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BACKGROUND OF THE STUDY

International Business acts an important role for an entrepreneur or an employee by improving the

knowledge on the world map, trade, foreign currencies and its exchange rates, and the trade

relations between the countries as well as the routes of trade. As a part of BBA program, our course

teacher Mr. Abdul Hai assigned us to prepare a report on the trade relation between Bangladesh

and any other countries as well as identification of major export goods and the route to increase

exports rather than import to China. We have selected our plan topic as “The Potential Trade

Relation between Bangladesh and China.” We have made an analysis for required information in

this area of the study. We have started our work on August 20, 2015 which will be submitted on

September 02, 2015.

OBJECTIVE OF THE STUDY

The report aims to show the bilateral trade relation between China and Bangladesh and suggest a

way to improve in export to China and find an easy way or route to export.

LIMITATIONS OF THE STUDY

We tried heart & soul to prepare a well-informed report. But unfortunately we faced some

difficulties when preparing this report. We tried to overcome the difficulties. In spite of trying our

level best, some difficulties that hamper our schedule report work.

METHODS

For making any report most of the data should be taken that reflect actual situation. For our report

we have collected various types of secondary data. We search in the website of Bangladesh Bank,

Dhaka Chambers of Commerce and Industries (DCCI), Metropolitan Chambers of Commerce and

Industries (MCCI) and other online newspapers.

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Abstract

Bangladesh-China relations observed its 35th anniversary in 2010. China is a significant

development partner of, and now the biggest source of import of goods for Bangladesh.

Bangladesh-China defense cooperation is strong. Bangladesh-China relations result in signing of

a plethora of bilateral agreements on various socio-economic issues. This paper attempts to have

a review of 35-year relations between Bangladesh and China. Although Bangladesh mainta ins

relatively stable political relations with China, Bangladesh suffers from huge trade deficit vis-à-

vis China. Trade and commerce is the major area of cooperation between the two countries. Other

potential areas of cooperation are water resource management, renewable energy, connectivity,

foreign direct investment (FDI), maritime security, and capacity building of Bangladeshi ports. If

the idea of the BCIM (Bangladesh, China, India and Myanmar) truly takes off, this „quadrilatera ls‟

could have enormous positive ramifications for lessening tensions and also serve as a model for

other parts of Asia on how to draw China into a collaborative relationship.

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The People’s Republic of Bangladesh

An independent country since 16th December 1971, has an area of approximately 148,680 square

kilometer, is 95th largest nation in the world. Bangladesh, officially titled as the People's

Republic of Bangladesh is a South Asian country bordering India towards west, north and east;

Burma to its southeast and separated from Nepal and Bhutan by the Chicken’s Neck corridor. To

its south, it faces the Bay of Bengal. It has one of the largest coast-line around the world of

around 580 kilometer, making Cox‟s Bazar its main tourist attractions for the sea-lovers.

Bangladesh is the world's eighth-most populous country, with around 158.5 people. One of the

most densely populated countries, and is by far the most densely populated of any country whose

population exceeds 10 million, holding a massive labor force for the future years ahead. It

governs most of Sundarban, largest mangrove forest globally, with an area of 6,000 square

kilometer.

Trade Relations In terms of foreign relations Bangladesh pursues a moderate foreign policy, which is articulated

by its principle of “friendship towards all and malice towards none”. It recognizes every country

and has heavy reliance on multilateral diplomacy, especially within the United Nations, except for

Israel. After liberation, it has joined the Commonwealth of Nations, the Non-Aligned Movement

and the Organization of Islamic Conference, has been elected twice to serve on the UN Security Council- from 1978–1979 and 2000–2001. In the 1980s, Bangladesh pioneered the

formation of the South Asian Association for Regional Cooperation (SAARC). Since the founding

of SAARC in 1985, a Bangladeshi has held the post of Secretary-General on two occasions. It co-

founded the Developing 8 Countries and the Bay of Bengal Initiative. It is a member of the Asia-

Europe Meeting, the Associations of South – East Asian Nations Regional Forum, the Asia

Cooperation Dialogue, Bangladesh–China–India–Myanmar Forum for Regional Cooperation, the

G-77, the Indian Ocean Rim Association and the World Trade Organization. Bangladesh's foreign

policy priorities include promoting multilateral engagement, regional security and cooperation,

combating terrorism and the expansion of trade and investment. Bangladesh is one of the world's

largest contributors of UN peacekeeping forces. As of 2014, it has taken part in over 54 UN

peacekeeping missions in Africa, the Balkans, the Middle East and the Caribbean, with an

estimated 113,000 military personnel. Bangladesh participated in Operation Desert Storm during

the Gulf War in 1991. In Afghanistan, the development agency BRAC serves 12 million people in

areas of primary and secondary education, the empowerment of women and microfinance.

