerce meeting in Lhasa is expected to address these critical issues with the aim of fostering more robust and efficient bilateral trade.
