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Nepal traders dealing with China incur huge losses

Nepal-China trade issues remain unresolved

Nepal’s traders dealing with China are going through a rough patch and incurring huge losses. While prior to the Covid 19 outbreak, about 80 to 100 trucks would move between the two countries in a day, the number has now come down to less than 50.

Tatopani-Zhangmu and Rasuwagadhi-Kerung are the two main trading points between Nepal and China that share a 1,415 km border. The Tatopani trade point, though officially reopened in 2020, often remains closed, halting the movement of goods into Nepal. Most trucks and containers are now being rerouted through Kolkata which is substantially adding to the cost for the traders. The rerouting cost per container amounts to a whopping (Nepalese) Rs 1 million.

The Tatopani- Zhangmu border point after closing down in 2015 post the earthquake reopened in 2019. But trade momentum failed to pick up due to a host of restrictions and prerequisites imposed by China. Later again this point was shut down due to the Covid pandemic.

“A large chunk of the goods comprises perishable items and rerouting them is almost impossible but most of the trucks are being forced to reroute through Kolkata,” Vijay Kant Karna, Nepal’s former Ambassador to Denmark and professor of Political Science, Tribhuvan University told India Narrative. “Despite our efforts, the Chinese authorities have not paid heed. This is causing huge losses to our traders, suicide cases have also come up,” Karna added.

The Nepalese side has raised the issue several times with Beijing, which has often cited security concerns as the primary reason for closing border points. Even during Chinese Foreign Minister Wang Yi’s visit, this contentious issue was brought up.

“We were hoping that after the Chinese foreign minister’s visit, trade would be eased. But that did not happen. It seems China is not serious about trade with Nepal,” Kathmandu Post quoted a senior member of the Nepal Trans Himalayan Border Commerce Association as saying.

Sources said that there is growing discontent among the Nepalese traders against the Chinese authorities. “After the initial euphoria, the traders in Nepal who are dealing with China have been fraught with problems and this is becoming even more stark as the country is trying to steer out of the economic mess post the Covid 19,” an analyst told India Narrative.

The trade deficit in 2020-21 between Nepal and China was estimated at about NPR 232.90 billion.

While Nepal’s exports to China stood at NPR 1 billion imports amounted to a staggering NPR 233.92 billion.

The huge trade deficit with China has become a cause for concern for Nepal. The Observer Research Foundation in its report said that tensions between the two countries peaked after Nepal ratified the American grant assistance, amounting to $500 million under the Millennium Challenge Corporation (MCC) in February, “against the wishes of the Chinese government.”