INTERNATIONAL JOURNAL OF RESEARCH AND INNO V A T ION IN SOCIAL SCIENCE (IJRISS)

ISSN No. 2454-6186 | DOI: 10.47772/IJRISS | V o lume X Issue III March 2026

Navigating Opportunity and Dependence: A Descriptive Study of the

Sino-Nepalese Relations in International Business Since 2005

Rifat Mia¹, Yunu Maya Gurung², Takia Akter³, Kumar Arun⁴, Md Shafiqul Islam^5*

^1,2,4Business School, Chengdu University of Technology, Erqianqiao #1, Chengdu, Sichuan 610059, China

³College Of Management Science, Chengdu University of Technology, Chengdu, Sichuan 610059, China

⁵College of Geography and Planning, Chengdu University of Technology, Chengdu, Sichuan 610059,

China

^*Corresponding Author

DOI: https://doi.org/10.47772/IJRISS.2026.100300147

Received: 10 March 2026; Accepted: 16 March 2026; Published: 30 March 2026

ABSTRACT

The strategic relationship between China and Nepal has described the significant transformation since 2005,

from traditional diplomatic relations to a multifaceted trade partnership, investment, infrastructure development,

and regional connectivity. This paper unveils the evolving nature of the Sino-Nepalese relations through trade,

strategic, and geopolitical lenses, employing qualitative analysis of policy documents, academic literature, and

media reports. The study used a qualitative research methodology, which involved content analysis of policy

documents, trade data, trade MOUs, and elite interviews; the paper discusses the drivers, aspects, and challenges

of this bilateral trade connectivity. The result highlights that Chinese investments under the Belt and Road

Initiative (BRI) play an effective role in ensuring infrastructural development in Nepal. In addition, the study

unveils that infrastructure development increased trade connectivity and provided alternative development

financing. Furthermore, this study also talks about the concerns regarding debt sustainability, strategic autonomy,

and trade imbalances, where the trade deficit reached NPR 12.55 billion in the 2004/2005 FY and NPR 338.47

billion in the 2024/2025 FY. The Sino-Nepalese cooperation is also very significant from the regional perspective,

particularly in the India-China competition perspective. The geographical location of Nepal also pushes China

to make strategic cooperation with Nepal, and it helps to shift power alignments in South Asia. This study

developed theoretical perspectives from realism and complex interdependence that provided a balanced analysis

of the opportunities and challenges in the Sino-Nepalese relationship. The paper contributes to broader

discussions on South Asian geopolitics, small-state diplomacy, and the prospects of Sino-Nepalese collaboration

and suggests some policy to ensure sustainable partnership in future perspectives.

Keywords: Sino-Nepalese Relations; Belt and Road Initiative (BRI); international business; sustainability;

infrastructure development, Trade imbalance; South Asian geopolitics.

INTRODUCTION

In the 21st century, geopolitical antagonism is focused on Asia, where the balance of global power is shifting on

an impressive scale. The geopolitical environment of South Asia has been transformed to a great extent by the

economic prosperity of China (C. Thapa, 2025). The establishment of a bilateral trade relationship between

China and its Himalayan neighbor is considered a dynamic trade cooperation in the South Asian economy. The

relationship between the two nations developed into a strategic alliance that comprises infrastructure, trade,

investment, and diplomatic collaboration.

Through the Five Principles of Peaceful Coexistence and diplomatic recognition in 1955, history has shaped the

relationship between Nepal and China by honor and non-interference (Baral, 2019). A major turning event took

place after 2005, between Nepal and China. The political shift of Nepal from monarchy to republic and the

simultaneous economic expansion under the "Going Global" agenda by China and bilateral cooperation started

Page 2091

www.rsisinternational.org

INTERNATIONAL JOURNAL OF RESEARCH AND INNO V A T ION IN SOCIAL SCIENCE (IJRISS)

ISSN No. 2454-6186 | DOI: 10.47772/IJRISS | V o lume X Issue III March 2026

to intensify rapidly. The contribution of investment guarantees, trade adjustments, and infrastructure funding

from China evolved as a fundamental development partner, offering Nepal an alternative to its traditional

dependence on India and Western sponsors (Aswasthama Bhakta Kharel, 2024). In 2013 China introduced the

Belt and Road Initiative (BRI), and Nepal signed in 2017. This strategic shift was further escalated. The BRI

framework provides innovative links, such as highways, trans-Himalayan trains, and energy projects. These aim

to potentially reduce Nepal's long-standing reliance on Indian transit routes due to its landlocked condition

(Murton & Lord, 2020). The fundamental reevaluation of Nepal's economic geography and foreign policy

orientation was facilitated by the Chinese investments in the country's hydropower sector, aviation infrastructure,

and cross-border commercial services. The importance of Nepal's geostrategic position cannot be exaggerated

regarding China. Nepal plays a very important role in China’s South Asian strategy due to its geographical

position bordering the Indian subcontinent and the Tibet Autonomous Region of China. A peaceful and

cooperative Nepal achieves several missions for Beijing, including safeguarding the southern border of China,

opposing Indian influence in the Himalayan state, and broadening its political and economic domains in South

Asia (Pulami, 2022). The current state of involvement with China by Nepal provides growth to its economic

relationship, decreases reliance on the neighboring country, and utilizes its geographical benefits to develop into

a potential one (Bastola, 2025). Also, during this time China has increased regional and international goals

beyond bilateral collaboration with Nepal. As Nepal became an important ally, Beijing looked at several

initiatives in South Asia aimed at securing alternate commerce and energy routes in order to reduce geopolitical

risks and China's westward expansion. The Kerung-Kathmandu railroad project and other trans-Himalayan

connectivity initiatives aim to build infrastructure pertaining to strategic assets, which have the potential to affect

the dynamic process of regional trade and power relations (Murton & Plachta, 2021).

