However, an agreement is unlikely, Kathmandu Post said, quoting sources.
The draft of the treaty, finalised by officials from Nepal and China, will be discussed as per the spirit of the statement issued jointly by the two countries during Prime Minister K.P. Sharma Oli's China visit in June last year, officials said.
Point number 10 of the statement says that the Nepali and Chinese sides agreed to negotiate the Treaty on Mutual Legal Assistance in Criminal Matters and Treaty on Extradition in order to strengthen cooperation on the administration of border areas and combat illegal border crossings and transnational crimes.
Based on the understanding reached in Beijing, teams from both sides had worked on the treaty's draft, the daily said.
Ram Krishna Subedi, Joint Secretary at the Ministry of Home Affairs, led the Nepali taskforce, which also included representatives from the Ministry of Law and Justice.
Officials familiar with the matter said the Nepali side had held several rounds of negotiations with the Chinese team that had come to Nepal for the purpose.
"The treaty is a priority for both the Nepali and Chinese sides," said an official.
A leader from the ruling Nepal Communist Party (NCP) confirmed that discussions on the treaty are on Xi's visit agenda.
"There will indeed be a discussion on the matter, but the rumours about an agreement are baseless. Nepal is discussing a similar treaty with India, so discussions will be held with China as well," Narayan Kaji Shrestha, the ruling party spokesperson, told the Post.
Shrestha said the Cabinet had not endorsed the treaty yet and that it had only been listed for discussion.
During an all-party meeting called by the government on Thursday to discuss Xi's visit, Minister for Foreign Affairs Pradeep Gyawali said there were no preparations to sign an extradition treaty with China.
Former Prime Minister Baburam Bhattarai urged the government not to sign the treaty for now as discussions for a similar agreement with India were ongoing.
Nepal signed an extradition treaty with India on October 2, 1953, when Matrika Prasad Koirala was Prime Minister. The Indian side, however, has been demanding a revision to the treaty.
In 2006, Nepal and India were close to signing an Extradition Treaty and the Treaty on Mutual Legal Assistance. Negotiations however failed due to disagreements among the parties in Nepal. Similar attempts collapsed in 2008 and 2010. The treaty would allow the two countries to hand over criminals from third countries to each other.
Despite the lack of an agreement, police forces from both Nepal and India have been handing over criminals on an informal basis to each other.
( With inputs from IANS )