Monday, June 10, 2013

Scrutinizing Nepal-China economic relation


According to Foreign Investment Opportunities 2009 Report, produced by Government of Nepal, Ministry of Industry and Ministry of Commerce and Supplies, the main objectives of Nepal economic diplomacy are to enhance the flow of foreign direct investments (FDIs) into the country, to promote Nepal’s export trade and attract greater number of tourists to Nepal. Therefore, there is a need to anatomize the Nepal-China economic relation and study to what extent Nepal has achieved in line with these objectives.


Scenario of Nepal-China Economic relation

The investment scenario of Nepal-China relation is marked by Foreign Aid and Foreign Direct investment (FDI). In the fiscal year 2011/12, Development Cooperation Report (DCR) suggests that China holds 12th position out of more than 19 foreign partners contributing 2.8 percent of the total US$ 1.21 billion. In was 16th in the chart with 1.7 percent share of US$ 1.21 billion in the fiscal year 2010/11.  

Today, China is the second largest country after India in FDI. The Industrial Statistics Report of the Fiscal Year 2010/11 says there were 69 Chinese industries with 1187.40 million rupees foreign investment creating 3066 jobs for Nepalese. In total, 209 foreign industries from 36 nations injected 10050.71 million rupees as FDI which collectively generated 10887 job opportunities. Chinese FDI, unlike other countries, are made in seven major Sectors (Industries) in Nepal which are Agriculture (10), Construction (1), Energy (1), Manufacturing (13), Mineral (2), Service (27) and Tourism (15).

Service sector is primary sector of investment for Chinese investors. 27 industries under this sector have been established so far creating 1143 job opportunities for Nepali labors. Manufacturing sector receives maximum foreign investment, 351.10 as compared to other sectors. Also, this sector is providing 666 job opportunities which is next big number after service sector.