The study focuses on critically evaluating the transformation of the Nepal-China relationship that has existed

since the year 2005 and the challenges as well as opportunities that have accrued from this developing

cooperation. It analyzes the economic, politically related, and security issues concerning bilateral cooperation

along with the national and international pressures that have or stand to have an influence on the sustainability

of such cooperation. Specifically, the subsequently discussed research questions are the following: What is the

depth of China-Nepal strategic convergence? How geopolitical factors Influenced in the Sino-Nepalese relations?

Which policy options can Nepal take to reduce challenges and protect national interests?

The article provides an insightful, grounded analysis of the Nepal-China relationship, focusing on Chinese

regional development and South Asian geopolitics. The research gap in the study is addressed by investigating

internal political shifts, geopolitical shifts, and great-power dynamics matters, which are shaped by Nepal's

foreign policy. This research delivers a valuable contribution to the academic literature and decision-makers, as

well as policymakers and non-governmental stakeholders. The researchers who are interested to know how Sino-

Nepalese relations might enhance in the uncertain environment can get knowledge from this study.

LITERATURE REVIEW

(Dahal, 2019) shows in a descriptive study about Nepal's foreign ties with China, where the author describes the

cooperation of Nepal and China in the form of ancient historical connections and modern diplomatic ties during

the time 1955-2019. Based on secondary data such as the Constitution of Nepal, bilateral treaties, and the joint

statements, the author demonstrates the cooperation of two countries through a descriptive and analytical

approach for the study. The result reveals that the consistent support by China for Nepal has created positive

relations and transit cooperation..(Sharma, 2018) conducted research to examine the historic evolution of China-

Nepal relations to find the reasons why their mutually beneficial relationship has been slow even though they

share a border and both countries have maintained diplomatic relations since 1955. The study took a qualitative

approach using historical and descriptive methodology, examining data from 1955 to 2018, on the basis of the

collected information from various sources on bilateral treaties, government reports, and joint statements.

According to the findings, the relations are historically amiable; however, partnership has moved in "slow

motion" due to several reasons such as political obstacles, insufficient infrastructure connection, and Nepal's

cautious stance to maintain ties with its neighbors.

(Murton & Lord, 2020) studied the infrastructure politics of China's Belt and Road Initiative in Nepal,

highlighting Himalayan power corridors and their geopolitical consequences between 2015 and 2020. The study

Page 2092

www.rsisinternational.org

INTERNATIONAL JOURNAL OF RESEARCH AND INNO V A T ION IN SOCIAL SCIENCE (IJRISS)

ISSN No. 2454-6186 | DOI: 10.47772/IJRISS | V o lume X Issue III March 2026

adopted a qualitative methodology that includes geopolitical analysis, ethnographic fieldwork in northern Nepal,

and policy document analysis. The result revealed that the development of infrastructure is the medium of

"infrastructural politics,” articulating a new model of power and regional links. The projects create the platform

for political debate over development, sovereignty, and regional integration. (Chan & Bhatta, 2023) examined

discourse from 2015 to 2020 by exploring the Nepal and China transborder railway project and its relevance in

Nepal's collective imagination, especially during the 2015 Indian embargo period. The examination utilized

qualitative methodology, including discourse analysis of policy conversations, media reports, and opinion

articles. The outcomes indicated that the projects attract significant interest in Nepal as a prospective

transformative element for national sovereignty, but matters such as its funds, viabilities, technical difficulties in

the Himalayan region, and capacity to further China's geopolitical goals were considered for public concerns.

(Kharel et al., 2021) conducted a study investigating how bilateral economic cooperation between Nepal and

China has strengthened the Nepalese economy. The author developed this study through mathematical analysis,

and the study adopted a quantitative methodology. The results unveil that, although Nepal still has an enormous

deficit, economic assistance, bilateral trade, FDI flows, and Chinese visitors highly influence the creation of a

positive change in the economy of Nepal. In addition, (Chand, 2023) conducted research examining the

dilemmas, debates, and evolution issues of the Belt and Road Initiative (BRI) in Nepal from 2017 to 2023. The

complex triangular relationship between Nepal, China, and India was analyzed through policy documents,

official statements, and media interpretations for qualitative methodology. The result shows implementations of

the BRI projects also facing different barriers due to geopolitical factors, particularly India's concerns and

perceptions between Nepal and China towards project selection and investment factors. Besides these, the reason

for the project delay and stagnation is the limitation in Nepal's institutional capacity and also highlights the

geopolitical importance of the Sino-Nepalese relationship. (Gautam, 2023) in a particular study shows the trade

cooperations between Nepal and China, exchange of goods and services output, and planning for expanding

financial collaboration for the fiscal years 2007/08 to 2016/17. The study was developed based on qualitative

analysis of trade data and customs statistics. The result highlighted the rapid growth of trade, but trade imbalance

is also a key concern for Nepal, especially the huge gap between import and export goods and services. (C. D.

Bhatta, 2024) studied historical context and ongoing events up to 2024 to evaluate the "metamorphosis" of

Nepal-China relations at a pivotal moment when China is on the stage of becoming a superpower nation. The

author used a descriptive and analytical method of qualitative research where policy documents, bilateral

agreements, and geopolitical studies were considered. The outcome showed that although the relationship is

friendly, it is asymmetrical, with China making demands from Nepal (regarding Tibet and Taiwan) while Nepal

has no reciprocal commitments. Moreover, the study mentioned that regional geopolitical factors will play a

significant role in future relationships between Nepal and China. Also ,(Joshi & Adhikari, 2025) in their study

talk about the BRI impact on the economic growth of Nepal through utilizing data from 2020 to 2024. The study

used a mixed-methods approach, incorporating quantitative data analysis and a qualitative evaluation of

contemporary theories. According to the results, the various obstacles such as management issues, the

environmental impacts of huge projects, and loan sustainability create obstacles in the implementation. In

addition, the study highlighted several research gaps for future research perspectives.

(K. D. Bhatta, 2025) conducted extensive research on the opportunities and challenges of the implementation of

the Belt and Road Initiative in Nepal, based on data from 2017 to 2025. The study followed descriptive and

analytical approaches to analyze current literature, policy papers, and case studies from other BRI countries. The

result highlighted that BRI creates immense benefits for Nepal; particularly, it helps Nepal to achieve landlocked-

to-land-linked status, as well as social and legal complications and debt trap issues, which are also a matter of

concern for Nepal.

