Exports to China Dip as Handicraft, Woolen Carpet, and Garment Sales Decline – NRB Report

Nepal’s exports to China have continued to slide sharply in the first two months of FY 2025/26, according to the latest Nepal Rastra Bank (NRB) Mid-September 2025/26 report. The total value of exports plunged by 58.5%, falling to just Rs. 123.5 million compared to Rs. 297.5 million during the same period last year. This marks one of the weakest trade performances with China in recent years, as demand for traditional Nepali products such as handicrafts, woolen carpets, and garments declined significantly.

The report shows that exports of major commodities dropped by 38.9%, amounting to Rs. 69 million, while other minor exports fell even further — by 70.5% to Rs. 54.5 million. Key traditional export items have been hit hard: handicrafts (metal and wooden) collapsed by a staggering 91.3%, recording only Rs. 1.7 million in export earnings. Woolen carpets, one of Nepal’s flagship exports to China, fell by 36.6% to Rs. 20.8 million, reflecting weaker luxury demand in Chinese cities. Similarly, readymade garment exports declined 36% to Rs. 24.6 million, reversing last year’s brief recovery.

Even smaller export items such as agarbatti (incense), rudraksha, and handmade craft goods showed notable declines, suggesting a broader contraction across artisanal and cottage industries that traditionally supplied the Chinese market. This drop has been attributed to reduced import orders from China, logistics hurdles along the Rasuwagadhi–Kerung border route, and post-pandemic shifts in Chinese consumer demand toward mass-produced and locally sourced goods.

Despite the widespread downturn, some exports displayed resilience. Pashmina exports rose by 47% to Rs. 11.2 million, reflecting strong niche demand among high-income consumers in China. Readymade leather goods also grew by 46.4%, signaling emerging potential for Nepal’s fashion and lifestyle products. These modest gains, however, were not enough to offset the overall decline in exports.

Analysts note that Nepal’s trade with China remains structurally weak, constrained by limited product diversity, small-scale production, and inadequate transport connectivity. To reverse this trend, experts urge the government to invest in trade infrastructure, modernize customs operations, and diversify exports into value-added sectors such as herbal products, organic goods, and processed foods tailored for the Chinese market.