Policy Push Needed as Nepal’s Exports to China Continue Downward Spiral

Nepal’s exports to China are facing a persistent decline, raising alarms for policymakers and exporters alike. According to the latest NRB trade data for FY 2025/26, exports to China have plunged by 65.2%, totaling just Rs. 54.8 million in a single month, while imports from China rose by 14.1%. This has further widened the already lopsided trade deficit with China, making Nepal increasingly dependent on imports.

Traditional export items such as woolen carpets (-43.7%), handicrafts (-89.4%), agarbatti (-40.4%), and readymade garments (-50.6%) have all suffered steep declines. Even niche products like rudraksha (-10.8%) and oil cakes (-42.4%) have shrunk, leaving only a few goods like pashmina (+2.3%) and other handicrafts (+9.2%) showing minor resilience.

This downward spiral reflects deep structural weaknesses in Nepal’s export competitiveness:

• Over-reliance on low-value goods,

• Non-tariff barriers and customs hurdles at Rasuwa and Tatopani,

• Lack of product diversification and branding, and

• Rising competition from regional producers.

Without urgent policy action—such as export diversification, quality upgrading, bilateral trade facilitation agreements, and targeted incentives for cultural and value-added products—Nepal risks losing its foothold in the northern market altogether.