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On Bangladesh-China economic relations

Published : Monday, 13 January, 2020 at 12:00 AM  Count : 775
Md Harunur Rashid

Md Harunur Rashid

Md Harunur Rashid

Bangladesh's trade deficit dropped by 14.76% year-on-year to $15.49 billion in the last 2018-19 fiscal year and exports to China also declined largely in the 2017-18 fiscal year, worth $694.96 million according to Export Promotion Bureau (EPB). No doubt it has a huge trade deficit with China.

On the other hand the United States is the largest destination for Bangladesh's exports, taking in more than USD 6.87 billion. According to EPB Germany was the second largest destination at just USD 6.17 billion in 2019.Country is basically sourcing raw materials and machinery for its textiles and clothing sector.

In the meantime country business men are forecasting that bilateral trade between Bangladesh and China to reach $18 billion by 2021.In this regards deficit would have been running a large in goods trade with China, isn't it?

Firstly the absence of direct marketing, limited exportable products and language are major barriers to the rise of exports to China, traders and exporters. They alleged that factors such as poor negotiating skills and lengthy process of getting products certification or certificate of origins from China did also hurt flow of exports to the world second largest economy.

Bangladesh is only getting the orders that are shifting from China but is yet to attract Chinese investments due to infrastructural bottlenecks in the country.
At present, China's competitive advantages in steel, non-ferrous metals, building materials, railways, electricity, chemical industry, automobiles, communications, construction machinery, aerospace ships and marine engineering will hardly benefit Bangladesh.

An EPB official said exporters need to take certificate of origin from Chinese authority through Bangladesh embassy. Although Bangladesh gets duty-free market access, Chinese rules of origin are very tough. The numbers of exportable items that get duty-free facility is also limited.

On the other hand, Bangladesh is yet to show its strength in making non-cotton or man-made garments along with some critical issues of our transitional economy including knowledge transfer for industrial revolution, artificial intelligence, regulatory planning, SDG goals, industry-academia gap assessment and re-skilling.

While neighbouring country like China's 40 years of reform and opening up, starting from 1978 under Deng Xiaoping, has transformed China into the world's second-largest economy. The country also has achieved remarkable progress in poverty alleviation. The further reform and opening up reiterate China's commitment to a strong, developed, and prosperous nation in the world. Why not follow Bangladesh for taking economic opportunities from country like China?

In the meantime Bangladesh's apex business body FBCCI President Sheikh Fazle Fahim told a group of 150 Chinese entrepreneurs that Bangladesh was always a potential destination for investment in various sectors and as we are a transitioning economy is imperative that our vital tie reflect the potential opportunities in various sector.

On Bangladesh-China economic relations

On Bangladesh-China economic relations

Especially processed food exporters have to wait inordinately to receive testing certification from China. Procrastination is one of the key reasons behind this decline in export told ATM Azizul Akil, senior vice-president of Bangladesh China Chamber of Commerce and Industry (BCCCI). The exporters are not getting full cooperation from the authorities concerned in this regard.

To avoid higher tariff, factories are relocating from China to elsewhere in Asia. Bangladesh has more competitive advantages than its competitors such as Cambodia and Vietnam. Due to the presence of strong unions, setting up factories in Cambodia is more challenging these days.

We know that China's textile industry already has a complete industrial chain and a relatively high level of processing, but it also faces problems of rising labour costs and overcapacity. Moreover, in contrast to 160 million Bangladeshis, Cambodia has a population of just 16 million, which gives Bangladesh a competitive edge for this labour-intensive industry.

Due to higher wage and production costs, Vietnam also looks less attractive to investors. The minimum wage in Bangladesh is currently USD 95 per month, which is almost half of USD 182 per month in Cambodia and USD 180 per month in Hanoi and Ho Chi Minh City.
Currently, our apparel industry is safer than in the past and China gradually phasing out from labour-intensive industries to a higher value-added, high-tech, capital-intensive manufacturing sector and a greater Bangladeshi stake in labour-intensive industries such as the textile industry one of them.

Bangladesh to work on a favourable policy regime to seize the china opportunities as they come by and to provide enabling conditions for more foreign direct investments. Bangladesh FTA agreement can bring more Bangladeshi products into the scope of tax exemption effectively alleviate the bilateral trade deficit between Bangladesh and China.
China regime should give Bangladesh tax-free preferential policies for more products, including polymer products, gloves, and silk, cleaning cloth, leathers, lead-acid batteries and synthetic fibres.

Think tank sought government's policy support to organize meetings, seminars and trade shows to showcase the local products in China and promoting the construction of Bangladesh, China, India and Myanmar economic corridor. And make sure the congenial environment for Chinese business men for doing business.
Moreover to facilitate cross-border trade and inject new forms of business while Chinese authorities have emphasized cross-border e-commerce for enhancing trade innovation and economic transformation.

While trade imbalance is the key challenge to Bangladesh-China economic relations than import tariff reductions particularly on textiles, apparel, raw materials, home appliances, consumer products, and paper-made commodities can diversify Bangladesh's export baskets in the Chinese market and reduce its trade deficit with China.
The public and private sectors should look to address with their respective Chinese partners, in order to achieve what the Chinese president often terms as win-win outcome for both countries and should policymakers and other stakeholders take the right steps and make the right decisions.

Accelerate economic prosperity of Bangladesh and China though trade and investment that the BCCCI should been working proactively for the betterment of bilateral trade and has been providing commendable support to the investors of both the countries and be committed to provide assistance to the business community at every step of promoting trade and investment for economic prosperity.

Last but not the least cooperation between China and Bangladesh on textile and apparel can be formulated as soon as possible and it will not only meet the practical needs of Bangladesh, but also provide a path for the development.

The writer is a Deputy Secretary, BKMEA and a business analyst

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