Nepal’s export earnings from China registered a steep 29 percent drop year-on-year in the first 10 months of the fiscal year following a fall in shipments of major exportable items like carpet, leather goods and handicraft items.

According to Nepal Rastra Bank, exports to the northern neighbour in the first 10 months were valued at Rs1.78 billion, down from Rs2.52 billion during the same period last year.

Export earnings from China had been rising for the past few years. Revenues in the first 10 months of the last fiscal year were almost double compared to the previous year.

China provides duty-free, quota-free market access to 8,030 Nepali products. They include cooking utensils, outfits, footwear, tooth paste and brush, beauty products and toiletry, printing paper, buttons made of animal bone, animal products, medicinal oil and products, pen, daily goods made of feather and plastic products, among others.

Nepal has been receiving preferential treatment on almost all exportable goods. According to the Trade and Export Promotion Centre, almost 95 percent of Nepal’s exportable goods qualify for duty-free, quota-free entry in China. China recently reallowed Nepal to use the trade route through Tatopani. In addition, the northern neighbour has agreed to open another six border points for trade. Despite the facilities offered by China, Nepal has failed to utilise the benefits to the optimum level, said analysts.

Former commerce secretary Purushottam Ojha said Nepal was still facing non-tariff barriers on a number of exportable items. “China provides duty-free facility, but a number of agricultural products are still facing sanitary and phyto-sanitary measures,” said Ojha, adding that there was a need to carry out a comprehensive review of the list of products under the duty-free scheme.

Ojha pointed out that a low production volume and failure to identify changing trends among Chinese buyers prevented Nepal from boosting revenues from exports to China. “Traders need to identify the changing demand of the market there to obtain the maximum benefit,” said Ojha.

He added that illegal shipments of Nepali products do not appear in official export data. “A large amount of high value herbs are reported to be smuggled through the Nepal-Tibet border in the high hilly areas.”

According to Sarad Bickram Rana, executive director of the Trade and Export Promotion Centre, export earnings could have dropped after Chinese authorities started adopting a stern policy on quarantine checks on agricultural products. According to him, Nepali farm products are among the fast selling items in China.

During the review period, export earnings from handicraft, noodles and readymade garments recorded a rise. The country dispatched metal crafts and wooden crafts worth Rs266.3 million, making them the top export products.

Meanwhile, imports from China soared 33 percent to Rs169.2 billion during the period mid-July to mid-May. Nepal spent a huge amount of money on readymade garments, machinery parts, telecommunication equipment and electrical appliances from China. The import of Chinese garments increased almost threefold to Rs18.84 billion.