The Study on China’s Foreign Direct Investment in Nepal

Nepal is lagging far behind in economic growth compared to its immediate neighbors. Given the fact that Nepal’s present saving rate can in no way enable it to attain its target to become a middle-income country by 2030, Nepal direly needs foreign investment for development, since Foreign Direct Investment (FDI) plays a vital role in economic growth. Presently China, one of the two neighbors of Nepal, is the second largest source of FDI in Nepal. In terms of FDI commitment, China has lately become the largest source of FDI for Nepal although the realization of the FDI is still limited. Nepal has also joined China initiated Belt and Road Initiative (BRI) in the hope that Chinese FDI would flow into the country for much needed connectivity, infrastructure development that spur economic development. In this backdrop, this paper explores pertinent issues, gathers information and presents true picture about Chinese FDI in Nepal, particularly its impact on employment generation by using a simple deductive method. Establishing a clearer status and impact of Chinese FDI on Nepal, this paper also forwards suggestions for attracting more Chinese investment in the country in order to help expedite Nepal’s economic development and integration into global economy.