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The People’s Republic of China

China, officially the People's Republic of China (PRC), is a sovereign state in East Asia. It is the

world's most populous country, with a population of over 1.35 billion. The PRC is a single-party

state governed by the Chinese Communist Party, with its seat of government in the capital city of

Beijing

Covering approximately 9.6 million square kilometers, China is the world's second-largest country

by land area, and either the third or fourth-largest by total area, depending on the method of

measurement. China's landscape is vast and diverse, ranging from forest steppes and the Gobi and

Taklamakan deserts in the arid north to subtropical forests in the wetter south. The Himalaya,

Karakoram, Pamir and Tian Shan mountain ranges separate China from South and Central Asia.

The Yangtze and Yellow Rivers, the third- and sixth-longest in the world, run from the Tibetan

Plateau to the densely populated eastern seaboard. China's coastline along the Pacific Ocean is

14,500 kilometers (9,000 mi) long, and is bounded by the Bohai, Yellow, East and South China

Seas.

Trade relations

In recent decades, China has played an increasing role in calling for free trade areas and security pacts amongst its Asia-Pacific neighbors. In 2004, it proposed an entirely new East Asia Summit (EAS) framework as a forum for regional security issues (Dillon & Thacik, Dec 2005 –

Jan 2006).The EAS, which includes ASEAN plus Three, India, Australia and New Zealand, held

its inaugural summit in 2005. China is also a founding member of the Shanghai Cooperation

Organization (SCO), along with Russia and the Central Asian republics. China became a member

of the World Trade Organization (WTO) on 11 December 2001. In 2000, the United States

Congress approved "permanent normal trade relations" (PNTR) with China, allowing Chinese

exports in at the same low tariffs as goods from most other countries. China has a significant trade

surplus with the United States, its most important export market. In the early 2010s, US politic ians

argued that the Chinese Yuan was significantly undervalued, giving China an unfair trade

advantage (Palmer, Oct 2012). In recent decades, China has followed a policy of engaging with

African nations for trade and bilateral co-operation (Pulitzer, Feb 2013) in 2012, Sino-African

trade totaled over US$160 billion. China has furthermore strengthened its ties with major South

American economies, becoming the largest trading partner of Brazil and building strategic links

with Argentina.

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China - Bangladesh Relationships

“The History” As described by Chinese Explorer and Admiral Zheng He whilst undertaking voyages to Bengal,

from Chittagong to Sonargaon “…..We started from the Kingdom of Sumatra, sailed with the wind

for twenty days and anchored in Chittagong. From there we took small boats for over 500 li (250

kilometers) to Sonargaon....There was a guard of honor of thousands of people accompanying us

along the way. The Sultan's palace was tall and spacious with pillars in the color of brass and

decorated with flower and animal carvings. There were long corridors on both sides with thousands

of armed cavalry squads inside and extraordinarily strong and dignified soldiers equipped with

swords, bows and arrows outside. On the left and right of vermilion steps leading up to the palace

there were over a hundred parasols made of peacock feathers. Hundreds of elephant squads lined

up in front of the palace. The Sultan wore a crown studded with eight gems and sat on the throne

with a sword on his knees. Two men with silver staffs came and guided the emperor's envoy

forward. The locals are followers of Islam. They are honest and pure and speak a language called

Bengali. Some men wrap their foreheads in white cloth and wear long white shirts. Some others

are wrapped in colorful cloth from the waist down. Women are dressed in short shirts and draped

with brocades. The kingdom is densely populated and has abundant resources and fertile lands.

Hard-working men plough the fields while diligent women weave cloth. Many of the rich build

ships and go abroad for business….”

