Not just a brief stopover in Bangladesh 

The Bangladesh-China alliance is not new. The path that connected Bangladesh with China is is famous in history as the Silk Road. Since China and Bangladesh are both coastal countries, the exchange between them by sea has been excellent since ancient times. China and Bangladesh established diplomatic relations in 1976. Since then, China has invested in and implemented a slew of coal-based power projects.

Bangladesh has conveyed to China that it maintains a balanced foreign policy and walks together with all the countries while reassuring Dhaka’s support to Beijing.

“We believe in the one-China principle. We maintain a balanced foreign policy. This is our principle. We will extend our support (to China) from time to time,” Foreign Minister Dr AK Abdul Momen told reporters on Tuesday as conveyed to his Chinese counterpart.

Newly appointed Chinese Foreign Minister Qin Gang had a brief stopover at Hazrat Shahjalal International Airport early Tuesday. Foreign Minister Momen received his Chinese counterpart upon his arrival at around 1:58am.

While briefing the media at the airport early Tuesday, Momen said he raised the huge trade gap issue with China.

He said though there was a decision of duty-free and quota-free facilities for Bangladeshi exports, it has not been implemented yet fully.

China, Asia’s largest economy, has decided to give duty-free export to 98 percent of Bangladesh’s products, including leather and leather goods. 383 new items were added to the list. This facility will expand the export trade. China will also increase investment in Bangladesh. It will produce products here which will also create employment opportunities for Bangladesh. The trade deficit between the two countries would be reduced.

It may be recalled that on 1 July 2010, China was the first to grant access to the least developed countries to the duty-free quota-free market. Initially, under this facility, 33 least developed countries, including Bangladesh, gt duty-free access to 60 percent of China’s tariff lines.

But an examination of whether China’s facility is conducive to Bangladesh’s export potential shows that many products are not included. The Bangladesh Commerce Ministry requested China to provide duty-free access to potential products for Bangladesh.

After lengthy negotiations, on 17 June 2020, China issued an order granting Bangladesh unconditional access to 97% of its products (6,256 items) duty-free.

As a result, all potential products of Bangladesh were to get duty-free quota-free access to the Chinese market, effective July 1 of that year.

Now China should implement this and Bangladesh should benefit from this offer if it utilizes this properly.

Businesses are yet to take advantage of the DFQF facilities in the Chinese market, Momen mentioned, seeking measures from the Chinese side.

Despite bilateral trade favouring China heavily, Bangladesh has enormous potential. With the new extension of duty-free and quota-free access to China, Bangladesh must redouble efforts with required administrative, regulatory and infrastructural support.

Momen described the visit of Chinese President Xi Jinping to Bangladesh in 2016 as a milestone but mentioned that many decisions in terms of investment are yet to be implemented.

He also mentioned China’s involvement in a number of important development projects including the Padma Bridge rail link.

He also thanked the Chinese government for its support to Bangladesh during the covid-19 pandemic. The Chinese Foreign Minister invited Momen to visit Beijing. Momen also invited his Chinese counterpart to come again for a longer stay.

Foreign Minister Momen saw off his Chinese counterpart at Hazrat Shahjalal International Airport at 2:50 am.

Although it was not an official visit, the Chinese foreign minister made a stopover here on his way to another destination. Qin Gang, who until recently was ambassador to the US, has started his term with a weeklong trip to five African countries, Ethiopia, Gabon, Angola, Benin, Egypt, the African Union Headquarters and the League of Arab States Headquarters, from January 9 to 16.

After the visit of Chinese President Xi Jinping in October 2016, the then Foreign Minister of China took a break in Dhaka. At that time, he discussed with the then Foreign Secretary about the various decisions taken during the visit of the President of China.

