This is a milestone in “trade-direct” between the two countries, for each other economically and mutually despite recent strategic divergences. China’s decision to give Bangladeshi products duty-free and quota-free status until 2028 is a major step forward for Bangladesh, particularly considering the latter needs an annual $2.5-$3b to make ends meet.
The continuation of trade privileges gives Bangladesh’s economy continued benefits in the wake of such achievements. Not least among these privileges is that of free trade developers with China; foreign exchange reserves worth hundreds of millions dollars in state hands. Moreover, remaining on a preferential list for Least Developed Countries should allow Bangladeshi trade to flourish without paying any fees at all in its home market.
As Bangladesh prepares to graduate from the LDC category by 2026, its development gains will require duty-free, quota-free trade conditions in order for them to last. At present more than one of the global economies practicing opening up and reform procedures towards underprivileged nations is still considering whether it can provide tariff preference to Bangladesh; maybe none are yet present at all in.
The announcement was made at a high-level meeting between China’s Vice Premier Ding Xuexiang and Bangladesh’s Chief Adviser Dr. Muhammad Yunus during the Boao Forum for Asia Annual Conference. Apart from announcing extension of trade privileges, China also mentioned the possibility of negotiating a Free Trade Agreement (FTA) with Bangladesh. This would deepen ties between the two countries even more and create many fresh opportunities for trade, investment and business development.
Trade Privileges And Economic Benefits
The extension of China’s trade privileges is a smart move that shields Bangladesh’s export industries as it enters the ranks of the non- LDCs. At present, Bangladeshi products still get preference in accessing global markets because they are still classified as LDCs; But once this status changes, the country will face higher tariffs and trade barriers. In key sectors some of its exports may become less competitive. China extending duty-free and quota-free access acts as a lifeline during this transition process, giving Bangladesh a strong foothold in the Chinese market–and immediately forestalling pressures to introduce tariffs. Bangladesh has China as one of its busiest trading partners.
Trade between the two countries has increased year by year. Between the two countries, trade topped 25 billion US dollars in 2023, and exports from Bangladesh made up a significant portion of this trade. The ready-made garment (RMG) industry for example accounts for over 80% of all manufacturing business there. And both sides of politics are satisfied with such statistics! If Bangladesh is left tariff free to enter China that can only mean good news for the clothing industry, however tough global competition gets.
Other areas of economy could also benefit if they too were affected leather goods, for instance, and jute items also agricultural exports Shawn WANG, for Washington Meanwhile China this summer has announced that some new varieties of mangoes from Bangladesh widely expected to be those same early-sweetheart and carabao which are available in markets all across China will be on the list of imports it wishes to include. If the entire export list is eventually established this will not only benefit agriculture but even create more profit points for Bangladesh’s much too concentrated trade relations in just one or two major areas.
A potential FTA between China and Bangladesh promises even greater benefits. Such an agreement would reduce trade barriers, enlarge market openings for both nations and ensure better delivery of goods. All of which could lead to more business opportunities for both Bangladesh and China and to the further expansion of their respective economies. For Bangladesh an FTA could give it the chance to generate more exports growing strongly in areas such as pharmaceuticals; light engineering goods enterprises rely on imported inputs for most manufactured products, but this would change if an opened up breast flattener could produce everything from beginning to end; or emerging industries both new and old.
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Development of Infrastructures, Strategic Cooperation
In addition to trade, China also promised to provide Bangladesh with financial aid over long years for infrastructure development, an essential condition to long-term economic growth. At the conference, China promised to support modernising Mongla Port in particular and constructing a multi-purpose container terminal at Dawangale for good measure. Both of these initiatives fall within the remit of China’s wider strategic motivations supporting its Belt and Road Initiative (BRI): encouraging better infrastructure and connectivity across Asia. Situated on the south-west after most tip of Bangladesh Island, Mongla Port is one of the country’s key seaports.
The modernization of this major hub port will directly help lower Bangladesh’s transport costs and thus increase the efficiency in its imports and exports. By constructing the Dasherkandi Sewage Treatment Plant we will be not only providing essential public works at an urban level, but tangibly contributing to environmental management and therefore eventually public health along our cities’ infrastructure. Such projects at once form the country’s economic base and enhance Bangladesh’s appeal as a target for international investment.
Implications for Geopolitics
For Bangladesh, linking itself to China through trade and infrastructure development has strategic importance. The country is presently engaged on multiple fronts with various powers globally-including China, India and the United States to name just three-not to mention the European Union that also interfaces with it diplomatically.
As Bangladesh deepens its economic relations with China, it must manage these diplomatic ties so that it does not become too dependent upon one power. This balancing act is especially important for Bangladesh as it sees itself as a global production center and must simultaneously maintain good relations with neighboring countries and traditional friends. This epidemic of carelessness has a very similar relationship with the last one. It is primarily caused by Myanmar’s expropriation of resources in Bangladeshi waters for use in its own north-central plains. They also agreed at the meeting on internal security, religious extremism, and the issue of Bangladeshi nationals in China.
In assisting Bangladesh with its ongoing Rohingya problems, China assured it was prepared to conduct dialogue with Myanmar in order to find a sustainable solution.In return, Dr Yunus renewed Bangladesh’s promise to adhere to the “One China” policy, and expressed gratitude for Chinese support, he said. He also highlighted the necessity of properly implementing these good exchanges in trade and investment.Senior officials from both sides attended the meeting, marking yet another step toward enriching the strategic partnership between Bangladesh and China.
