China will provide Nepal with technology and assistance to build a border land port that will boost trade and serve as a transit point on a proposed railway line, Chinese officials have said.

Chinese Ambassador to Nepal Yang Houlan told Nepali officials last week that China is taking forward plans for a “dry port” at Tatopani near the border with Tibet, following discussions held during Premier Wen Jiabao's brief half-day visit to Kathmandu in January.

During the visit, both countries also discussed plans for a railway line connecting Nepal and the Tibet Autonomous Region (TAR), and agreed to have more frequent high-level visits. Mr. Wen's visit was the first high-level visit since that of the former Premier, Zhu Rongji, in 2001.

Year of friendship

In a reflection of how both countries are pushing relations forward, a senior Chinese leader is also expected to visit Nepal this summer as part of plans to mark 2012 as a year of friendship, according to diplomatic sources.

Mr. Yang, the Chinese Ambassador, told a meeting of the Nepal-China Chamber of Commerce and Industry (NCCCI) last week that Beijing was providing assistance and technology for constructing a dry port in Tatopani, which links the two countries through a “friendship bridge”, according to a statement posted on the website of the Chinese Foreign Ministry.

Last year, China also opened a port of entry at Gyirong in TAR to make it a major passage for land trade with Nepal. China plans to make Gyirong a 44.5-sq.km. “cross-border free trade zone” with Nepal, according to Chinese media reports, with 1.2 billion yuan ($190 million) spent to upgrade its infrastructure.

A five-year plan for TAR's development announced in January detailed measures to build highways and rail links to boost connectivity to border regions. Part of the plan is upgrade the 318 National Highway, also known as the “friendship highway”, that runs to Gyirong and to Zhangmu, a border town where much of the trade between China and Nepal takes place.

The two countries also discussed extending the Tibet railway line to the Nepal border during Mr. Wen's visit. Nepal President Ram Baran Yadav told Mr. Wen that a railway that would join Nepal and TAR “will further strengthen ties between the two countries”, the official Xinhua news agency reported.

The TAR five-year plan has allocated funds to extend the Qinghai-Tibet railway line, which now runs until Lhasa, to Xigaze (Shigatse in Tibetan), a project that will be completed by 2015. Construction on the line began in September 2010, with $538 million — a quarter of the budget — already spent.

Growing trade

Trade between China and Nepal grew by 61 per cent last year to $1.2 billion. Chinese officials say they see potential for supporting infrastructure and hydropower projects in Nepal with the country facing deficits in both areas.

Focus on stability

According to one Chinese analyst who advises the government on its Nepal policy, trade, though still very low, is emerging as a secondary driver to a relationship that has, so far, been largely dominated by Chinese concerns over Tibet. China sees Nepal as crucial to Tibet's stability, with the country not only serving as an important transit route for Tibetans travelling to India but also home to a large exiled population. Boosting trade ties and commercial support to the Nepali government, the analyst said, would serve a dual purpose of increasing China's presence in the country and also giving Beijing greater strategic weight to press authorities there to cooperate more closely on the Tibetan issue.

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