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Diplomatic Relations

In 1977, President Ziaur Rahman became the first leader of independent Bangladesh to visit the

PRC. Successive governments in Bangladesh followed the policy of building close relations with

China, in response to mutual mistrust and imbalance with neighboring India. Politically, President

Ziaur Rahman's party the Bangladesh Nationalist Party is closely tied to China while Awami

League is to India although Awami League has a healthy and amicable relation with China.

By the mid-1980s, China had forged close military, commercial and cultural ties with Bangladesh

and also supplied it with military aid and equipment. The then-president of Bangladesh Hossain

Mohammad Ershad was received with much fanfare and warmth when he visited Beijing in July

1987. A Bangladesh-China friendship bridge was constructed and inaugurated over river

Buriganga connecting Dhaka-Bikrampur Munshigonj by the Chinese as token of this newly

advancing diplomatic and military relationship. On 4 October 2000, Ministry of Post and

Telecommunications (Bangladesh) issued a postal stamp marking the 25th anniversary of the

establishment of Bangladesh-China diplomatic relations. By this time, China had provided

economic assistance totaling US$300 million to Bangladesh and the bilateral trade had reached a

value mounting to a billion dollars. In 2002, the Chinese Premier Wen Jiabao made an official visit

to Bangladesh and both countries declared 2005 as the "Bangladesh-China Friendship Year. The

two countries signed nine different bi-lateral agreements to increase their mutual relationship.

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Military Relations

The Bangladesh Army has been equipped with Chinese tanks, its navy has Chinese

frigates and missile boats and the Bangladesh Air Force flies Chinese fighter jets. In 2002, China And Bangladesh signed a "Defense Cooperation Agreement" which covers military training and

defense production. In 2006, in a report submitted to the United Nations by China, for its exports

and imports of major conventional arms revealed Dhaka is emerging as a major buyer of weapons

made in China. China sold 65 large caliber artillery systems, 16 combat aircraft and 114 missile

and related equipment to Bangladesh in 2005. Besides this, some 200 small arms like pistols and

sub-machine guns have also been imported along with regular 82-mm mortars. In 2008, Bangladesh set up an anti-ship missile launch pad near the Chittagong Port with assistance

from China. The maiden missile test was performed on 12 May 2008 with active participation of

Chinese experts. It successfully test-fired anti-ship missile C-802A with a strike range of 120 km

from the frigate BNS Osman near Kutubdia Island in the Bay of Bengal. BNS Osman which was

commissioned in 1989 is a 1500-ton Chinese built Jianghu class Frigate, and the C-802A missile

is a modified version of Chinese Ying Ji-802 with weight reduced from 815 kg to 715 kg to

increase the strike range from 42 km to 120 km.

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Economic Relations

Bangladesh is third largest trade partner of China in South Asia. But, the bilateral trade between

them is highly tilted in favor of Beijing. Bilateral trade reached as high as US$3.19 billion in 2006,

reflecting a growth of 28.5% between 2005 and 2006. China has bolstered its economic aid to

Bangladesh to address concerns of trade imbalance; in 2006, Bangladesh's exports to China

amounted only about USD 98.8 million. Under the auspices of the Asia-Pacific Free Trade

Agreement (AFTA), China removed tariff barriers to 84 types of commodities imported from

Bangladesh and is working to reduce tariffs over the trade of jute and textiles, which are

Bangladesh's chief domestic products. China has also offered to construct nuclear power plants in

Bangladesh to help meet the country's growing energy needs, while also seeking to aid the

development of Bangladesh's natural gas resources. China's mainly imports raw materials from

Bangladesh like leather, cotton textiles, fish, etc. China's major exports to Bangladesh include

textiles, machinery and electronic products, cement, fertilizer, tire, raw silk, maize, etc.

