BILATERAL RELATIONS

Political Relations
The two countries engraved the glorious traditional relations on an agreement of 1955 that led to establish diplomatic relations between them. The new age thus began in our common history. It is well known that Nepal and China have very long and constantly sustained relationships. These have been marked by friendliness, mutual support, understanding and appreciation of each other’s aspirations and sensitivities. Our two countries are unequivocally abiding by the ideals of Panchasheel, the Five Principles of Peaceful Co-existence. Nepal-China relations have always remained good and cordial.Regular exchange of high-level visits has played an important role in further consolidating our mutually beneficial relations. The successful conclusion of a boundary agreement in 1978, Chinese assistance in Nepal’s economic and technical development and joint cooperation in international forums, including the United Nations have greatly increased mutual understanding leading to still closer cooperation between the two countries. Deeply influenced by the common values and traditions of mutual respect, our two countries are committed to international peace, development and harmony.As a Permanent Member of the UN Security Council, Nepal is of the conviction that only with meaningful role of China, the acts and decisions of the UN achieves greater support from the world community. The responsible role being played by China to maintain international and regional peace and achieve a harmonious world will always be laudable for Nepal. In the meantime, we appreciate the contribution of China in resolving the issues of the Korean Peninsula through the Six Party talks.

Nepal has been consistently pursuing the ‘One China’ policy. Nepal was among the first group of countries to recognize and establish diplomatic relations with the People’s Republic of China. Nepal had taken a leading role in sponsoring China’s admission to the United Nations and all other international agencies. In the UN human rights body sessions, Nepal has consistently voted in favor of China. China has deeply appreciated Nepal’s stand in this respect.

In addition, China has appreciated the stand of the Government of Nepal that Nepal will never allow her territory to be used for anti-China activities. Nepal has recognized Tibet and Taiwan inalienable part of the People’s Republic of China. In this connection, the Nepal Government has unequivocally supported the Anti-secession Legislation enacted by the National People’s Congress in 2005. Nepal has also appreciated ‘one country two systems’ principle as enunciated by China and applied successfully in Hong Kong and Macao in the form of special administrative regions.

Exchange of bilateral visits immensely contributed to further nurturing Nepal-China bilateral relations and promoting the understanding between the two countries. The following are some of the important exchange of visits, though there have been several other visits at different levels from various walks of life:

From Nepal:
Former Prime Minister Mr.Tanka Prasad Acharya in 1956
Former Prime Minister Mr. Bishweshwar Prasad Koirala in 1960
Former Prime Minister Mr. Kirtinidhi Bista in 1972, 1978
Prime Minister Mr. Girija Prasad Koirala in 1992, 1993
Former Prime Minister Mr. Manmohan Adhikari 1995
Former Prime Minister Mr. Sher Bahadur Deuba in 1996
King Mahendra in 1961
King Birendra in 1973, 1982, 1987, 1993, 1996
Former King Gyanendra in 2002, 2005
Former Crown Prince Paras in 2004
Prime Minister Mr. Pushpa Kamal Dahal “Prachand” in 2008 (Closing ceremony of the Olympics)
Prime Minister Mr. Madhav Kumar Nepal in 2009
President Dr. Ram Baran Yadav in 2010 (Closing ceremony of the Shanghai Expo)

From China:
Premier Mr. Zhou Enlai in 1957 and 1960
Mr. Deng Xiaoping in 1978 (in his capacity as Vice Premier)
Premier Mr. Zhou Ziyang in 1981
President Mr. Li Xiannian in 1984
Premier Mr. Li Peng in 1989
President Mr. Jiang Zemin in 1996
Premier Mr. Zhu Rongji in 2001
Chairman of the Chinese People’s Political Consultative Conference Mr. Jia Qinglin in 2003
Foreign Minister Mr. Li Zhaoxing in 2006
State Councilor Mr. Tang Jiaxuan in 2006
Deputy Speaker of National People’s Congress Mr. Li Tieying in 2007
Foreign Minister Mr. Yang Jeichi in 2008
Politbureau Member of the Communist Party of China Mr. Zhang Ghaoli 2009
Vice premier Mr. He Yong in 2010

