Nepal’s longstanding desire to deepen trade relations with China, the world’s second largest economy, will continue to remain a pipedream unless the country focuses on development of alternative land trading routes.

This was the main highlight of an interaction organised on the sidelines of the 14th annual general meeting of the Nepal-China Chamber of Commerce and Industry on Tuesday.

Nepal can reap benefit from China’s fast growing economy if economic corridors are built at Rasuwagadhi, Korala, Sankhuwasabha and Hilsa to link the two countries, according to former commerce secretary Purushottam Ojha. “China has been linking its country with South Asian nations by creating economic corridors. Nepal can also benefit if similar economic corridors are created at potential border points,” Ojha said.

Economic corridors come with roads, a special economic zone, quarantine facility, warehouses, customs offices, inspection and security provisions, banks and medical services. “If the economic corridors are opened, it will not only promote bilateral trade, but spur other economic activities in these areas,” Ojha said.

China has provided duty free quota free facility for exports of over 8,000 goods from least developed countries, including Nepal. However, Nepal has not been able to reap maximum benefit from this facility due to lack of infrastructure to facilitate cross-border trade.

Nepal’s exports to China fell by 17.7 percent to Rs 930 million in the first half of the current fiscal year that ended in mid-January, while imports surged by 34.6 percent to Rs 64.4 billion in the same period.

Chinese Ambassador Yu Hong said the governments of the two countries are currently conducting joint feasibility study of Nepal-China Free Trade Agreement and the Protocol of the Transit Transport Agreement.

“Cooperation and fulfilment of these agreements will provide stronger support and foundation to enhance trade and economic ties between the two countries,” the Chinese envoy said. Nepal and China have so far opened six routes for bilateral trade along the border in the north. But most of these trading points lack minimum infrastructure for trade facilitation.

Prior to the earthquakes of 2015, Nepal was heavily dependent on Tatopani route to conduct bilateral trade with China. Almost a quarter of goods from China used to enter Nepal through this route.

But after the quake, the route was shut down.

Although China has been saying it will soon reopen the route, nothing has happened till date. Instead, it has been promoting the Rasuwagadhi-Kerung route for bilateral trade of bigger volumes, where a dry port is also being built.

However, poor infrastructure at Rasuwagadhi-Kerung route has been the bane of bilateral trade. Other, non-tariff barriers have also hampered imports and exports through this route.

Hilsa in Humla district was another border point that China had agreed to open for cross-border trading when former Chinese premier Wen Jibao visited Kathmandu in 2012.

Even though the border point has not been opened formally for imports and exports of big volumes, tourists have been using this route to travel to Kailash Manasarovar.