Katmandu and Nepal's Maoist rebels agreed to a ceasefire Thursday and both expresed willingness to enter into peace talks.
Puspakamal Dahal, chairman of the Communist Party of Nepal said the rebels were ready to participate in elections for a new constitutional assembly. It is widely-believed that a new constitution will greatly restrict the power of the monarchy. Both sides are interested in limiting the power of the royal office after King Gyanendra overthrew the elected government in 2002.
New Prime Minister Girija Prasad Koirala asked the rebels to join an interim government until the assembly elections are held.
The government on Wednesday announced that it would no longer refer to Maoists as "terrorists" to signal the new relationship.
Despite the conflict between Nepal's Congress party and the Maoists, Congress governments have traditionally had close ties with China. Beijing has never actively supported the Maoist rebels, and Congress leaders have looked at China as a means of counterbalancing Indian influence.
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