Research On The Bilateral Trade Between China And Nepal

The trade between China and Nepal has been1500years since it was recorded. Even though bilateral trade accounted for a small proportion of China’s total trade, but it has entered a rapid development track since Nepal joined WTO at2004. The developed countries pay much attention to the rapid development of China’s economy after the financial crisis in2008. The trade policies and hidden trade barriers makes Chinese products being blocked in the international market. However, it did not have significant impact on economic cooperation between China and South Asian countries. China’s cooperation with the South Asian Association for Regional Cooperation (S AARC) is still in its infancy. Nepal is an important link connecting China market and the South Asian market, therefore, the development of Sino-Nepalese trade has a huge significance:On one hand, Nepal is the key for China to open up South Asian market. Most importantly, Sino-Nepalese trade will promote further development of Tibet’s regional economy. On the other hand, Nepal has been controlled by India on politics, economy and culture. If Nepal wants to out of being poverty and becomes the developing countries, it is necessary to trade with China.I have gone to Tibet to do some survey for this paper writing and it took me two days to make a survey in Zhangmu port which gave me a chance to experience the behind infrastructure construction and the close trade connect between Tibet and Nepal. The study of Sino-Nepalese trade is the summary of my practical experience and international trade theory.The content of this paper have five parts. Firstly, it introduces the Ricardo’s Comparative Advantage Theory and Border Trade Theory, which is the basis of empirical analysis. Secondly, it is information of the two counties trade. Thirdly, it is index analysis, which contains trade intensity index and export similarity index. Fourthly, we conclude the main problems of Sino-Nepalese trade. Finally, put forward some practical policy to improve Sino-Nepalese trade scale. Currently, Sino-Nepalese bilateral trade studies are limited to certain areas, let alone the empirical analysis and comprehensive research. By using of traditional trade theory, the article make a comprehensive and systematic study on Sino-Nepalese small traditional trade, which is the biggest innovation of this paper.We get some conclusion through empirical analysis. Firstly, China has closely connection with Nepal on international market, on the contrary, Nepal has low trade intensity with China. Secondly, export similarity of the two countries is low, indicating that the product of the two countries have no competitiveness on the world market. There is a strong complementarity between the two countries on bilateral trade and it has huge development space. Thirdly, there are many problems between two countries, For example, not closed bilateral trade, small-scale trade, large trade surplus, single commodity trade structure, unstable trade relations and other issues. The main reason for these problems are large economic gap, instable Nepal politics, the special relationship between India and Nepal, bad logistics and other infrastructure and the lack of service platforms. To solve these problems, this paper presents three suggestions Policy:Firstly, China and Nepal government should pay much attention to the development of border trade, to develop a long-term strategy for economic and trade cooperation. Otherwise, relative department make some preferential policies and strengthen cultural exchanges, to improve the knowledge of each market and products, thereby promoting economic and trade cooperation. Secondly, improve the existing trade services platform, while establish more information sharing center and establish market network system. Thirdly, China increase logistics and other infrastructure construction to improve the terms of trade. Finally, make use of Nepal potential industry. Seek new areas of trade cooperation to stimulate bilateral trade growth.