KATHMANDU, Dec 3 (AFP) - Chinese President Jiang Zemin is arriving here on Wednesday at the invitation of King Birendra for a two-day state visit following a trip to India and Pakistan.

Jiang's visit is politically and economically significant for Nepal, a Foreign Ministry source said.

India had in the past viewed visits by Chinese leaders to Nepal with displeasure and suspicion, but this time it has not shown much concern, the source observed.

The visit is significant for Nepal's internal stability because it is expected to pacify the Nepal Communist Party-United Marxist and Leninist (NCP-UML) which is bent upon pulling down the tripartite coalition government.

NCP-UML is preparing to oust the government headed by Nepali Congress leader Sher Bahadur Deuba, either by breaking the coalition or through a no-confidence motion for the second time in six months.

Jiang's visit is also expected to assuage extreme left groups, which swear by the precept of China's late Chairman Mao Zedong, who are engaged in alleged terrorist activities in north-eastern and north-western remote districts. The Home Ministry has said 65 people have been killed in Maoist terrorist activity.

The pro-Maoist left opposes Parliamentary democracy, describing it as a bourgeois and imperialist system and has called a nation-wide day-long strike on 12 December.

Jiang's visit could bring economic benefit to Nepal as it is expected to result in the start of some public utility projects such as construction of mountain highways to Tibet in western Nepal.

China had built in the late 1960s the 114-KM (72-miles) Kathmandu-Kodari highway, providing a link to the Tibetan capital, Lhasa.

India saw the highway as a threat to its own security. The Indian reaction sparked bitter anti-India feelings among the Nepalese right as well as pro-China lobbies.

The late King Mahendra, father of the present king, had sought to allay India's suspicion by saying the highway would help open new economic vistas for Nepal-China relationship and improve Sino-Indian relations.

India and China fought a brief border war in 1962.

Anti-India sentiments gained ground steadily in Nepal and observers said India blamed China for the development, later retaliating with denial of some transit facilities for landlocked Nepal.

India backed anti-Monarchy and pro-democracy activists who eventually prevailed and Nepal adopted a constitutional monarchic system with multi-party democracy.

Jiang's visit takes place in a "completely different atmosphere and political situation in Nepal with India and China heading for liberal economic, trade and political relationship," according to Bhogendra Prasad Sharma, a pro-Chinese Communist leader.

Jiang is to meet King Birendra and Prime Minister Deuba. The nettlesome issue of anti-Chinese Tibetan activities in Nepal is expected to be prominently projected by the Chinese side, sources here said.

Authorities here have taken stringent measures to thwart any protest action by the Tibetan youth during Jiang's visit, an official spokesman of the Home Ministry said.