China and Nepal on Monday signed a memorandum of understanding on a feasibility study on a free trade area (FTA), the Ministry of Commerce (MOC) said on Monday.
Minister of Commerce Gao Hucheng and his Nepalese counterpart signed the memorandum, according to an MOC statement on its website.
The two countries will set up a working group to research areas of common concern, according to the statement.
Ties between China and Nepal have seen sound development in recent years. China has become Nepal's second-biggest trading partner and its major source of foreign direct investment.
China's non-financial outbound direct investment in Nepal was 32.03 million U.S. dollars in 2015. Bilateral trade hit 866 million U.S. dollars.
The FTA will further boost bilateral trade and investment, the statement said.
