Nepal emerges as fresh destination for investment

In the dusty outskirts of Kathmandu, south of the Himalayan mountain range in Nepal that holds the world's highest peaks, Chinese engineers in orange hard hats oversee construction of the country's first eight-lane highway.

The $45 million upgrade of a road circling the Nepalese capital is one of dozens of projects helping China challenge India's dominance in a country that is sandwiched between them. Until recently, the Himalayas served as a natural barrier that prompted Nepal to trade more across its flat border with India.

"China is growing in importance," Ram Sharan Mahat, Nepal's Finance Minister, said in a recent interview in Kathmandu. "Because of new trade horizons and the cheap pricing of Chinese goods, China's trade vis-a-vis Nepal is growing."