Table-1:Trade Volume of Bangladesh with China (in millions of $)

Year Export

to China Import

from China Trade Ratio Trade Deficit

Deficit Growth Rate (%)

2004-2005 56.07 1643.77 1:29.32 1587.7 46.05

2005-2006 64.35 2078.99 1:32.31 2014.64 26.89

2006-2007 92.97 2572.62 1:27.67 2479.65 23.08

2007-2008 106.95 3136.7 1:29.33 3029.75 22.18

2008-2009 97.06 3451.47 1:35.56 3354.41 10.72

2009-2010 178.63 3819.28 1:21.38 3640.65 8.53

2010-2011 319.66 5912.55 1:18.50 5592.89 53.62

2011-2012 401.94 6433.21 1:16.01 6031.27 7.84

2012-2013 458.12 6324 1:13.80 5865.88 -2.74

2013-2014 746 7540 1:10.11 6794 15.82

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MAJOR EXPORT ITEMS TO CHINA

Commodity Group

2011-2012 2012-2013 2013-2014

Amount ($) (in millions)

Amount ($) (in millions)

Amount ($) (in millions)

Readymade Garments 59 90 157

Fish, Shrimps and Prawns 6 10 13

Jute Manufactures 48 50 71

Leather and Leather

Manufacturer 29 59 164

Raw Jute 57 34 25

Handicrafts 0 0 0

Others 111 98 103

310 341 533

Last year, Bangladesh exported more readymade garments, jute manufactures, leather and leather

manufactures than the previous years.

MAJOR EXPORT ITEMS TO CHINA

Commodity Group

2011-2012 2012-2013 2013-2014

Amount ($) (in millions)

Amount ($) (in millions)

Amount ($) (in millions)

Cotton,(all types) cotton yarn/thread and cotton fabrics 1229.8 1409.6 1618.8

Nuclear reactors, Boilers, Machinery & mechanical

appliances, parts thereof 1117.9 941.1 1161.4

Electrical machinery and equipment and parts thereof, sound recorders and reproducers, television image and

sound recorders and reproducers and parts and accessories of such articles

816.5 753.5 986.2

Man-made staple fibers 415.4 417.0 401.6

Knitted or crocheted fabrics 332.9 377.1 389.4

Man-made filaments; strip and the like of man-made

textile materials 214.8 231.7 286.0

Fertilizer 298 236.6 267.5

Plastics and articles thereof 120 138.1 172.3

Organic chemicals 129.2 125.1 161.0

Iron and steel 118.1 128.8 146.8

Others 1617.7 1549 1949.8

Bangladesh imported defense materials, materials for garments industries, electrical machineries,

fertilizers, organic chemicals, iron and steel materials and other kinds of materials for the industries

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Bilateral Relations

In 2013, the closer comprehensive partnership of cooperation between the People's

Republic of China and the People's Republic of Bangladesh continued to grow with exchanges and

cooperation deepened in various fields. Exchanges between the two countries were close at all

levels, and political mutual trust was enhanced. In July, Foreign Minister Wang Yi met with

Bangladeshi Foreign Minister Dipu Moni in Brunei during the East Asian Foreign Ministers'

Meetings. In September, Foreign Minister Wang Yi met with Bangladeshi Prime Minister Sheikh

Hasina in New York during the UN General Assembly. In the same month, Vice President Li

Yuanchao met Speaker of the Bangladeshi National Parliament Shirin Sharmin Chowdhury in

Kunming on the sidelines of the "International Day of Peace 2013 and China-South Asia Peace

and Development Forum".

In June, Bangladeshi Foreign Secretary Md. Shahidul Haque visited China. In the same month,

Bangladeshi Minister of Industries Dilip Barua and International Affairs Adviser to the Prime

Minister Gowher Rizvi attended the first China-South Asia Expo as representatives of the guest of

honor nation. In October, Bangladeshi Foreign Minister Dipu Moni visited China, during which

she met with Vice President Li Yuanchao and had talks with Foreign Minister Wang Yi. In

December, Foreign Secretary Haque attended the first meeting of the BCIM Economic Corridor's

joint study group in Kunming. The two countries had active party-to-party and military-to-military

exchanges. In August, General Iqbal Karim Bhuiyan, Chief of Army Staff of

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The Bangladeshi Army, visited China. Chinese Navy hospital ship "Peace Ark" visited Chittagong.

