China has “responded positively” to an appeal by Nepal for immediate resumption of the Araniko Highway — the main road that links Nepal with Tibet and China — and, during talks between top Nepali leaders and visiting Chinese Vice Premier Wang Yang, Beijing has also agreed in principle to upgrade the trade highway.

China has also announced a donation of $1 million as emergency fund to tackle the damage wrought by the recent floods in Nepal, the Kathmandu Post reported.

The Araniko Highway was hit badly in the 2015 earthquake and was also affected by landslides, leading to China closing down the route.

The road is of crucial importance to Nepal as it carries a very large amount of goods from China.

In March this year, China handed over the Araniko Highway to Nepal after completing repairs.

The 114-km highway from Kathmandu to Tatopani in Sindhupalchok district was damaged at five different places in the 2015 earthquakes, disrupting vehicular movement. The highway was repaired with Chinese grant assistance of Rs.760 million.

Chinese construction company China Railway Sisuju Group Corporation had repaired the damaged sections of the highway.

The Araniko Highway was constructed in 1960 with Chinese grant assistance. Nepal joined China’s Belt Road Initiative (BRI) in May, and the Chinese have voiced interest in building a railway network up to Kathmandu.

Chinese Vice Premier Wang made the announcement of the flood aid during the Nepal-China Deputy Prime Minister-level meeting here on Tuesday. Deputy Prime Minister Bijay Kumar Gachhadar represented Nepal at the bilateral meeting.

The two countries have sealed three important agreements with long term impact on Nepal’s socio-economic development.

The agreements were reached on three different domains — Economic and Technological Cooperation, China-Aid Oil and Gas Resources Survey Project and Framework Agreement on Promotion of Investment and Economic Cooperation, the Kathmandu Post reported.

The agreements were inked in the presence of Wang, Deputy Prime Minister Gachhadar, DPM and Foreign Minister Krishna Bahadur Mahara, and Chinese Ambassador to Nepal Yu Hong.

Speaking to the Rastriya Samachar Samiti national news agency, Finance Secretary Shanta Raj Subedi said the agreements reached with China would make significant contributions in the country’s socio-economic transformation.

The agreements straddle a wide range of projects including a feasibility study on natural gas and petroleum products in Nepal’s mountainous, hilly and the plains of Terai region including its survey and excavation. The two countries have reached agreements on establishment of hydro power projects and transmission lines and necessary steps for the economic and technological development.

China has responded positively towards an appeal made by the Nepal Government on immediate resumption of the Araniko Highway — an old route connecting the two countries — following an obstruction in the aftermath of the earthquake. China has also agreed in principle to upgrade the highway, the Kathmandu Post said.

Though the meeting also discussed matters relating to the construction of physical infrastructure projects such as bridge construction at Timure (on the border with China) of Rasuwa and the Kerung (on the border)-Kathmandu-Lumbini Railway, no concrete decision was taken.

“The Chinese side is positive over the matter, but extensive talks and discussions are essential as a single round of talks is not enough to finalise all issues. They (the Chinese side) are positive towards our priorities of national development,” Secretary Subedi added.

Deputy Prime Minister Gachhadar hosted a luncheon in honour of the Chinese delegation on Tuesday. Members of the Council of Ministers and other government secretaries also attended the meeting.