Multiple trade and transit agreements, oil pipeline connection agreements, special economic zone creation agreements, aircraft purchase deals, and airport construction agreements have been struck between Nepal and China in recent years. Some of these business transactions were supposed to speed up Nepal’s growth. However, most of these deals either never materialized or cost Nepal a significant amount of money.
In April 2016, during Prime Minister KP Sharma Oli’s visit to China, the two countries inked a Trade and Transit Agreement. At the time, China agreed to allow Nepalese traders to use its seaports in Tianjin, Shenzhen, Lianyungang, and Zhanjiang, in addition to the three land ports in Lanzhou, Lhasa, and Shigatse. The accord also opened up six border crossings between Nepal and China, allowing for the export of Nepalese commodities.
Many Nepalese were led to think that cutting ties with India would be easier because to the Trade and Transit Agreement with China. Additionally, the Chinese pipeline would make it easier for Nepal to purchase petroleum products from Kazakhstan. Mahesh Maskey, Nepal’s then-ambassador to China, boasted of his ability to negotiate with Kazakhstan over oil prices. Nepal had hoped to import at least 30% of its petroleum product requirements from Kazakhstan through the Chinese pipeline, but not a single drop made it into Nepal.
Also in 2012, Nepal and China’s Aviation Industry Corporation (AVIC) came to an agreement so that Nepal could buy six civil aircraft from China for a total of INR 6.67 billion. One of the six planes lost in 2018’s crashes. It was later discovered that the aircraft’ equipment was inadequate. Having Chinese pilots fly such aircraft was also too expensive. The Board of Directors of Nepal Airlines thus resolved in 2020 to park all five ‘Made in China’ jets the airline had purchased from China between 2014 and 2018. Nepal has already lost a total of INR 1.9 billion before they were grounded. Nepal bought the jets from China even though Bangladesh had rejected the deal.
Additionally, in 2017, Nepal’s Dahal government signed the Belt and Road Initiative (BRI) deal with China. There was speculation that after signing the deal, Nepal’s commerce with BRI member nations would increase by a factor of four thanks to China’s willingness to facilitate such trade via its territory. So as to enable not only bilateral commerce with China but also trade with third nations via Chinese territory, agreements were also struck between Nepal and China to build special economic zones in Kerung (China) and Nuwakot (Nepal) closer to the Sino-Nepal border. However, after that point, commerce between Nepal and China actually plummeted. Due to the periodic closure of two important commercial sites along the border, freight transfers between the two nations through land routes have essentially remained paralyzed in the previous three years. As a result, it became more difficult for Nepalese merchants and freight forwarders doing business with China to import commodities from China through the land routes. The Indian ports of Kolkata and Visakhapatnam became the preferred entry points for Chinese imports.
China reopened the Tatopani border crossing for commerce with the two nations on May 1 after an eight-year hiatus and much protest. Located around 115 kilometers to the northwest of Kathmandu, this border crossing serves as the primary land route for commerce with China. However, on the second day after the border reopened, China blocked the entrance of all three containers carrying the plastic utensils. Nepalese exporters have to pay customs fees of INR 5,000 to INR 10,000 every day for the containers to stay in the customs yard.
Nepal used to export handicrafts, herbs, noodles, and other things to the Tibetan market in Khasa, Shigatse, and Lhasa until the Tatopani border post was blocked after the April 2015 earthquake. By that time, the Nepalese government was raking in over INR 15 million in daily income from this crossing.
Under a non-disclosure agreement, Nepal purchased Vero Cell vaccines made by Sinovac in China during the COVID-19 phase in 2021. As a result, the vaccine’s cost was kept secret from the parties involved in the contract’s creation. It was then determined that a single injection of the vaccine cost US$10. Prior to the agreement with China, Nepal paid only US$4 per dosage to the Serum Institute of India for AstraZeneca’s Covishield vaccine.