Bangladesh is all set to reap benefits from duty-free access of 98% of its products to China, the largest economy in Asia
n a note verbale forwarded to the commerce ministry, the Chinese Embassy stated that the Chinese government would grant duty-free access for imported goods produced in Bangladesh. It further added that the step was taken to strengthen the economic ties between China and Bangladesh. With the inclusion of 383 new products, this duty-free access has opened doors to vast economic opportunities for our country. Now Bangladesh’s leather products are under the zero treatment lists. The total number of Bangladeshi products with duty-free access now stands at 8,930. In 2020, China offered a 97% duty-free facility to Bangladeshi products. In that facility, leather products were not included. As leather goods are the 2nd largest earning source for Bangladesh and a primary exportable product, China reevaluated the case. As a result, the 98% duty-free facility now includes leather products from Bangladesh.
Many critics have deemed this as preferential treatment towards Bangladesh. In other words, Beijing’s charm offensive towards Dhaka is also claimed as the first step towards its coercive diplomacy. What is driving China to proffer hands of friendship and cooperation towards Bangladesh?
The striking aspect that has accelerated this trade dynamic is Bangladesh’s mediatory position between India and ASEAN. Bangladesh holds a geopolitical advantage that connects trade routes among South Asian countries. Since the liberation war, Bangladesh and India have shared close ties. Its foreign policy strength coincides with neighbouring India. India has been rock-solid in strengthening Bangladesh with shared counterterrorism efforts from time to time.
Now Bangladesh’s leather products are under the zero treatment lists. The total number of Bangladeshi products with duty-free access now stands at 8,930. In 2020, China offered a 97% duty-free facility to Bangladeshi products.
This bond took a sour turn in 2021 when India’s COVID infection reached a horrific state. Due to vaccine shortages in the home country, India was bound to restrict vaccine supply to Bangladesh. Conversely, China gifted 100,000 jabs of Sinopharm vaccine doses to Bangladesh. This act reflects China’s strategic assertion on South Asia.
China believes in connectivity to enhance cooperation. Cooperation with Bangladesh can enable China to establish healthy trade connections with other regional states. In this regard, China and Bangladesh have also negotiated on building a 900 km highway project. This project will connect Chittagong and Kunming through Myanmar. Besides, it would accelerate trade for both countries. The bridge will give Bangladesh access to the Mekong sub-region; accelerated trade and direct contact. Apart from that, it will reduce transportation costs and add to the economy of the Yunnan province.
Both the countries have maintained strong communication. To meet its growing energy requirements, China has offered to develop natural gas resources and nuclear power plants in Bangladesh. Vice versa, Bangladesh has set up a Special Economic Zone for China. It’s evident that both nations advocate communication and cooperation at the local level and enhance bilateral cooperation mechanisms. The countries signed into the Asia Pacific Trade Agreement (APTA) to remove tariff barriers from commodities imported from Bangladesh. Thus, China and Bangladesh have developed a diplomatic relationship to serve self-interests. China’s observant and calculative move is setting up its coercive diplomacy as Bangladesh’s dependency increases.
Nevertheless, Prime Minister Sheikh Hasina is trying to utilise the geopolitical advantage strategically. The duty-free access to China will create generous economic opportunities. As leather goods are now included in the duty-free export list, it will tremendously boost our export. This tariff-free offer will undoubtedly bridge the trade gap between the two countries. According to experts, with this mutual partnership, if Bangladesh can capture even 1% of China’s imports, then some $20 billion to 25 billion dollars can be attained.
The COVID-19 engulfed the world in stark darkness and
disrupted the world’s economy. Bangladesh too faced the harsh impact of such an economic adversity. Due to the restrictions of cross-country supply-chain, the country faced a downturn in the GDP growth rate. Hence, China’s decision to increase cross-border trade with the duty-free facility was a blessing in a state of acute economic vulnerability. It helped Bangladesh recover from the loss, boost economic growth, increase income, and provide greater employment opportunities.
Nevertheless, every opportunity comes with challenges. The duty-free facility holds a good deal of challenges as well. As per the prediction of Faruque Hasan, president of BGMEA, the most challenging aspect of exporting products to China is their high productivity. Bangladesh’s production capacity needs to be enhanced and accelerated to meet its productivity. Besides, China can bargain prices which becomes another challenge for Bangladesh seeking to export goods.
It is possible to overcome the challenges and ensure an economic escalation. All that is required is to stay aware and alert. China has hosted an international trade fair where Bangladeshi companies can set up their stores and have their own pavillion. It will certainly help promote Bangladeshi products. Moreover, Bangladeshi companies must appoint a representative in their respective branch in China. This would help in maintaining a solid understanding of product demands.
Bangladesh’s geopolitical advantage has contributed towards developing strong allies, and China is one of them. Attaining a 98% duty-free access of products to China is a monumental scope for the economic growth of Bangladesh, although too much dependence on China might lead to a predicament. China is being compliant, observant, and calculative in its move. Likewise, if Bangladesh can strategically utilise each opportunity, this diplomatic relationship will bring forth economic success.