THEORETICAL FRAMEWORK

To scrutinize the relationship between Nepal and China since 2005, a theoretical framework is mandatory. A

two-sided theoretical approach is applied in this study, integrating classical realism and complex interdependence

theory. In figure 1, this approach is displayed that delivers a meaningful understanding about the developing

bilateral partnership between Nepal and China.

Page 2093

www.rsisinternational.org

INTERNATIONAL JOURNAL OF RESEARCH AND INNO V A T ION IN SOCIAL SCIENCE (IJRISS)

ISSN No. 2454-6186 | DOI: 10.47772/IJRISS | V o lume X Issue III March 2026

Realism: Power, Security, and Geopolitical Balancing

Realism was introduced by researchers such as Waltz (1979) and Mearsheimer (2001), where the maximization

of power and survival are major goals that operate in an anarchic international system. The valuable perception

towards the strategic calculations is guided through realism on behalf of Sino-Nepalese relations, which gives

direction to the behavior of each country's foreign policies. The involvement of China with Nepal carries several

pivotal reasons, such as reducing the dependence of Nepal on India, maintaining its southern edge in the Tibet

Autonomous Region, and enhancing its political and economic reach into South Asia. Sino-Indian rivalry has

uplifted the geopolitical importance of Nepal, where competition for regional consequence and border disputes

have emerged in Beijing's calculus. From Nepal's perspective, realism describes the country's reason to transform

its external relations: to reduce its overreliance on India. In 2015 Nepal faced problems like economic crises and

humanistic issues due to the authenticated Indian blockade and the serious matter of vulnerabilities that took

place in landlocked geography and imbalance dependence on a single nation (S. Thapa, 2025). Nepal adopts a

classical balancing strategy to solve these problems and develop conferring power vis-à-vis dominant regional

authority, aside from connecting with China, which is depicted in the figure 1.

Complex Interdependence:

In illustration, the geopolitical nature of the relationship was depicted in realism through the broadening of the

economic, conventional, and social structure links with an inability to fully address them but with recognition of

the contemporary Sino-Nepalese involvement (Singh, 2000), as well as the developed complex interdependence

that furnishes supportive analytical instruments by highlighting multiple channels connecting communities, the

diminishing role of military force in some surfaces of issues, and the lack of clear ranking of policy objectives.

The Belt and Road Initiative (BRI) reveal complex interdependence in practice. China and Nepal have

established numerous interdependent relations as a result of developing infrastructure, investment flows, trade

facilitation, and exchange of people, which go beyond traditional diplomatic and security relations. The intended

Trans-Himalayan Multi-Dimensional Connectivity Network, comprising railways, roads, and hydropower, is

not wholly economic infrastructure but institutional structures that stabilize the two economies and societies

amid an increasingly complex environment (Bhattarai, 2019). Also, the participation of Nepal in common

platforms like the activities of the China-led projects and the Shanghai Cooperation Organization (SCO) as a

witness indicates harmonization of bilateral cooperation in addition to the country-to-country

intercommunication. Complex interdependence is coordinated with these developments, putting emphasis on

transnational relationships and the place of international institutions in defining state action.

Combining the Complex Interdependence and Realism:

It is the combination of theoretical viewpoints that makes the Nepal-China relationship more complex. Realism's

strategic motivation was elaborated as something that compelled both sides of Nepal and China, where China

envied the expansion of access, and Nepal altered their policy space in terms of diversification. Complex

interdependence captures the changing nature of the appearance of the involvement in both countries, the

definition of economic integration and institutional cooperation, and civil connection, which create dependencies

and susceptibility. The relationship stress is also examined in this combined framework. Potential conflict

between the two countries can be established based on power imbalance, where Nepal aims at achieving strategic

sovereignty by committing to China, whose participation in such a venture may be counterintuitive by

establishing a new form of dependence, be it in financial, political, or economic terms. Likewise, when it comes

to issues like the sustainability of debts, the semi-transparency of projects, and the implications of the long-term

sovereignty, inquiries are made about the investment of infrastructure by China when it comes to promoting

connectivity and developments (Adhikari, 2021).

This study is guided by the conceptual model presented in Figure 1. The conceptual model shows a structured

analysis of Sino-Nepalese relations in international business since 2005 by highlighting the key strategic drivers,

theoretical perspectives, and key dimensions of the Sino-Nepalese relations. The model uses the term “realism”

to describe China’s security and power interests; on the other hand, the term “complex interdependence” is used

to show Nepal’s need for policy space and diversified partnerships. The result shows several opportunities and

Page 2094

www.rsisinternational.org

INTERNATIONAL JOURNAL OF RESEARCH AND INNO V A T ION IN SOCIAL SCIENCE (IJRISS)

ISSN No. 2454-6186 | DOI: 10.47772/IJRISS | V o lume X Issue III March 2026

challenges in these Sino-Nepalese relations. The analysis ends with the policy recommendations that both

countries should consider in order to achieve mutual gains.

Navigating Opportunity and Dependence: A Descriptive Study of the Sino-Nepalese Relations in

International Business Since 2005

Strategic Drivers

China’s Westward

Strategic Expansion

Nepal’s Diversification

Geopolitical

Competition

Strategy

Security concern, Border

management, Secure Southern

periphery (Tibet), Military to

Military ties

Economic imperatives, Nepal

LDC graduation, FDI attraction

and trade expansion,

Regional context, South

Asian geopolitics, Sino-

Indian competition, BCIM

corridor

Infrastructure gap

Theoretical Lense

Complex Interdependence

Realism

Multiple channels, Transnational relations,

Economic integration, Institutional

cooperation

Power/ Security, Geopolitical balancing, Power

maximization, Security concern, State centric.

