China is largest FDI source for Nepal, overtakes India

China has overtaken India to become the largest contributor of Foreign Direct Investment to Nepal over the first six months of the current fiscal year, underlining the rising Chinese economic presence — and strategic influence — in the country, according to new figures.

Investment from China reached $174 million between July and December, accounting for over 60 per cent of the total FDI commitment, the Chinese State-run Xinhua news agency said, citing a new report released by Nepal’s Department of Industry.

This marked a three-fold rise from the same period in the previous 2011-12 fiscal year, where Chinese investment reached $55 million. The Xinhua report noted that since last year, China “has begun to surpass the investment from India” into Nepal. While India was the biggest source of FDI during the 2011-12 fiscal year, investment from China rose the following year to account for 31 per cent of total foreign investment.

“The Chinese investors had always desired to expand their investment in Nepal. However the political scenario in the past discouraged them,” Dhruba Lal Rajbanshi, an official at the Nepali Department of Industry, told Xinhua.

“As the political course took positive shape following the Constituent Assembly election, the Chinese investors have introduced huge amount of FDI,” he said.