Faltering exports drive up trade deficit with China

Published On: April 28, 2019 03:30 AM NPT By: Republica | @RepublicaNepal

KATHMANDU, April 28: Exports growth to China, the second largest trading partner of Nepal, has been falling in the current Fiscal Year 2018/19.

The combination of faltering exports growth and rise in the imports bill has been driving up the total trade deficit with the northern neighbor at a rapid pace.

According to Nepal Rastra Bank (NRB) data, the exports to China fell by 27.6 percent in the first eight months of the current fiscal year to Rs 1.35 billion. On the other hand, imports from China jumped 37.8 percent to Rs 139.04 billion.

As of mid-March, Nepal had a trade deficit of Rs 137.69 billion, up by 39 percent a year ago.

Mainly exports of polyester yarn, zinc sheet, jute goods, woolen carpet and pulses, among others, increased whereas exports of cardamom, shoes and sandals, tanned skin, readymade garment and rosin, among others, decreased in the review period, according to the NRB data.

Shipping of pashmina, which is one of the major products exported to China, has fallen by 38.9 percent to Rs 38.4 million. Similar is the case with tea which observed an export decline of 50.7 percent to Rs 11.4 million. Tanned skin's exports plummeted 42.9 percent to Rs 49.4 million.

Even the growths in export of other major products have been lower if compared with the previous year. While there was a growth of 178.7 percent in export of noodles in the first eight months of the last Fiscal Year 2017/18, it fell to 32.7 percent to Rs 43.3 million in the current fiscal year.

Readymade garments' exports grew by 20.6 percent to Rs 73.9 million compared to 60.1 percent of growth in the previous year.

Experts are worried about the growing trade deficit with China in recent years. They have called for measures to boost the production of exportable goods of the country and utilize zero-tariff facility provided by China.

China has provided Nepal zero-tariff entry facility for over 8,000 Nepali products since 2009. However, Nepal has not been able to utilize the facility and bring the trade deficit down.