China's calculus

Nepal's calculus

Power projection, Periphery security, Economic

outreach

Balancing India, Policy space, Development

needs

Key Dimension

Geopolitical Dimension

Economic Dimension

Diplomatic and Security, Border

Cooperation, Military exchange, MOUs,

Strategic Cooperation

Infrastructure, Railway, Airport, Highway,

Hydropower, Trade and Investment, FDI, Trade

gap, Export, Loans

Outcome

Opportunities

Challenges

Trade Imbalance, Debt Concern, Implementation

Delay, Sovereignty and geopolitical Issues

Infrastructure, Transit Diversification, FDI

growth, Alternative Financing Energy Security

Balancing geopolitical relations,

Avoid power trap

Policy

Enhance export capacity, Diversity

product, Quality, Market access

Recommenda

tions

Strengthening Domestic Institutions

Political and Social development

Ensure debt sustainability, Cost

benefit analysis, Multiple financing

Transparency

Figure 1. Conceptual Framework: Navigating Opportunity and Dependence: A Descriptive Study of the Sino-

Nepalese Relations in International Business Since 2005

Source: Author’s own work

Page 2095

www.rsisinternational.org

INTERNATIONAL JOURNAL OF RESEARCH AND INNO V A T ION IN SOCIAL SCIENCE (IJRISS)

ISSN No. 2454-6186 | DOI: 10.47772/IJRISS | V o lume X Issue III March 2026

RESEARCH METHODOLOGY

This research has been developed based on a qualitative research design to understand the dynamic shape of the

Sino-Nepalese relationship since 2005. Basically, qualitative methodology is highly preferable for international

relations research. This study shows a descriptive analysis to unveil policy factors, geopolitical factors, and

societal perceptions that are associated with Sino-Nepalese cooperation. This method helps researchers to

understand how strategic narratives are constructed, how policy decisions are justified, and how various

stakeholders perceive the evolving relationship (Braun & Clarke, 2006).

Data Collection Methods

Primary Documents: Initially data has been collected from multiple sources. Such as Nepal-China bilateral

treaties and agreements, official statements, Memorandum of Understanding (MOUs) signed under BRI

groundwork, and administration documents from Nepal's Ministry of Foreign Affairs and Ministry of Physical

Infrastructure and Transport were primary official documents to gather information. Additionally, to determine

economic tendency, trade data from Nepal Rastra Bank and the Department of Customs were addressed.

Interviews with key informants: Semi-structured interviews were conducted with 15 specialists during August

2024 to January 2025, including 2 former diplomats. Former diplomats were selected to gather information

related to South Asian bilateral trade post-2005, 3 foreign trade analysts, 5 professors who are academic

researchers, and 5 former government officers who were connected with Sino-Nepalese trade management

activities during their service time. On the basis of experience and proficiency, purposive sampling was imposed

to select candidates. Under circumstances of inconspicuousness, all the interviewees were reassured to give

forthright responses on sensitive topics that include sovereignty concerns, debt sustainability, and geopolitical

pressures. Kvale and Brinkmann's (2009) instructions were compiled to develop an interview protocol for

qualitative research.

Interview Process: The interview duration was between 20 and 30 minutes, with an average of 25 minutes.

Interviews had been conducted in person or through secure digital tools, such as Zoom, Google Meet etc.,

according to the preference of the interview respondents.

Secondary Sources: Several secondary data have been considered for this research, including peer-reviewed

journal articles, policy briefs, and institutional reports such as those from the Institute of South Asian Studies

(ISAS), the International Monetary Fund (IMF) and the Asian Development Bank (ADB). Analytical

perspectives and contextual background on economic cooperation, infrastructure development, and geopolitical

implications of the bilateral relationship were obtained from these sources.

Media and Discourse Analysis: To figure out general and evolving approaches, Nepali and Chinese media

coverage of bilateral affiliation, including editorials, op-eds, and news magazines from 2005 to 2025, was

determined. The English-language sources, The Kathmandu Post and China Daily, were consistently reviewed.

Qualitative Data Thematic Analysis: The analysis was performed with NVivo 14 software in order to analyze

it systematically. Including qualitative data of interest, interview transcripts, bilateral agreements, MOUs, joint

statements, and policy documents from Nepal's Ministry of Foreign Affairs. The software offered various support

such as efficient coding, retrieval, and pattern identification across the comprehensive dataset comprising 15

elite interviews and over 200 policy documents considering the timeframe 2005-2025.

Coding Framework

Based on two phases, open coding and axial coding, the study was conducted. The themes were presented

through an inductive process from document review and interview narratives, which was enabled by open coding,

whereas the classification of codes into macro concepts based on relationships and patterns identified in the data

was enabled by axial coding. Geopolitical Drivers of Engagement, Infrastructure Development and BRI

Implementation, Economic Asymmetry and Trade Dynamics, and Strategic Autonomy and Sovereignty

Concerns were the four overarching themes brought by this iterative process. Additionally, 13 sub-themes of the

Page 2096

www.rsisinternational.org

INTERNATIONAL JOURNAL OF RESEARCH AND INNO V A T ION IN SOCIAL SCIENCE (IJRISS)

ISSN No. 2454-6186 | DOI: 10.47772/IJRISS | V o lume X Issue III March 2026

multidimensional nature of Sino-Nepalese relations that were captured since 2005 were also part of the iterative

process.

Assuring Reliability

An inter-coder reliability measure was applied to knock off the impact of the bias of an individual researcher

and to boost the reliability of the coding procedure. A random sample of three interview transcripts was coded

independently by two independent coders who were acquainted with South Asian geopolitics and international

business research. During consensus meetings, some of the differences in the clarification of the codes were also

debated and settled, providing the outcome of 0.82 with a Cohen's kappa coefficient in a finalized agreement-

based codebook, showing substantial inter-coder reliability.

Thematic Saturation

Interview 13 achieved thematic saturation since the interview had no new concept and meaningful information

was received in the subsequent two interviews (14 and15). Although the initial sample size (15) was sufficient

to minimize the exhaustive list of the relevant attitudes that corresponded to Sino-Nepalese cooperation, it

covered the viewpoint of former diplomats, foreign policy analysts, academic researchers, and former

government officers who had various institutional affiliations and expertise in policy.