According to the Observer Research Foundation, Bangladesh received a net FDI of US $1.159 billion from China in FY-19, making it the top receiver in South Asia. Henceforth, one can observe that the ties between Bangladesh and China increased exponentially after X’s Dhaka visit. President Xi and Bangladeshi PM Sheikh Hasina inked 27 agreements worth billions of dollars, elevating their relationship from a “comprehensive partnership of cooperation” to a “strategic partnership of cooperation”. In 2015, China surpassed India as Bangladesh’s largest trading partner. China’s expanding engagement with Bangladesh is built on stable economic ties and Chinese infrastructure assistance. Dhaka has welcomed Beijing’s cooperation as the two sides agreed to expand cooperation on trade, defence, and infrastructure projects, further strengthening China-Bangladesh ties.
China made a commitment to provide Tk 1,700 billion for 27 projects. Three years have already elapsed, but loan agreements have been signed to merely fund for these projects.  During Chinese president Xi Jinping’s visit to Bangladesh in October of 2016, some 27 projects were finalised. The implementation of these projects was supposed to be complete by 2020.

The joint working group (JWG) consisting of officials of two countries should meet as early as possible to find a solution to the delay in implementing projects. The JWG was formed during Sheikh Hasina’s visit to Beijing in July 2019. The implementation of the projects should gain pace following the recommendations of the JWG.

With 2023 looking gloomy for both economies, businesses in Bangladesh are cautiously optimistic that China’s decision to open its trading doors to the world after 1,016 days of a strict “zero-Covid” policy will ease supply chain woes and boost business. However, as China opens up its borders on Sunday, experts said there are concerns about whether the spillover effects of the decision may disrupt the world economy.

Entrepreneurs and experts opined that the reopening might create more export opportunities for Bangladesh and help it procure raw materials from its most significant source. Additional demand for oil, gas and other essential commodities in global markets will also be created.

Bangladesh plays a significant role in trade relations with both India and China due to its geopolitical location. In recent years, China has stepped up its investments in Bangladesh in an effort to strengthen bilateral ties. Bangladesh’s total exports to China reached $38.959 million in February 2021, according to CEIC data.

Until now, Bangladesh is the second-largest recipient of Chinese loans under the Belt and Road Initiatives (BRI) after Pakistan. China has also stepped up its investments in infrastructure, which is worth $10 billion in Bangladesh. Also, Bangladesh is set to receive an investment worth $40 billion from China under a bilateral partnership. To meet Bangladesh’s growing energy needs, China has offered to construct nuclear power plants in Bangladesh. Moreover, China has exported refined petroleum worth $861 million, light rubberized knitted fabric worth $749 million, and light pure woven cotton worth $170 million. According to Dr Ma Razzaque, the head of Research and Policy Integration for Development (RAPID), Bangladesh could make $25 billion if it could acquire even one percent of China’s imports. Bangladesh’s principal export categories, such as ready-made clothes and others such as leather goods, jute and jute goods, agricultural products, frozen and live fish, pharmaceutical products, plastic, sports goods, handicrafts, and tea, have a great competitive advantage in the worldwide market.
“Bangladesh is important to China due to its geopolitical location, and as a result, investment has steadily increased. For example, total business was approximately $14.69 billion in 2018-2019, whilst investment was around $12.8 billion in 2017-2018. However, investment was reduced to $12.5 billion in 2020-21 owing to Covid-19.

In other areas, the pace of cooperation has increased with Xi’s and Hasina’s exchange of visits. During them, various agreements and memoranda of understanding were signed in various fields including energy, technology, and infrastructure development. China will invest about $25 billion in various sectors including economic infrastructure development in Bangladesh in the light of the One Way One Region programme. China has been assisting Bangladesh in various developmental activities including the construction of the country’s first tunnel on the Padma Bridge and Karnafuli River, and construction of thermal power plants in Chittagong and Khulna.

Last year, China offered duty-free access to 5,161 products to Bangladesh to reduce the trade deficit between the two countries. With this, Bangladesh got duty free facility on a total of 8,256 products. As a result, it is expected that the trade deficit between the two countries will be reduced.

It was expected that with the announcement of July 1, 2020 for more duty-free quota-free access of Bangladeshi products to the Chinese market, bilateral trade, especially export from Bangladesh would be revamped. That did not happen. Bangladesh has a huge trade deficit with China.

Despite bilateral trade favouring China heavily, Bangladesh has enormous potential. With the new extension of duty-free and quota-free access to China, Bangladesh must redouble efforts with required administrative, regulatory and infrastructural support.