China-Bangladesh FTA agreement can bring more Bangladeshi products into the scope of tax exemption, effectively alleviate the bilateral trade deficit between Bangladesh and China,” Prof Cheng Min of the Institute for Bangladesh Studies of the Yunnan Academy of Social Science, Kunming, says.
“On the other hand, it also lays a good foundation for promoting the construction of “Bangladesh, China, India and Myanmar” economic corridor,” she said, speaking at an international conference on the belt and road initiative (BRI) in Dhaka recently.
She tried to give an overview of the feasibility and countermeasure analysis of the signing of the China-Bangladesh FTA and allay possible concerns. “At present, China’s competitive advantages in steel, non-ferrous metals, building materials, railways, electricity, chemical industry, automobiles, communications, construction machinery, aerospace ships and marine engineering will hardly impact Bangladesh, because Bangladesh’s industries are just starting.
“According to Liszt’s theory of infant industry, a lot of imports and foreign investment are needed at this time. Due to the rising labour costs, it is also difficult for China’s homogeneous ready-made clothing products to impact Bangladesh,” Prod Min said. Bangladesh does not have free trade agreement with any country.
In October 2016, during Chinese President Xi Jinping visit to Bangladesh, the two sides agreed to launch a feasibility study on bilateral free trade area. Bangladesh also joined his flagship BRI during that visit. Prof Min said Bangladesh is an “important partner” of China in South Asia, and the establishment of the FTA will not only benefit the two countries to carry out economic cooperation, but also will have a “positive impact” on the BRI construction.
The bilateral trade of $16.4 bn in 2017 grew with an average annual growth of 20 percent since 1975 when China established diplomatic ties with Bangladesh. It is heavily in favour of China. In 2018, China’s direct investment in Bangladesh was $228 mn.