Saturday, October 15, 2016 http://dailyasianage.com/news/34134/china-now-source-of-technology-and-finance
China now source of technology and finance M S Siddiqui China was the "world factory" of consumer goods from the past and recently upgraded to provide advanced equipment to the world's major bases. The low cost products are no more competitive due to rapid development and increase of wages. Now China is looking forward to shift the manufacturing locations to get competitiveness of production. China is the largest source of import for Bangladesh since last few years and the share of imports from China is growing quite rapidly from 20.7 percent in 2013-14, and increased to about 24.1 percent of the total merchandised imports from the country in 2015-16 as per Bangladesh Bank data. The foreign exchange data shows that import from China was worth about USD 9.8 billion in 2015-16, which was $ 5.9 billion in 2010-11. But there are some informal transaction and the total amount reportedly 13 billion as shown in the statistics of Chinese trade records. The bilateral trade has been increasing significantly over the years, both in terms of absolute amount and percentage change among Bangladesh's top trade partners. Bangladesh's trade with China is now about 26.5 percent of its total trade with the world, which is the highest with a rising trend. If this rate prevails, the total bilateral trade would be $18 billion in 2021, when the country would celebrate its 50th anniversary. As per the statistics of Export Promotion Bureau of Bangladesh, the country's total merchandised export to China was $808.14 million in the year 2015-16, which was only $319.66 million in 2010-11. Thus, Bangladesh's export to China grew at an annual average of 30 percent in the last five years. But the recent export growth has been quite slow, only 6 and 2.2 percent in 2014-15 and 201516, respectively. The share of exports to China was merely 2.4 percent of the total export in the immediate past fiscal year. The growth of import was considerably lower than export during this period, on average 13 percent per annum. The top five export items count about 80 percent of total exports in 2015-16, of which 42.2 percent is woven and knit garments as per the doubledigit harmonized code. The main items are woven garments (24.5 percent), leather products and travel items (17.9 percent), knitwear (17.8 percent), paper yarn and woven fabric (12.6 percent), and raw leather (6.5 percent). Fish and footwear are also getting prominence (8.5 percent) in the export basket. Bangladesh mainly imports raw materials for its textiles and some components from China, such as cotton, yarn, fabrics, staple fibers and accessories for its readymade garments (RMG) industry,
which is nearly 35 percent of total imports. The latest data reveals that the Bangladesh imported cotton, cotton yarn/thread and cotton fabrics (19.6 percent); man-made staple fibers and knitted or crocheted fabrics (10.1 percent); man-made filaments, strip and the like of manmade textile materials (3.8 percent); and other fabrics and apparel accessories (2.8 percent). The other notable import items are machinery, industrial equipment and their parts (16.4 percent); electrical machinery and equipment and parts (12.2 percent); and fertilizer, plastic, chemicals, and iron and steel (13.1 percent). It also imports some food items from China. Despite there is no bilateral free trade agreement but Bangladesh got duty-free access of around 5,000 items to the Chinese market under the Asia Pacific Trade Agreement (APTA). Bangladesh expects zero-tariff access of almost all exportable items, including RMG products and to reduce huge trade deficit and bilateral trade would be much larger in the foreseeable future. The best part of Bangladesh-China trade relation is a complementarity as evident in the export and import items, which is believed to create synergy especially in Bangladesh's export-oriented RMG industry. China is the largest trading partner and source of raw materials for our industries particularly for RMG and the integration is possible with investment in Bangladesh by Chinese entrepreneurs in order to reduce cost of products to enhance the integration of industries in Bangladesh and China. China will hopefully take initiative for investment in two proposed special economic zones (SEZs) and establishing two dedicated export processing zones (EPZ) for China and would help boost bilateral trade and increase Bangladesh's exports to the global market. Over and above synergy in business, we are very much keen to be connected through Road and Belt initiative. Bangladesh will naturally beneficial of the initiatives of China namely (1) the One Belt One Road (OBOR) strategy or Belt and Road Initiatives (BRI), comprising of the Silk Road Economic Belt (SREB) and the 21st Century Maritime Silk Road (MSR); (2) the Asian Infrastructure and Investment Bank (AIIB); (3) the revival of the Free Trade Area of Asia and the Pacific (FTAAP) initiative; and (4) the intensification of bilateral partnerships with its neighbors. Moreover, the Chinese Road and Belt initiative is for connectivity for China throughout the world to increase Chinese business relation with efficient transportation and also strategic cooperation for regional and global peace. Bangladesh and other countries will enjoy the benefit of the connectivity and increase more trade and cultural exchange. Bangladesh has given warm reception to the trusted friend from China the Honorable President Xi Jinping on Friday. Bangladesh and China have signed 27 deals on cooperation in a number of sectors. Some investment-related MoUs were signed for strengthening investment on industrial production-capacity cooperation, joint feasibility study on FTZ and framework agreement for developing cooperation on production capacity including construction of a Karnaphuli tunnel. A five-year MoU was also signed for a project to help Bangladesh mitigate disaster risks. We also expect more cultural and educational co-operation between two countries in order to have closer relation in education and technology transfer for advancement of our nation. Bangladesh also reciprocated by offering dedicated Free Trade Zone for China and agreement for Deep sea port etc during his visit. The emerging global leader may give more attention to regional issues and play a constructive role.
The requested free trade zones will be fenced-in, duty-free areas, offering warehousing, storage, and distribution facilities for trade, transshipment, and re-export operations. The FTZ will have a roadmap for increasing Chinese investment in Bangladesh and setting up joint venture companies and initiate the process of re-export through Bangladesh. Bangladesh is ideal place of free trade due to strategic location between China, India and ASEAN countries. China has signed Free Trade Agreement with an exclusive free trade zone for some time that will be a feasibility study for a free trade zone in Bangladesh to facilitate Chinese investment. The free trade zones should be fenced-in, duty-free areas, offering warehousing, storage, and distribution facilities for trade, transshipment, and re-export operations. The Chinese Road and Belt initiative is for connectivity for China throughout the world to increase Chinese business relation with efficient transportation and also strategic co-operation for regional and global peace. Bangladesh and other countries will enjoy the benefit of the connectivity and increase more trade and cultural exchange. We are very much keen to be connected through Road and Belt initiatives. The writer is a legal economist