Trade Relations
On economic front too, Nepal and China maintain cooperative relations. The bilateral trade between our two countries is in increasing trend in recent years. Nepal’s trade with China is largely conducted through Tibet and Hong Kong. Six points along the Nepal-China border have been opened for overland trade. These points are Kodari-Nyalam; Rasua-Kerung; Yari (Humla)-Purang; Olangchunggola-Riyo; Kimathanka-Riwo, and Nechung (Mustang)-Legze.Nepal and China have established Inter-Governmental Economic and Trade Committee (IGETC) in October 1982. The IGETC meetings have become the main forum for discussions on Nepal-China bilateral economic and technical cooperation. The IGETC meetings focus on economic and technical assistance, bilateral trade and tourism. The adoption of liberal economic policy in Nepal, China’s move towards freer economic system, and their membership with the WTO have together brought two countries even more closer in economic agendas. Their liberalized economies have aimed at achieving higher standards of living for their peoples.Main export from Nepal to China are food grains and flour, tea, fruits and juice, hides and skin, vegetable ghee, handicrafts, noodles etc. Main import are readymade textiles, shoes, wool, electronic items, machinery and equipments, etc. The current trade statistics show that there exists a huge trade deficit, as shown below:
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It is therefore a matter of concern for Nepal that an ever increasing trade deficit continues to dominate our economy. However, there exists tremendous prospect of expanding Nepalese exports, for which the Government of Nepal is working on building up its export capabilities. In addition, we are doing homework to take advantage of the southbound expansion of railways in China. Our Government sincerely urges China to consider further extend and upgrade the existing linkages up to the border of Nepal. An expanded and enhanced connectivity between the two countries also open the avenues for Nepal being a transit country between the two giant economies, China and India. Nepal could utilize these routes also for importing petroleum products from China.

Investment
Chinese investment in Nepal is growing, and has potential to further growth. Chinese investors are found interested in making investment in hotels and restaurants, electronics, telecommunications services, readymade garments (pashmina), medical services, hydropower, civil construction, etc. Currently, the Chinese record one of the leading sources of foreign investment in Nepal.Now that the security situation in the country has improved, there will be greater opportunities for Chinese investors to invest in Nepal. Nepal has adopted investment friendly policies and laws. There is a need for enhanced publicity in China about this in order to further increase Chinese investment in Nepal. The FNCCI, especially under the framework of Nepal-China Non-Governmental Cooperation Forum, is also working towards attracting Chinese investment. The Chinese government has encouraged its viable enterprises to invest in friendly countries. There are ample possibilities of developing bilateral co-operation through large-scale induction of Chinese technology and capital in the form of joint ventures.
China-Nepal Cooperation
China is Nepal’s one of the largest development partner. China began its economic cooperation program to Nepal in 1956, and ever since, Nepal has been receiving financial and technical assistance from China as a reliable development partner, despite its own status as developing country. Chinese aid is focused mainly in infrastructure such as roads, bridges, hospital, hydro-power project, sports facilities and industrial set ups. It is geared towards the long-term goals of promoting Nepal�s trade capability with China, particularly with Tibet via overland route. The historic agreement of 1961 to construct 104 kilometer long Kathmandu-Kodari highway, and the 2001 agreement on the construction of Syaprubesi-Kerung Road have broadened the possibilities of bilateral trade. Efforts of expanding contacts via land route have been reinforced by the operation of bus services between Kathmandu and Lhasa. Other important agreements which are in different phases of implementation include the Civil Servant hospital, Poly-technique Institute, Optical Fibre along the Araniko Highway, National Ayurvedic Hospital and an Outer Ring Road in Kathmandu.In the early years, Chinese assistance was pledged in terms of projects and no financial involvement therein was mentioned. From mid-90s, the Chinese Government has been pledging grant assistance to Government under the Economic and Technical Cooperation programme in order to implement mutually acceptable development projects. The Governments of China and Nepal have agreed to utilize a concessional loan of US$ 200 million to Nepal.

