Chinese Foreign Ministry spokesman Kong Quan said China respects the Nepali people's decision to choose their own path of development and hopes its neighbour is able to achieve national reconciliation and economic development.

However, the spokesman also expressed indignation at foreign media who call Nepal's anti-government rebels "Maoists", which stains the memory of the great leader of the Chinese revolution, Chairman Mao Zedong.

The Nepali King Gyanendra announced Tuesday that he has dissolved the coalition government, led by Prime Minister Sher Bahadur Deuba and has formed his own.

Nepal's new Home Minister Dan Bahadur Shahi has called on anti-government rebels to resume peace talks with the government as soon as possible.