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Trade ties between China, Bangladesh on the rise

WorldTrade ties between China, Bangladesh on the rise

‘Such developing ties may be a matter of concern for India’.

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. Such developing ties may be a matter of concern for India as both China and India are seen as rising powers in South Asia.
China and Bangladesh established diplomatic relations in 1976. Since then, China has invested in and implemented a slew of coal-based power projects. 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 Chinese president Xi Jinping visited Dhaka in October 2016. As per many reports, the Chinese President and Prime Minister Sheikh Hasina inked 27 agreements worth billions of dollars, elevating their relationship from a “comprehensive partnership of cooperation” to a “strategic partnership of cooperation”. Prime Minister Sheikh Hasina committed to enhancing the country’s economy after Covid-19 and achieving the status of a developed nation by 2041 at the 76th United Nations General Assembly (UNGA). 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.
Until now, Bangladesh is considered to be 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, as per sources, 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 to Bangladesh. 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 1% 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,” a political observer on India-Bangladesh, Tapas Das, told The Sunday Guardian.
The Chinese Ambassador to Bangladesh, Li Jiming, also said that the bilateral trade between China and Bangladesh will grow with the execution of the 2021-2024 export policy of Bangladesh, and duty-free access to China for 98% of Bangladeshi products. Looking into this perspective, Das said, “China provides 60% of Bangladesh’s raw materials for the garment industry. Bangladesh has tax-free access to about 97% of the products. China is investing in several major projects in Bangladesh, including the Padma Bridge, the Chittagong to Cox Bazar railway, and the Dhaka bypass, which is a major source of concern for India, as both China and India are significant growing powers in South Asia.”
However, India and Bangladesh have some asymmetric relations, like the truck movements across India-Bangladesh borders, and some issues still need to be resolved. By resolving several disparities, India can increase its investment in Bangladesh. Looking at the strategic investment of the Chinese in Bangladesh, he said, “Despite the fact that China has increased its investments, their policy dictates that the labour must come from China. We all know that foreign investment always creates more employment, while China solely employs its people on foreign land. In such a circumstance, it would be a positive step for India to engage in a large project in Bangladesh and hire Bangladeshi workers.”

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