Bangladesh Struggles To Leverage Zero-Duty Trade With China Amid Rising Imports4 min read

Despite having preferential zero-duty trade access to the Chinese market, Bangladesh has barely scratched the surface of its export potential, primarily due to a lack of product diversity. Meanwhile, imports from China have surged, further widening the already staggering trade gap between the two nations, reportedly.

China has remained Bangladesh’s largest trading partner for years, yet the trade equation remains heavily lopsided. In the first half of the current fiscal year (July-December), Bangladesh imported $8.89 billion worth of goods from China but managed to export only $461.05 million in return. The previous fiscal year painted a similar picture, with imports totaling $16.63 billion while exports barely reached $715.37 million, according to data from Bangladesh Bank (BB) and the Export Promotion Bureau (EPB).

Why Does Bangladesh Rely So Heavily on Chinese Imports?

One of the biggest contributors to Bangladesh’s reliance on China is its textile sector, which is heavily dependent on Chinese yarn and fabrics – particularly man-made fibers and fabrics—that account for more than 40% of total imports. Additionally, capital machinery constitutes 24% of total imports, alongside cotton, food items, and other essential raw materials.

While Bangladesh imports billions of dollars’ worth of goods, its exports to China struggle to make an impact. The country’s main export – garments – is overshadowed by China’s own dominant apparel industry, which holds a staggering 31% global market share. The Chinese garment sector alone is valued at around $750 billion, with domestic consumption making up $350 billion.

Read more: CA Yunus To Strengthen Investment Ties, Facilitate Factory Relocations In China Visit

Can Bangladesh Compete in the Chinese Market?

China’s total global garment imports barely reach $10 billion annually, meaning Bangladesh’s chances of expanding its apparel exports to China are extremely limited. To reduce this dependency, Bangladesh needs to diversify its product offerings and attract more Chinese investments into its own industrial sector.

Economists and business leaders believe that Chief Adviser Muhammad Yunus’ upcoming visit to China presents a crucial opportunity for Bangladesh to negotiate greater investments and push for a more balanced trade relationship.

A Shift in Strategy: From Trade to Investment

Experts suggest that Bangladesh should not only focus on increasing exports but also work towards attracting Chinese entrepreneurs to relocate their factories. There is huge potential for investment in man-made fibers, leather goods, solar panels, semiconductors, and microchips.

Currently, Chinese investments in Bangladesh are mostly concentrated in infrastructure projects, but business leaders argue that the scope should be broadened to manufacturing and high-value industries.

To foster stronger business ties, some have proposed a regular joint trade and investment fair to showcase new opportunities for collaboration. Additionally, ongoing negotiations for a free trade agreement (FTA) with China could be expanded into a comprehensive free trade and investment agreement to ensure long-term economic benefits.

Signs of Growing Chinese Interest in Bangladesh

There are already signs that Chinese investors are paying close attention to Bangladesh. After the US imposed 35% tariffs on Chinese goods under Donald Trump’s administration, many Chinese entrepreneurs began exploring alternative investment destinations—with Bangladesh emerging as an attractive option.

Some Chinese importers have also shown interest in sourcing Bangladeshi agricultural products, such as jackfruits, mangoes, guavas, and hilsa fish, which could help broaden the country’s export portfolio.

Showkat Aziz Russell, President of the Bangladesh Textile Mills Association (BTMA), has urged Chinese factories to relocate to Bangladesh, particularly in textiles, garments, footwear, and leather industries. Additionally, he stressed the need for large Chinese banks to open branches in Bangladesh to strengthen financial ties and foreign currency supply.

Overcoming Barriers to Investment

Despite growing Chinese interest, many potential investors are hesitant due to concerns over energy price fluctuations and political instability. Mohd Khorshed Alam, the former president of the Bangladesh-China Chambers of Commerce and Industry (BCCCI), highlighted that frequent energy price hikes and political uncertainties often deter Chinese businesses from committing to large-scale investments.

However, there is optimism on the horizon. A nearly $5 billion Chinese investment plan is expected to be announced during the chief adviser’s visit to China, signaling renewed enthusiasm for strengthening economic ties between the two nations.

If Bangladesh can capitalize on this momentum, secure long-term Chinese investments, and diversify its exports, it could turn the tide on its current trade imbalance – paving the way for a more equitable and prosperous partnership.

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