Methodological Limitations

There are several limitations that can be seen in this study; the first one is high restraint to access by China to

diplomats and high-level policymakers. Second, it is impossible to statistically summarize the outcome because

respondents are not probabilistic, although they may provide valuable qualitative results. Finally, there exists the

presence of analytical constraints because of reliance on secondary sources such as translated documents and

media reports. Despite these drawbacks, the depth relation between Nepal and China can be determined using

this methodology that provides fruitful results about South Asian geopolitics and small nation diplomacy to

academic literature.

DISCUSSION AND RESULTS

The Evolution of the Sino-Nepalese Relations: The analysis concludes that the Sino-Nepalese relations have

been undergoing a dynamic form since 2005, particularly the change in the traditional cooperations into a

strategic partnership encompassing economic cooperation, industrial and infrastructural development, as well as

security cooperation. This connectivity demonstrates the prospects as well as challenges for Nepal that also drive

geopolitical changes in South Asia.

Diplomatic Deepening and Political Transformation (2005-2015): In this phase, Nepal was struggling with a

grave problem of political stability and geopolitical problems. China stands out to provide Nepal with a peaceful

profile and political stability by establishing the basis of greater collaboration. The interview respondent pointed

out that China has consistently advocated the principles of sovereignty and noninterference of Nepal; especially,

China would manifest greater interest in India’s interventionist attitude toward Nepal. In 2009, Nepal and China

hosted the formation of a fruitful partnership of cooperation featuring everlasting friendship.

The BRI Era and Transformative Ambitions (2017–Present): In 2017, Nepal signed the Belt and Road Initiative,

which can be regarded as a prudent move by the Nepalese government. The BRI partnerships help in various

types of infrastructure developments such as the proposed Kerung-Kathmandu railway, cross-Himalayan

highways, and cross-border energy grids. These cooperations, as stipulated in the final objectives of the bilateral

MOU, ultimate goals of these cooperations are to transform Nepal from a "landlocked" to a "land-linked" nation;

and the economic geography of Nepal will also be promoted. BRI empowers Nepal with its immense

opportunities using the multiple connections that can be extremely effective in eliminating dependence on transit.

Nevertheless, the correct implementation and queries regarding the financing rules and regulations are also the

main concern of Nepal (academic researcher, Kathmandu).

Page 2097

www.rsisinternational.org

INTERNATIONAL JOURNAL OF RESEARCH AND INNO V A T ION IN SOCIAL SCIENCE (IJRISS)

ISSN No. 2454-6186 | DOI: 10.47772/IJRISS | V o lume X Issue III March 2026

This research determines that there is a huge disparity between what was intended to be done in the project and

what is being done through an analysis of some of the official documents. Moreover, this research concludes that

various MOUs have been entered into, yet the developments have not been much, including those in hydropower

and aviation infrastructure. With a narrowed-down distance, Nepal can realize immeasurable good under the

BRI cooperations.

Economic Dimension:

Trade Relations and Structural Imbalances: This study will determine the trade growth and the high percentage

of trade imbalance, which is very worrying for Nepal to be sustainable in the long run after analyzing trade data

provided by Nepal Rastra Bank (2005-2025). The bilateral trade deficit from 12.55 billion in 2004/2005 to more

than NPR 338 billion in 2024/ 2025, is a high trade gap and a very low export ratio for Nepal in relation to its

ratio of imports from China. Nepal's exports to China are very low, and that concentrated in some of the products,

such as handmade paper, pashminas, and metal crafts; the imports are in the form of manufactured goods,

electronics, machines, and construction materials.

Table 1: Nepal-China Trade Trends (Selected Years, NPR Billion)

Fiscal Year

2004/2005

2009/2010

2014/2015

2019/2020

2024/2025

Export to China

NPR 0.55 billion

NPR 1.00 billion

NPR 1.82 billion

NPR 1.19 billion

NPR 2.63 billion

Import from China

NPR 13.10 billion

NPR 39.21 billion

NPR 177.80 billion

NPR 181.92 billion

NPR 341.10 billion

Trade deficit

NPR 12.55 billion

NPR 38.21 billion

NPR 175.98 billion

NPR 180.73 billion

NPR 338.47 billion

Source: Nepal Rastra Bank, Department of Customs, Chinese customs data.

This outlook of trade imbalance is the key concern for Nepal to ensure economic sustainability in the long run.

Interview respondents identified multiple factors that are mainly key barriers to Nepal's export growth: a still

large number of export-based industrial sectors are underdeveloped in Nepal. Lack of necessary phytosanitary

facilities, scarcity of well-equipped tools, and appropriate trade arrangements to access the Chinese market

properly." (Trade economist, Kathmandu)

Flow of Investments and Infrastructure Development: In Nepal, Chinese foreign direct investment (FDI)

grows rapidly after 2005, with involvement in small businesses and later in large businesses. According to the

Rising Nepal (30 November 2025 report), Nepal's government received NPR 64.96 billion (approximately $473

million USD) as total FDI commitments from different countries in the fiscal year 2024/25. During the fiscal

year 2024/25, the budget has been allocated to tourism, the ICT sector, and services for the enhancement of the

country. Besides this, in other sectors such as infrastructure, hydropower, and manufacturing, aggregate

investment is distributed. China is the primary and largest source of FDI in Nepal, where the records from recent

years show the investment from China is nearly half of the total commitments. The noticeable infrastructure

projects contributed by Chinese investment are as follows:

Road and Transportation Networks: With the support of Chinese investments, the Araniko Highway

connecting Kathmandu to China's border was constructed, but due to the risk of natural disasters, the highway

remains unsafe, and it needs additional cost. Under the technical guidance by China, the Kerung-Kathmandu

railway project is going on in Nepal.

Aviation Infrastructure: Pokhara Regional International Airport was constructed in 2023, with a mix of

interest-free and concessional loans from China, presenting a flagship infrastructure project. Additionally, during

the construction of Gautam Buddha International Airport in Bhairahawa, Nepal receives the reinforcement from

Chinese investors. With the aim of uplifting tourism connections and developing the regional part of Nepal, these

infrastructure projects were carried out.

