Khadga Prasad Oli has regained his position as prime minister of Nepal after a parliamentary election on February 15, 2017. K.P. Oli, as he is often called, began his political career as a Marxist insurgent and was eventually elected in October of 2015, serving in the role for a little less than a year. Tourism is a major industry for Nepal and the largest source of foreign exchange for the Himalayan nation. However, despite its close proximity to China, the country has struggled to attract a large number of Chinese visitors. However, the return of K.P. Oli to power has seen Chinese state media hailing the “rise” of Chinese tourism to Nepal.

India is by far Nepal’s biggest tourism source market in terms of arrivals, with China coming in second

India is still by far the biggest source market in terms of arrivals for Nepal and the countries have historically maintained strong ties, especially within the context of the Cold War. Moreover, India has continued to be the main driver of foreign arrivals, growing from around 75,000 in 2015 to 160,000 in 2017.

Overall, 2015 was a historic low point for Nepal’s tourism industry, largely due to the massive earthquake that shook the country that year. Tourism dropped by 31 percent in 2015, but has seen strong recovery and grew by 40 and 24.8 percent in 2016 and 2017 respectively. The country is on track to attract 1 million foreign visitors for the first time ever, receiving 940,000 in 2017 alone.

Chinese tourism, while still the second largest tourism source market for Nepal, is struggling to grow. Chinese arrivals in 2016 and 2017 were both approximately 104,000, up from 67,000 in 2015.

Of course, visitors from developed countries are also a major cornerstone of Nepal’s tourism industry. The United States, the United Kingdom, South Korea, Australia, and Germany respectively sent approximately 80,000, 51,000, 34,000, 33,000, and 30,000 tourists to the Himalayan country in 2017.

Tourism from developed countries in total far surpass Chinese and Indian tourists and undoubtedly provide more revenue

Overall, tourists from developed nations far surpass those from China and India combined, with around 400,000 visitors. Given that these tourists are on average wealthier than their Indian or Chinese counterparts, it is likely that they are Nepal’s main source of tourism revenue.

However, that doesn’t mean that Chinese visitors won’t be valuable. Given that Chinese outbound tourism is continuing to grow at breakneck speeds, it’s hard to ignore the potential of China as a source market for Nepal.

However, with Nepal’s new communist government under K.P. Oli, through K.P. Oli’s Communist Party of Nepal (Unified Marxist–Leninist) and Communist Party of Nepal (Maoist Centre), Chinese state media have been on the charm offensive to court favor with the new government by stressing the potential financial benefits of a close bilateral relationship with China.

Given the enormous and growing potential of Chinese outbound travel, China will still be a key source of growth for Nepal’s tourism industry

Infrastructure projects are a part of this discussion and K.P. Oli already announced that he will seek to revive a Chinese dam project. The project set to be built on the Budhi Gandaki river is part of China’s larger Belt and Road Initiative (BRI or OBOR). Moreover, he has indicated interest in backing out of the traditional agreement of Nepalese-Indian military cooperation, which includes the country’s soldiers serving in the Indian armed forces.

Given that tourism is such a key pillar of Nepal’s economy, the Chinese government has been keen to emphasize the potential impact of Chinese tourism. This largely fits within China’s larger goals of utilizing tourism diplomacy to exert influence on its neighbors, whether it’s South Korea, the Maldives, or Taiwan.

Still, it’s hard to deny the enormous potential for tourism revenue that China represents for Nepal. Given the growing, but still modest numbers of foreign tourists, increased access to the Chinese market would undoubtedly be very lucrative.