Navigating Opportunity and Dependence: A Descriptive Study of the Sino-Nepalese Relations in International Business Since 2005

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.