Page 2098

www.rsisinternational.org

INTERNATIONAL JOURNAL OF RESEARCH AND INNO V A T ION IN SOCIAL SCIENCE (IJRISS)

ISSN No. 2454-6186 | DOI: 10.47772/IJRISS | V o lume X Issue III March 2026

Hydropower Infrastructure: Chinese enterprises play a vital role in the development of Nepal's hydropower

projects, such as Upper Trishuli-3A (60 MW) and Upper Marsyangdi A (50 MW), and there are also several

other projects that are at the stage of development. These investments help to address Nepal's chronic energy

shortage while supplying returns to Chinese investors.

Development Assistance and Debt: China is one among the top development partners that offer technical and

financial support in various sectors to Nepal. In 2015, Nepal, according to the Ministry of Finance, was to receive

NRP 110.902 billion in Chinese development assistance commitments in the form of roads, reconstruction,

disaster relief, forests and the environment during the period between 2015 and 2025.

Nevertheless, the issue of the sustainability of the debt sustainability discourse in the public has become a major

concern. The loans, which are granted on concessional conditions, and the cumulative debt distress and financing

conditions of significant infrastructure projects by China to Nepal lie as objects of debt. The IMF Nepal Article

IV consultations have identified a moderate risk of debt distress, though the role of transport contracting and the

significance of careful project selection were both highlighted.

Geopolitical Dimension: Fighting Between Giants

Competition Between China and India and Nepal's Strategic Space: The opportunities and challenges that are

created by the geostrategic positioning of Nepal between two rising powers of Asia. The increasing Sino-Indian

rivalry in the Himalayan region confined Nepal in its geopolitical worth and freedom of choice in terms of

diplomacy. The 2015 unofficial blockade by India was an essential situation in the foreign policy orientation of

Nepal. As a result of the border interruptions, humanitarian and economic crises are produced, which illustrate

geographic weaknesses of landlocked geography and transit dependency on India. Nepal hastens its relationship

with China, including BRI membership, with the purpose of receiving more connectivity opportunities as well

as decreasing its dependence on India.

The requirement emphasized by interview respondents for balancing relations: “The fact that the policy of

balancing China and India is a good idea on paper but hard to implement on the ground is the case in Nepal.

Participation of Nepal in all activities to satisfy one party creates doubts with the other. The dilemma for Nepal

lies in ensuring credibility between the two states while at the same time promoting national interest.” (former

diplomat, Kathmandu). The long-term strategic goals of the Chinese policy manifest themselves in Nepal; in

Tibet, it establishes its southern line, eliminating the influence of India and extending its economic and political

influence. The support and respect for the development priorities of Nepal, sovereignty and territorial integrity,

and noninterference in internal affairs are noted on numerous occasions in the official statements of China.

Nevertheless, in the case of the Nepal status and those of Tibet and Taiwan, there are somewhat evident

expectations that China brought about.

Tibet Factor and Border Management: There is a significant point in the bilateral relations of the Tibet

Autonomous Region with Nepal. China has also tried to sustain Nepal exile operations and control Tibetan

refugees, among other trans-border operations. To preserve Chinese interests, the policy of Nepal has been made

subordinate, and yet its humanitarian missions have not been compromised. In 2012, the procedures of

collaborative patrolling and cooperative border management and the procedures that followed, as well as

information sharing, were outlined. As a measure of enhancing connectivity by offering increased surveillance

capacities, China elevated the infrastructure development of Nepal in the regions of the northern borders.

One of the interviewees presents a conscious Tibet-based problem: Tibet is a segment of China, and to ensure

peace and retain the positive relationship between two nations, Nepal promotes policies of China. However, it

generates domestic sensibilities, especially when it comes to the groups that are sensitive toward Tibetan issues.

Then, to cope with this dilemma, diplomacy is necessary." (Security analyst, Kathmandu)

Multilateral Engagement and Regional Cooperation: Bilateral interests were furthered because both

countries employed multilateral platforms. As an observer, Nepal took part in the Shanghai Cooperation

Organization (SCO), where engagement on connection issues and regional security between the countries was

discussed. Additionally, with the UN and other multilateral organizations, the involvement of Nepal reflects the

Page 2099

www.rsisinternational.org

INTERNATIONAL JOURNAL OF RESEARCH AND INNO V A T ION IN SOCIAL SCIENCE (IJRISS)

ISSN No. 2454-6186 | DOI: 10.47772/IJRISS | V o lume X Issue III March 2026

principles of non-interference, sovereignty, and similar stances on many international issues. Bangladesh-China-

India-Myanmar (BCIM) and other regional organizations offered Nepal's expansion in cooperation, but due to

limitations such as geopolitical challenges and institutional pressure, Nepal became backward in catching these

opportunities.

Security Cooperation and Strategic Alignment

Military-to-military interactions, trainings, and military equipment have been increasing the security aspect of

Nepal-China relations since the year 2005. Chinese military assistance to Nepal takes the form of capacity-

building programs and infrastructural and non-lethal equipment assistance to the Nepalese Army. Nepal is also

engaged in military training and observer status in the Chinese military-organized programs that put an emphasis

on the increasing defense activities in the region.

Respondents provided a very varied view on security cooperation between Nepal and China relations:

“Progressive development of security cooperation between the two countries is present. Nepal is traditionally

reliant on India and Western sources, and it is diversified with China, which offers necessary training

opportunities and equipment. The harmonious position is preserved without causing the concerns of other

countries.” (Defense analyst, Kathmandu). Some quarters have cast doubts on the militarization of the Chinese

infrastructure projects, but there was no indication that they were being changed as indicated as civilian projects.

The dual-use potential of facilities such as airports and highways was used to create geopolitical sensitivities.

