Nepal has benefited from China's economic boom and will pay close attention to China's investment as relations with its neighboring countries are crucial to Nepal's overall economic development, said Nishchal N. Pandey, director of the Center for South Asian Studies based in Kathmandu, Nepal.
"How to attract Chinese investment is the priority for every new administration of Nepal," Pandey added.
A forum on China-Nepal Business Development was held on December 17 in Beijing, where Nepali Ambassador to China Leela Mani Paudyal welcomed investment from Chinese businesses, especially in infrastructure construction.
Paudyal said water and power utilities, infrastructure and mining are the main areas for investment. He praised China's technology and business management.
"Large Chinese companies have already invested in Nepal, including Huawei, ZTE and China Gezhouba Group Co. There are also many other Chinese companies showing great interest in Nepal's potential," he said at the forum.
Trade and cooperation in the fields of tourism, transportation and construction are the top three areas of focus between China and Nepal, and the list is expected to expand further, said Gu Xueming, president of the Chinese Academy of International Trade and Economic Cooperation under the Ministry of Commerce.
Gu said that Chinese companies are the main participants in the contract market in Nepal.
Since 2013, there have been 229 contracts signed between Chinese and Nepal companies, valued at $3.32 billion. Such deals have generated revenue of $1.88 billion. The largest of the signed contracts is a highway project connecting Kathmandu with Hetauda, which is worth $590 million and covers transportation, water and power utilities, water conservation and communications engineering.
Rupak Sapkota, general secretary of the Nepal Institute for Strategic Analyses, noted Nepal's economic development relies on the support of neighboring countries and international aid agencies.
"From Nepal's experience, most of the aid from Western countries is (involved with) soft power, such as democracy and human rights. Within this context, Nepal hopes to attract more foreign investment from its neighbors, namely China and India," Sapkota said.
The construction of the Lhasa-Xigaze-Gyirong railway is significant for Nepal's economic development. On the one hand, it will bring more Chinese tourists to Nepal; on the other hand, it will create opportunities for Nepal's exports, according to Pandey and Sapkota.
Sapkota hoped the railway could extend to Kathmandu and said China supports Nepal in carrying out the relevant research on its viability. The length of the proposed railway is 550 kilometers and is expected to cost over $8 billion.
As a result, the National Planning Commission of Nepal has formulated a plan called "Envisioning Nepal 2030," which aims to bring about a relatively prosperous economy in Nepal by 2030. In order to realize this goal, Nepal needs investment of $7 billion to $8 billion, of which $5 billion to $7 billion is intended to come from foreign investment.
According to Hindustan Times, China became Nepal's biggest foreign investor in 2014 and become the biggest source of foreign investment.
With China's growing investment in Nepal, some problems have appeared in recent years. For example, the first hydropower station built and operated by a Chinese company, the Marsyangdi A Hydropower Station, was disrupted following a strike of workers there.
Tourism is another area for China and Nepal to explore. Ambassador Paudyal said the country hopes to attract 2 million international tourists to Nepal by 2020.