Nepal has told India that it will permit China a corridor in its territory and a consulate disregarding Indian concerns and displeasure.
But King Gyanendra has conveyed he might reconsider a Pakistani proposal for a consulate in Birganj mindful of Indian concerns.
Responding to a diplomatic note, Nepal has said both China and Pakistan showed interest in opening consulates in the kingdom sometime in August last year, but that Nepal assessed the whole situation before making it public.
Officials said that Gyanendra is adamant about a closer relationship with China, since China has linked massive development aid to the kingdom with its strategic interests.
China will offer a three year assistance package of $2 billion to Nepal whose crashed economy needs hard cash injections in return for access to eastern Nepal.
Nepal was initially doubtful about the aid package parameter, resistant to development assistance carried out by Chinese companies and institutions, and insisted on cash funding.
Earlier reports were categorical that China and Pakistan are ready to open consulates in Biratnagar and Birganj, but Indian pressure could exclude the Pakistanis.