On April 28, 2021, President Abdul Hamid and Colonel General Wei Fenghe, member of the State Council of the People’s Republic of China and Minister of Defense, met in Dhaka, capital city of the People’s Republic of Bangladesh. Representatives of the two states agreed to develop the existing cooperation in the military sphere.
Today, China is Bangladesh’s largest trading partner. The annual net inflow of investment from China to this country of 162 million people ranks first among all sources of foreign direct investment. Bangladesh was also one of the countries that used the largest number of China’s soft loans. It is worth recalling that the country actively participates in China’s “One Belt, One Road Initiative”, considering it one of the most important areas of cooperation.
As of July 1, 2020. China exempted 97% of Bangladeshi goods from customs duties. A total of about 8,000 products from Bangladesh will be subject to zero tariffs, a relaxation that is believed to boost trade between the two countries, as previously only about 3,000 products from Bangladesh were covered by the privilege.
In 2021, 40% of Bangladesh’s total imports came from China, making it the largest import partner after India, whose goods account for about 20% of Bangladesh’s total imports. In general, the main imported goods are nuclear equipment, cotton, electrical equipment, man-made staple fibers, and knitted or crocheted fabrics. In addition to the above goods, Bangladesh also imports iron, steel and steel products, plastics, fertilizers, organic chemicals, paper, cardboard, floating structures — ships, boats, etc.
From 2013 to 2021, the volume of Chinese imports to Bangladesh increased by almost 90%. It is clear that trade between Bangladesh and the PRC is heavily skewed toward imports of goods from China. New technological developments and lower commodity prices increase the demand for Chinese products in Bangladesh.
In turn, China also imports various kinds of goods from Bangladesh. The Celestial Empire is the fourth largest recipient of plastic products made in Bangladesh. China is also the largest export destination for Bangladeshi seeds and fruits. Bangladesh exports large quantities of seafood to China every year. It is important to note that agricultural products from Bangladesh are in extremely high demand in China’s domestic market. Bangladesh also supplies pharmaceuticals to China. So far, the industry is underdeveloped in the country and export volumes to China are small, but the Bangladeshi leadership is promoting the modernization of its country and is making great efforts to develop high-tech areas of production.
The 2020 coronavirus pandemic also played a role in strengthening relations between the two nations. In late April 2021, the government of Bangladesh approved the domestic production of the Chinese vaccine against COVID-19 (as well as the Russian vaccine Sputnik V), scheduled for late July or early August.
It should be noted that the leadership of Bangladesh has many agreements with the Chinese government on the supply of military weapons and military equipment for the needs of the Bangladeshi army. For example, the arsenal of the armed forces of Bangladesh includes 58 Type 69 tanks, 49 WS-1 multiple rocket launchers, 344 HJ-8 anti-tank missile systems and 132 Type 65/74 anti-aircraft guns.
In addition to the long-standing historical friendship, there are some very important factors that make the relationship between China and Bangladesh more intense every year.
One of the main reasons for the improvement of relations between the PRC and Bangladesh can be identified as the weakening of the US position observed throughout the world. Over the past few years, the United States has been struggling intensely with its domestic problems, which include massive social unrest, a difficult political climate, the coronavirus pandemic, and a growing national debt. Because the US leadership is currently unable to change the situation at home, the US economy has sagged significantly, which means that the US side cannot cooperate with other countries on the previous favorable terms. In this context, China is a more reliable partner for Bangladesh.
The global trend that has been going on for several years, including the weakening influence of the US dollar in the international market, also plays a significant role in strengthening relations between Bangladesh and China. The Bangladeshi leadership is increasing its foreign exchange reserves in yuan rather than dollars. Every day, commercial organizations in the country are increasingly settling accounts with their counterparts from China in yuan, as businessmen from both countries consider the Celestial Empire’s currency more reliable than the US one.
It is worth noting that one of the most important links between the two countries is their geographical proximity. China and Bangladesh are separated by only one narrow isthmus in the form of the Indian borders. The close cooperation between China and Bangladesh can have a positive impact on the development of the region.
However, despite the unfortunate fact that Bangladesh is not a rich country, the government is fighting poverty with all its might and is trying to develop the state under its control. Increased trade with China will definitely have a positive impact on the living standards of the population.
In addition, China’s increasing economic influence is unlikely to weaken India’s rather strong position both in Bangladesh and in the region as a whole. However, if the leadership of Bangladesh is more willing to cooperate with China than with India, it means that China offers more fruitful conditions for cooperation.
To sum it up, we can conclude that the interaction between the PRC and Bangladesh makes a tremendous positive contribution to the development of the whole region. If Bangladesh, through its trade with China, increases its level of economic development, it will soon be able to expand its foreign trade relations not only with China and India, but also with many other neighboring countries.
Petr Konovalov, a political observer, exclusively for the online magazine “New Eastern Outlook“.