China blockades traders from Nepal under the guise of Covid


For the last two years, China has imposed an ‘undeclared’ blockade of Nepal. Initiated under the guise of preventing the spread of Covid-19, this blockade has been in place since early 2020 and creating major obstacles for Nepali traders and impacted their livelihoods. Early this year, Nepalese traders held anti-China demonstrations at several border crossings against this blatantly unfair step. The Chinese action has severely disrupted traffic of consumer items across the Nepal-China border and caused losses worth millions of Nepalese rupees. China’s heavy-handedness, including imposition of the undeclared blockade is a tactical move to show China’s displeasure at Prime Minister Sher Bahadur Deuba’s perceived inclination towards India.


At the end of January 2022, Nepalese traders held a demonstration in Rasuwagadhi. Reports indicate that businessmen carried placards with messages like, “Ensure smooth movement of containers, ensure safety of Nepali living at the border, abide by international law and end undeclared blockade”, amongst others. Locals at Tatopani in Sindhupalchowk district had also earlier staged a protest on China’s blockade.


China is tightening its grip on Rasuwagadhi and Tatopani, the two most crucial trading points and China has been allowing a maximum of two-three truckloads of goods per day at places where there used to be heavy traffic earlier. Presently, there are nine trading routes between Nepal and China, including Hilsa, Nagcha, Ko Rala, Gorkha Larka, Rasuwagadhi, Tatopani, Lamabagar, Kimathanka, and Olangchung Gola. Of these, Rasuwagadhi and Tatopani are most crucial and have been closed since January, 2020.


Nepalese traders say that since January 2020 around 300 trucks have been stranded at Kerung and Tatopani border points. Nepalese traders also accuse the Chinese government of not issuing visas to them and therefore, have stopped ordering new goods from China.


A statement released by the Chinese Embassy in Kathmandu (13 January 2022) said that they had opened cargo transportation to Nepal, “The Chinese side opened one-way cargo transportation to Nepal by overcoming great difficulties and has continuously enhanced the ports' cargo handling capacity, which played an important role in ensuring the supply of anti-pandemic and livelihood materials in Nepal. We look forward to working with the Nepali side to overcome the present difficulties and make efforts to restore the economy and normal personnel exchanges.”



The origin of this undeclared blockade can be traced to early last year when traders reported that their container trucks had not been allowed to cross over the border for over sixteen months. At that point, Naresh Katuwal, President of the Nepal National Traders' Federation, had said that shipments were being held up at the northern border on the pretext of the Covid-19 pandemic.


“We have taken this gesture of China as an unofficial blockade,” Katuwal told the Kathmandu Post(February 2021). He added that there was no point in doing trade with China if this situation continued. Almost 2,000 containers loaded with clothes, shoes, cosmetics, electronics, and industrial raw materials were stopped at the border during the October-November 2020 festive season. China permitted only a few trucks to enter Nepal. Subsequently, most importers re-routed their goods through Kolkata port in India.


The net result of this has been a drastic reduction in trade between Nepal and China. According to Nepal’s Trade and Export Promotion Centre, Chinese exports to Nepal shrunk by 3 per cent from 17.6 per cent to 14.6 per cent in a span of just two years.


China exports mainly electronic goods and garments to Nepal, while Nepal exports mainly carpets, handicraft items, and traditional items to China. Nepal’s exports to China have been reduced to 0.4 per cent from 1.8 per cent. Nepal bought Rs 96.33 billion worth of Chinese goods in the first six months of 2021, down from Rs 118.25 billion in the same period in the last fiscal year. Exports to China also fell by 50 per cent in the first six months of the current fiscal year. Shipments were valued at Rs 500 million, down from Rs 1.02 billion in the same period in the last fiscal year.


The present impasse is not because both sides lack agreement on trade and transit. Nepal and China had signed a Transit Agreement in March 2016, which was operationalised during the state visit of the Nepali President to China in April 2019. Article 15 of the Agreement talks of implementation of the pact one month after each country informs the other of its coming into force.


According to this protocol, China had allowed Nepal the use of four open seaports and three open dry ports. The Nepal-China trade deal also allows people living within 30 km on either side of the border, to travel freely by merely providing residence proof to engage in barter trade. This is because the majority of Nepal’s exports to China are consumed in Tibet.


The current restrictions of the movements of traders and people across the borders with China have created major obstacles for Nepali traders. In some cases, instances of cheating have also been noticed. One such instance came to light recently, when a Nepalese company Sun Moon Trading Co., placed an online order (September 2021) with a Chinese company, Changsha Washum Bamboo Products trading company based in Hunan China, for supply of 5,000 boxes of Latex gloves. The Nepali company also deposited a sum of US$ 25,000 for delivery of the items within a month but is yet to receive the products. Apparently, the Chinese company has shut shop and is unable to send the supplies. The Nepali company is now in a fix and has lost valuable money.


The government of Nepal has approached China through the Foreign Ministry to find a diplomatic resolution to the issue, but no outcome has been forthcoming. In the meantime, Chinese transporters hiked the freight charges. The cost of transporting goods over the 26-km distance from the Chinese border point to the Nepali border point has been raised from RMB 15,000-16,000 to 60,000-65,000 per container.


China’s continued indifferent attitude towards Nepal may have to do with both PM Deuba’s alleged pro-India tilt and the inability of China to keep the Communist Party of Nepal together. Resultantly, the people of Nepal are being made to suffer the consequences of China’s irrational thought process. The people of Nepal have every right to protest this unfair step taken by its giant neighbour to the north.