Asymmetric Relationship Strategic Autonomy: The Nepal-China relationship highlights the underlying

concerns of a country that are regarded as the capacity of Nepal to have strategic autonomy as per its national

interests and not increase political and economic interactions with more influential neighbors. The constraints

and opportunities were valued through analysis. Besides that, agency has been exhibited by Nepal in order to

control the relationship between the two countries. An element of intentional policy decisions can be seen in the

decisions made concerning the selection of the BRI projects, speed of implementation, and interactions with

other partners. Nepal has not been part of all Chinese initiatives and has not neglected its active relations with

India, the United States, and other development partners. Conversely, asymmetric interdependence results in

structural constraints. Policy flexibility in Nepal was made relative, which created dependency on imbalances in

trade, investment patterns, and debts.

CONCLUSION

The Sino-Nepalese relations since 2005 represent a unique change in the South Asian economy and geopolitical

sector. Specifically for strategic cooperation between two nations under the BRI. This transformation unveils

both Nepal's strategic initiatives to foster external partnerships and China's specific goals to extend its economic

and political connectivity in the South Asian region.

Summary of Key Findings of Sino- Nepalese Relations

At first, for the development of Nepal's infrastructure and economic diversification, China has contributed

extensively. The critical development constraints during hydropower funding, aviation infrastructure, and

transportation networks were addressed by providing alternatives to traditional dependence on Indian transit

routes. The tangible outcomes of bilateral cooperation were demonstrated after the completion of major

infrastructure projects, including international airports and road networks. Second, Sino-Nepalese relations are

very significant in terms of economic dimensions: trade, investment, development cooperation, and debt

management factors. But Nepal's exports remain limited in volume and diversification. In specific sectors,

investment flows remain concentrated, but also studies show key concerns regarding project transparency,

financing terms, and long-term debt sustainability issues. Third, the bilateral engagement gave shape to the

geopolitical factors completely. Both opportunities for strategic diversification and the threat of maintaining

balanced relations were created due to the location of Nepal between China and India. While complicating

foreign policy choices, the intensifying Sino-Indian rivalry has elevated Nepal's strategic significance. There

was a reflection of realistic adaptation to regional power dynamics when Nepal was engaging with China and

maintaining traditional ties with India. Fourth, complicated sovereignty significance was generated due to the

Page 2100

www.rsisinternational.org

INTERNATIONAL JOURNAL OF RESEARCH AND INNO V A T ION IN SOCIAL SCIENCE (IJRISS)

ISSN No. 2454-6186 | DOI: 10.47772/IJRISS | V o lume X Issue III March 2026

relationship. To manage the engagement with China, Nepal demonstrated agency where structural constraints on

policy autonomy were created due to asymmetric interdependence. To maintain policy space, there is a challenge

to manage multiple dependencies, which is impossible for small and landlocked states.

Finally, the relation between two countries is influenced by domestic political factors. Policy foundation and

project implementation are affected because of institutional capacity constraints, political progression, and

evolving public discourse. Chinese engagement requires open governance, social acceptance, and a fair sharing

of development benefits for legitimacy and sustainability. Realism and complex interdependence are the dual

theoretical frameworks in the study that justify relevance for understanding the relation between Nepal and China.

The geopolitical drivers such as the strategic importance of China to defend Indian influence and its periphery;

Nepal's motivation to balance strategy with dominant neighbors as well as to diversify partnership; and, while

shaping interaction patterns, the role of power asymmetry were illuminated in realism. The concern on the

dimensions beyond traditional securities was captured in complex interdependence, such as the increasing value

of developmental and economic aspects with geopolitical interests, the connection between societies, and

institutionalization of cooperation through the BRI framework. By examining trade relations, cultural exchange,

and infrastructure investments, the framework clarifies how these interactions build mutual dependencies that

transcend current diplomatic engagement. The deep-rooted stress in the relationship was revealed through the

assimilation of these perspectives. Nepal's engagement with China to pursue strategic autonomy may

paradoxically create new dependencies in financial, economic, and political sectors, and autonomy can be

constrained in different ways. Similarly, while promoting development and connectivity, queries were raised

about implications of stable sovereignty in infrastructure investment of China, which cannot be addressed by

only real perspectives.

POLICY IMPLICATIONS AND RECOMMENDATIONS

Based on the above result, this study recommends some policies for fostering the Nepal-China relations and

ensuring mutual benefit.

Enhancing Export Capacity: By diversification of the export industry, Nepal has to increase the export ratio

to reduce the large trade deficit that is shown in the above table 1. Also, Nepal has to focus on quality certification

infrastructure and the quality of the products that can meet Chinese standards. By 2027, Nepal's Department of

Customs should develop around 3 phytosanitary testing laboratories (estimated cost: NPR 450 million) with

technical support from China that will create an advantage in the field of agricultural exports as well help to

meet Chinese import standards. In addition, China’s 14th Five-Year Plan (2021-2025) highlighted the food safety

standards for imports; that’s why if Nepal can establish that lab facilities by 2027, then it can provide proper

support to ensure import standard goods.

Ensuring Debt Sustainability: Nepal should focus on project selection that’s very essential for maintaining

debt sustainability. Nepal should ensure deep cost-benefit analysis for all major infrastructure projects, as well

as increase its financing sources to avoid over-concentration and debt trap issues.

Balancing Geopolitical Relations: Nepal can modify its foreign policy to maintain strategic balanced

cooperation with China and India so that it helps to ensure advanced regional cooperation without exacerbating

great-power competition. Since, through China’s BRI Implementation project, Nepal is receiving immense

benefits, Nepal should focus on specific sectors such as multiple trade and agriculture-based cooperations with

China.

Strengthening Domestic Institutions: Domestic institutions play a vital role in increasing total output or

national income. Nepal has to develop their domestic industry by enhancing project planning and execution

capabilities within line ministries. Human capital development now demands of time for Nepal, and by ensuring

diplomatic and technical negotiations with China, Nepal can do it. China can play an effective role in this

segment by providing technical support, and it indirectly helps China to foster trade cooperation in the South

Asian region.

Political and Social Development: Nepal has to ensure political and social stability to receive more investment

from China or other international communities. Political instability is a key barrier in the development progress.