Completed Projects:
Transport
Arniko Highway 104 Km
Kathmandu Ring Road 27 Km
Kathmandu Bhaktapur Road 13 Km
Prithvi Highway 174 Km
Narayanghat-Mugling Road
Kajhuwa-Gorkha-Road 24 Km
Kathmandu-Bhaktapur Trolly Bus 14 Km
Pokhara-Baglung Road 65 Km
Seti River Bridge at Pokhara

Industries
Bansbari Leather and Shoes Factory
Hetauda Cotton Textile Mills
Harisidhi Brick Factory
Bhaktapur Brick Factory
Industrial Gloves and Apron Manufacturing
Bhrikuti Paper Mills
Lumbini Sugar Mills

Water Resources
Sunkoshi Hydroelectricity Plant and Transmission
Pokhara Water Conservancy and Irrigation Project

Health and Sports
B.P. Koirala Memorial Cancer Hospital, Bharatpur
Civil Service Hospital
Sports Complexes at Kathmandu and Lalitpur
Sports Facilities for the 8th South Asian Games
Repair of Lighting System in the Sports Complex

Others
National Trading Complex
Warehouse at Kathmandu and Birgunj
City Hall in Kathmandu
Birendra International Convention Centre
Consolidating Seti River Bridge in Pokhara
A three-month arch bridge training course for 15 Nepalese engineers
Pokhara Sedimentation Pond
Provision for the Television Truck for NTV
Mobile X-Ray Machine for Birgunj Dryport Customs Office
Equipments for the Parliament Secretariat
Feasibility study of a Research Centre for Nepal Trust for Nature Conservation
Nepal Television Metro Channel Station Expansion and Improvement
Installation of Optical Fibre along the Araniko Highway

Ongoing Projects
Syafrubesi-Rasuagadhi Road
Rehabilitation of Ring Road in the Kathmandu Valley
Polytechnic Institute in Banepa
National Ayurvedic Research and Training Institute

Cultural Relations
Culturally, Nepal and China are closely linked since ancient times. Lord Buddha�s teachings have profoundly impacted the sociocultural lives of the Nepalese and Chinese. In order to sustain the deep rooted cultural relations at present times, the two countries have reached an agreement on cultural cooperation in 1999. Various activities have taken place since. Cultural programmes have been organised in each other’s territories; and visits have been exchanged. For example, China is regularly organising cultural fairs in Kathmandu since 2003. Similarly, the Chinese Embassy in Kathmandu organised China Festival in Kathmandu in 2005 on the occasion of the 50th anniversary of the establishment of diplomatic relations. Various shows and activities have been organized in each other’s territories to enhance cultural relations.A Confucius Institute was inaugurated at the premises of the Kathmandu University on 13 June 2007 at the joint collaboration of the Kathmandu University and Hebei University of Economics & Business.
Scholarships:
China has been providing 100 scholarships annually to Nepalese students to study in China. Government of Nepal appreciates the Chinese assistance in the field of education. Many Nepalese have found China as an attractive destination for higher studies, particularly in medical sciences. This has helped Nepal to meet the ever-increasing demand for technical manpower in the country. It has also contributed to promoting understanding and appreciation of each other’s culture and tradition.
Tourism
The Government of the Peoples Republic of China has designated Nepal as one of the tourist destinations since 2001, which has rendered a great potential for Nepal to attract many tourists from China. Chinese Yuan has been made convertible for tourists and businessmen in Nepal. Nepal has established Consulate General’s Offices in Hong Kong and Lhasa (the only mission in the city), and an honorary consul has been appointed in Shanghai. In addition to direct air links, bus service between Kathmandu and Lhasa has been in operation since 2005. In 2010, about 42,000 Chinese tourists travelled to Nepal via air route. The Embassy has set a target of 100,000 Chinese tourists for the period of Nepal Tourism Year 2011.
Permanent Mechanisms
Nepal and China established the Nepal-China Non-Governmental Cooperation Forum in 1996. The Forum has been meeting regularly. The Forum is being led by FNCCI from the Nepalese side and All China Federation of Industry and Commerce (ACFIC) from the Chinese side.Similarly, the Consultation Mechanism is an arrangement of the meeting between the two coutries’ foreign secretaries. Since its beginning in 1996, the Mechanism has been operational with foreign secretaries visiting each other’s capitals to hold meetings regularly. The Mechanims has proved to be useful tools of interaction with each other. The seventh and eighth rounds of the Mechanism were held in Kathmandu and Beijing in 2008 and 2009, respectively.

Border
Nepal and China share a long border, spanning a range of about 1414 Kilometres. The two Governments resolved border issue amicably in 1961, and have been conducting joint inspection of the border at regular intervals. The border demarcation work was amicably completed in the 1960s and there is no single issue pending to be resolved between Nepal and China. The border between the two countries is being jointly inspected every ten years.