Continuing its increased economic engagement in Nepal, China has agreed to provide RMB 800 million (nearly $128 million) to the Himalayan nation as grant assistance for the next financial year.
This will be Beijing's biggest annual grant to Kathmandu, an over five-fold increase from its previous annual grant of RMB 150 million.
Nepal's finance secretary Suman Prasad Sharma and Chinese ambassador to Nepal Wu Chuntai signed an agreement in this regard in Kathmandu on Tuesday as part of economic and technical cooperation between both nations.
"The amount will be used for various large scale infrastructure projects and development programmes as agreed between both sides," Sharma stated at the signing ceremony.
Chuntai stressed China was willing to continue its support to Nepal in all sectors and expressed confidence the increased aid and cooperation will help strengthen bilateral ties.
The decision to hike annual grant was taken during Chinese foreign minister Wang Yi's Kathmandu visit in December last year following India's move to provide Nepal with a line of credit worth $1 billion.
Beijing has been increasing its influence and assistance to Nepal and China emerged as the biggest foreign direct investment contributor to the land-locked country in the last financial year.
China has supported Nepal with soft loans and assistance in hydropower projects, national highways and Chinese companies are involved in major construction projects including a new international airport at Pokhara.
On Tuesday itself, China's Honghshi Holdings Group signed a joint venture agreement with Nepal's Shivam Holdings to set up a cement factory as a cost of nearly $300 million.
Hongshi Holdings will invest nearly $210 million in the project, making it the biggest foreign direct investment by a Chinese company till date in Nepal.
Nepal and China are celebrating 60 years of establishment of diplomatic relations between nations.