Page 2101

www.rsisinternational.org

INTERNATIONAL JOURNAL OF RESEARCH AND INNO V A T ION IN SOCIAL SCIENCE (IJRISS)

ISSN No. 2454-6186 | DOI: 10.47772/IJRISS | V o lume X Issue III March 2026

LIMITATIONS AND FUTURE RESEARCH DIRECTIONS

Although this study provides a comprehensive analysis, avenues of limitations are suggested for future research.

First, findings require updated information as new events unfold because bilateral relations shift invariably.

Second, it is difficult to figure out the decision-making processes due to the narrow approach to Chinese

policymakers and document restraint. Third, certain dimensions susceptible to quantitative analysis cannot be

captured through a qualitative approach even though it provides in-depth information.

Future research should consider the following idea: to determine patterns and variations through comparative

analysis of China's assurance with different South Asian countries, examining the detailed implementation and

outcome of specific infrastructure project cases, applying firm-level data to evaluate the pattern of Chinese

investment across sectors, and at last surveying impacts of Chinese-funded projects on environmental and social

aspects through community-level research.

REFERENCES

1. Aswasthama Bhakta Kharel. (2024). Influence of Nepal’s Foreign Policy on Domestic Political

Dynamics. Interdisciplinary Journal of Management and Social Sciences, 5(2), 24–36.

https://doi.org/10.3126/ijmss.v5i2.69441

2. Baral, B. N. (2019). Nepal-China-India: Prospects and Challenges of Trilateralism. Journal of Political

Science, 19, 1–20. https://doi.org/10.3126/jps.v19i0.26696

3. Bastola, S. (2025). Foreign Policy of Nepal: StrategicApproach to Sovereignty. Unity Journal, 6(1), 235–

247. https://doi.org/10.3126/unityj.v6i1.75632

4. Bhatta, C. D. (2024). Metamorphosis of Nepal-China Relations. NCWAAnnual Journal, 55(01), 88–96.

https://doi.org/10.3126/ncwaj.v55i01.63057

5. Bhatta, K. D. (2025). Nepal and the Belt and Road Initiative: Assessing Opportunities and Challenges.

Unity Journal, 6(1), 323–338. https://doi.org/10.3126/unityj.v6i1.75637

6. Bhattarai, D. (2019). Understanding the Belt and Road Initiative. Journal of APF Command and Staff

College, 2(1), 103–117. https://doi.org/10.3126/japfcsc.v2i1.26750

7. Braun, V., & Clarke, V. (2006). Using thematic analysis in psychology. Qualitative Research in

Psychology, 3(2), 77–101. https://doi.org/10.1191/1478088706qp063oa

8. Chan, R. C. K., & Bhatta, K. D. (2023). Trans-Himalayan connectivity and sustainable tourism

development in Nepal: A study of community perceptions of tourism impacts along the Nepal–China

Friendship Highway. Asian Geographer, 40(1), 59–80. https://doi.org/10.1080/10225706.2021.1943470

9. Chand, H. P. (2023). Dilemmas, Debates, and Development of BRI in the Himalayan Nation: A Nepali

Perspective. Journal of Foreign Affairs, 3(01), 34–48. https://doi.org/10.3126/jofa.v3i01.56508

10. Dahal, G. (2019). An Overview of Foreign Relation of Nepal with China. Journal of Political Science,

19, 85–99. https://doi.org/10.3126/jps.v19i0.26700

11. Gautam, S. (2023). Nepal and China Trade Relations. Voice: A Biannual & Bilingual Journal, 15(2), 68–

82. https://doi.org/10.3126/voice.v15i2.61452

12. Joshi, B., & Adhikari, G. M. (2025). Economic Perspectives on the Belt and Road Initiative (BRI):

Opportunities, Challenges, and Impact on Nepal’s Development. The Harvest, 4(1), 8–21.

https://doi.org/10.3126/harvest.v4i1.75347

13. Kharel, K. R., Upadhyay, Y. M., & Kharel, S. (2021). Nepal-China Bilateral Economic Cooperation

Empowering

https://doi.org/10.3126/pragya.v9i02.42031

14. Murton, G., & Lord, A. (2020). Trans-Himalayan power corridors: Infrastructural politics and China’s

Belt and Road Initiative in Nepal. Political Geography, 77, 102100.

https://doi.org/10.1016/j.polgeo.2019.102100

Nepalese

Economy.

Patan

Pragya,

9(02),

128–143.

15. Murton, G., & Plachta, N. (2021). China in Nepal: On the politics of the Belt and Road Initiative

development in South Asia. In J. Chinyong Liow, H. Liu, & G. Xue (Eds.), Research Handbook on the

Belt and Road Initiative. Edward Elgar Publishing. https://doi.org/10.4337/9781789908718.00038

16. Pulami, M. J. (2022). China-India contemporary relations: Geopolitical challenges to the small states in

South

https://doi.org/10.12688/stomiedintrelat.17419.2

Page 2102

Asia.

Stosunki

Międzynarodowe

–

International

Relations,

1,

1.

www.rsisinternational.org

INTERNATIONAL JOURNAL OF RESEARCH AND INNO V A T ION IN SOCIAL SCIENCE (IJRISS)

ISSN No. 2454-6186 | DOI: 10.47772/IJRISS | V o lume X Issue III March 2026

17. Sharma, B. P. (2018). China-Nepal Relations: A Cooperative Partnership in Slow Motion. China

Quarterly

of

International

Strategic

Studies,

04(03),

439–455.

https://doi.org/10.1142/S2377740018500239

18. Singh, S. (2000). Sino‐South Asian ties: Problems & prospects. Strategic Analysis, 24(1), 31–49.

https://doi.org/10.1080/09700160008455194

19. Thapa, C. (2025). Geopolitical Implications of BRI in South Asia. Journal of APF Command and Staff

College, 8(1), 191–216. https://doi.org/10.3126/japfcsc.v8i1.77607

20. Thapa, S. (2025). SINO-NEPAL RELATION AND STRATEGIC INTERESTS. SSRN Electronic

Journal. https://doi.org/10.2139/ssrn.5149285

Page 2103

www.rsisinternational.org