Nepal’s exports to China have experienced a significant downturn, falling by over 41 percent in the first ten months of the fiscal year. This decline is primarily attributed to a substantial decrease in carpet shipments, a historically key export commodity. Rising production costs, a scarcity of skilled labor, and increased competition from cheaper, machine-made carpets are cited as major contributing factors. The carpet industry, a significant employer in Nepal, is facing mounting challenges impacting its international trade performance. This export slump raises concerns about Nepal’s economic reliance on the Chinese market and the need for diversification. Industry stakeholders are seeking solutions to address the rising costs and labor issues to regain competitiveness. The situation highlights the vulnerability of Nepal’s export sector to global market dynamics and production constraints.