Nepal's trade with China going through rough patch amid COVID

Traders in Nepal continue to face hardship due to the continued restrictions on the border of the country with China, which had been in force since the outbreak of the COVID-19 pandemic. Nepal's trade with China, particularly the imports, is also affected by the rising freight cost, which is seen to be a global trend in recent months.

A number of countries, including Nepal, are witnessing inflationary pressure on account of rising freight costs globally. Incidentally, the trade between Nepal and China since the onset of the COVID-19 pandemic has been halted, and it still is not fully resumed as Beijing has placed strict restrictions at the border.

The pandemic has pushed up freight costs globally. As a result, goods have become more expensive, causing a significant rise in inflation for countries like Nepal. The United Nations Conference on Trade and Development (UNCTAD) has predicted that higher shipping costs will make goods costlier over the next year.

According to a UNCTAD report published on November 18, the global surge in container shipping rates could push consumer prices by 2.2 per cent in the least developed countries over the next year, based on an 8.7 per cent increase in the import prices, The Kathmandu Post reported.

Container freight rates skyrocketed amid a surge in demand for freight transport, shortage of shipping containers, and limited capacity and congestion at ports, the report said, adding that the impact was generally greater in smaller economies.

Quoting Ashok Kumar Shrestha, president of the Nepal Trans Himalayan Border Commerce Association, the media outlet said that the transport charges from Kerung to the Nepal border, a 30-kilometre distance, have increased six-fold to around Rs 600,000 per container from Rs 100,000 before the pandemic.

More than 100 cargo containers used to come through Tatopani daily before the earthquake.

Nowadays, according to Shrestha, around eight containers leave Kerung daily for Nepal.

It normally takes two months for goods ordered from China to arrive in Nepal by sea freight, and two weeks by container truck overland across the northern border.

The traders have informed the Ministry of Industry, Commerce and Supplies, Ministry of Finance and Ministry of Foreign Affairs, Embassy of China and the private sector apex body, the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), about their problems.

The government has been negotiating with Chinese authorities to allow more containers to cross into Nepal, but the trade hiccups persist.

Customs data shows Nepal's exports to China declined to Rs 1 billion in the last fiscal year from Rs 1.19 billion in 2019-20. That is almost half of the figure for the fiscal year 2018-19 when shipments totalled Rs 2.10 billion, The Kathmandu Post reported.

Concerns have also grown if there is an undeclared blockade on the Nepal-China border, as Nepali traders have been unable to import goods, resulting in losses to the tune of millions of rupees.

"China failed to exhibit good neighbourly behaviour in terms of trade," said Posh Raj Pandey, a trade economist.

Nepal's major imports from China in the last fiscal year consisted of electric goods, machinery and parts, readymade garments and telecommunication equipment and parts, the media outlet reported citing Nepal Rastra Bank.

( With inputs from ANI )