Nepal's China exports plunge 41% as carpet sector faces structural headwinds

Rising costs and machine-made competition are eroding Nepal's traditional export advantage, signaling a broader shift in the country's trade dynamics with its largest partner.

By Handelsavisen Newsroom · Automated 2026-06-22 01:08 UTC · 1 min read

Nepal's merchandise exports to China contracted sharply in the first 10 months of the fiscal year, falling by more than 41 percent.

The steep decline was driven primarily by a collapse in carpet shipments, a sector that has long been a cornerstone of Nepal's trade relationship with its northern neighbor.

The slump reflects mounting structural pressures rather than a temporary cyclical dip.

Nepali exporters are grappling with rising production costs and acute labor shortages, which have squeezed margins and reduced output capacity.

Simultaneously, the market is seeing intensified competition from machine-made products, which undercut the price point of Nepal's traditionally handcrafted goods.

This deterioration in trade flows comes as China's broader economy shows signs of faltering following a strong first quarter.