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How do we increase our exports to China?
MAMUN RASHID
China is the largest exporting and second-largest importing country in the world. The Chinese domestic market is also expanding fast with increasing consumerism and brand popularity. Yet Bangladesh’s export to China is dropping despite signing the tariff waiver for many “Made in Bangladesh” products.
Since 2015, China offered Bangladesh extensions on the trade benefits for up to almost 99 percent of our goods. Still, the exports from Bangladesh have not picked up to the desired level.
Analysts blame the lack of product diversification and competitiveness as a major barrier. Bangladesh’s major export is readymade garment, while China itself is the largest apparel and textile supplier worldwide, occupying nearly 32 percent of the global share.
China’s imports of RMGs share are more where it has signed free trade agreements like in ASEAN countries. It has effective FTAs with countries which are our competitors, especially in the garment sector. Studies reveal that we have only about 3 percent market share in China for RMG whereas it is 18 percent for Vietnam, our competitor in the same domain.
Though fisheries and aquatic products have been accorded zero duty coverage by China, they often face non-tariff and technical barriers to trade under the guise of sanitary and phytosanitary measures leading to blockages.
We don’t have a strong forward and backward linkage in RMG. This is a big handicap. Bangladesh’s backward linkage industry in the textile sector is 5-8 percent of total demand. Due to this, raw materials like fabrics, trims, and accessories are being imported from other countries, especially China.
Analysts think that the granting of zero duty concessions and exemptions is a transient phase accorded to least-developed countries (LDCs) and a derogation from WTO principles. This is unlikely to be continued for an indefinite manner.
Ultimately, developed and industrialised countries should give special and differential treatment to developing countries as envisaged. Even the Chinese importers think of the zero duty concessions as a temporary phase.
They are, on the other hand, favourably disposed towards those countries with which they have FTAs. Hence, we need to be more competitive and need to attract Chinese investment in our export sector. Bangladesh should take advantage of China’s projected RMG import growth if needed by using Chinas relocated factories in Bangladesh.
If unilateral zero duty concessions cannot be expanded, we should prioritise an FTA with China. In the talks leading to the signing of FTA, we should follow a sector-by-sector approach and protect our interests in the thrust, promising and emerging sectors. China should not insist on reciprocity while granting duty exemptions.
China may consider setting up a special economic zone in Bangladesh like the Shenzhen Special Economic Zone. Once considered a sweatshop centre, Shenzhen is now the hi-tech home of leading Chinese tech firms. A research and development institute could also be set up to give thrust to innovation and entrepreneurship development.
China is now driving technological innovation in new and renewable energies, advanced telecommunications, supercomputers, AI, robotics, and space technologies. Could we not convince them to set up some of their centres in these areas in Bangladesh? Investment seems to be a big driver that could fill up the yawning export-import gap.
Our foreign minister has recently appreciated the progress in FTA negotiations between Bangladesh and China and hoped that it will be finalised by 2026. We hope the above issues will be given due priorities as our prime minister visits China this week.
The author is an economic analyst.