The policy brief examines China’s multifaceted investments in Nepal, detailing historical shifts, strategic interests, and the geopolitical context. Focused on sectors like services, hydropower, and manufacturing, the analysis highlights challenges including political instability and investor confidence issues due to policy fluctuations. Existing legal frameworks and policy changes are explored, emphasising revisions to attract foreign direct investment (FDI). Trends reveal a surge in Chinese commitments since 2012, with discrepancies between pledges and actual projects. State-owned enterprises dominate critical infrastructure projects, while private companies invest in micro-enterprises. Recommendations include sectoral diversification, strengthened democratic institutions, and improved monitoring to address illegal activities.