A top Chinese official is in Nepal for talks with King Gyanendra and opposition leaders during a three-day visit to the country.
Tang Jiaxuan is the highest ranking foreign dignitary to visit Nepal in the past year
Chinese state councillor Tang Jiaxuan is the highest ranking foreign official to visit Nepal after the king seized direct power last February.
China has not criticised the royal takeover of power, but has called for a reconciliation to end Nepal's crisis.
China has also refused to recognise Nepal's Maoist rebels.
More than 13,000 people have been killed in violence in Nepal since the rebels took up arms 10 years ago. The rebels want to set up a Communist republic.
The king, who seized absolute power in February 2005, has come under increasing pressure at home and abroad to restore political freedoms.
An alliance of opposition parties has been organising protests to press King Gyanendra to hand back power.
The BBC's Sushil Sharma in Kathmandu says Tang Jiaxuan is expected to press for reconciliation between the king and opposition parties to end the deepening political crisis during his visit.
Nepal's key donors such as India, the USA and the UK, who criticised the royal takeover, had long been urging for such a reconciliation.
They say the widening rift between the king and the parties would further deepen the political crisis, benefit the Maoist rebels and threaten the stability of South Asia.
Analysts say that China is also worried about such a prospect in its backyard.
Although Nepal's communist rebels have styled them after the late Chinese leader, Mao Zedong, China has refused to recognise them as a Maoist group - it calls them anti-government forces.
Instead, China last year provided a token military assistance of a million dollar to the Royal Nepalese Army which is engaged in an offensive to tackle the Maoist insurgency.