In September, Chief of Air Staff of the Bangladeshi Air Force Muhammad Enamul Bari visited

China. The Young Cadre Delegation of the Awami League and Bangladesh Nationalist Party and

leaders of left-wing parties visited China respectively. Business cooperation yielded fruitful

results, and the bilateral trade volume grew rapidly. Projects undertaken by the Chinese side,

Including the Padma Water Treatment Plant and the Shahjalal Fertilizer Company, made smooth

progress. The 3G network project was officially put into commercial operation. Consular relations

between the two countries continued to grow, and cultural exchanges further deepened. In October,

the Bangladeshi Consulate- General in Kunming was inaugurated, bringing greater convenience

to friendly people-to-people exchanges between the two countries. Signature cultural events such

as the "Happy Chinese New Year" activities and the "Chinese Bridge" Chinese proficiency

competition for college students were held as usual. (FMPRC, 2013)

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Bilateral Investment Relations

China is the largest trading partner of Bangladesh, with total bilateral trade volume coming to

$8.287 billion in fiscal 2013-14. However, it is expected to grow to more than $10 billion in this

current fiscal year. In fiscal 2013-14, Bangladesh imported $7.5 billion worth of goods from China

and exported only $746.20 million worth of goods to China. So there is ample scope of not only

increasing export from Bangladesh to China but also re-locating labor intensive industries from

China to Bangladesh.

China, today, with almost $10 trillion of GDP, is the second largest economy and the largest

exporter in the world having the highest foreign exchange reserve of about $4 trillion. In the global

landscape, five Chinese corporate houses stand in the top ten. Over the next five years, there will

be some major developments in China: $500 billion is expected to be invested by the government

and Chinese corporate houses in different countries; China is expected to import $10 trillion worth

of products and export products worth $20 trillion; and 400 million Chinese tourists will travel to

various destinations.

Graph 1

Joint Statement between the People's Republic of China and the People's Republic of Bangladesh

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FOREIGN DIRECT INVESTMENT BY CHINA

China is keenly interested to invest in the different sectors of Bangladesh. We are showing some

investment; present and future; below:

There are about 186 Chinese enterprises with a registered capital of US$320 million in

Bangladesh

China has already built six bridges in Bangladesh

Establish a high speed railway link between Kunming and Kolkata through Dhaka and

Chittagong

Construction of a deep seaport in Chittagong, facilitating Chittagong‐Kunming road

connection through Myanmar as well

the ‘Chinese Economic and Industrial Zone (CEIZ)’ at Anwara upazila in Chittagong in

Bangladesh

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FUTURE PROGRESS OF CHINA-BANGLADESH RELATION

Chinese Economic and Industrial Zone (CEIZ): the Bangladesh Economic Zones Authority (BEZA) has sought funding from the finance ministry to set up a special

economic zone at Anwara upazila in Chittagong to attract Chinese investment. The BEZA has recently sent a proposal to the finance ministry seeking about Tk 420 crore

interest free funds for acquisition of land for the Chinese Economic and Industrial Zone (CEIZ). And Recently Chinese Commerce Minister GAO Hucheng visited Bangladesh on August 29 to discuss about bilateral trade and commerce. During his visit

Bangladesh-China-India-Myanmar (BCIM): China plans to establish a high speed railway link between Kunming and Kolkata through Dhaka and Chittagong. According to

reports reaching Dhaka from Kunming, the capital city of China's southern Yunnan province, the proposal plans to boost the Bangladesh-China-India-Myanmar (BCIM)

multi-modal transport system. The project looks forward to the newly established Asian Infrastructure Investment Bank (AIIB) and other funders for financing it. The 2,800 kilometer rail route could be a critical component for the BCIM that seeks cross-border

movement of goods and people in the four countries

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Findings

China – Bangla relationships has recently declined. The trade gap has always been too high, new

markets can be created and introduced. Bangladesh has high- potential to enter in Chinese market,

more than its neighboring nation. We have been importing heavily but we need to focus on

increasing exports between each other.

Recommendations

Trade variances between Beijing and Dhaka need to be focused closely. Learning from trading

partners is always beneficial. China is a very strong nation, current global leader, needs to be well

– catered. We should focus at improving the ties, building goals, increase prospects, select them

as a role – model. China’s growth have been amazing for the last few decades, from nothing, they

became the strongest nation globally. The global leaders follow their strategies to overcome their

issues and certainly Bangladesh can do the same.

Conclusion

Bangladesh – China trade relationship is often mentioned as Sino – Bangla trade system, due to

their well-maintained relationship since 1976. We hold strong ties even before our independence,

dating back to Silk Road, whilst Muslin was traded. The governments of both countries have been

looking forward to tighten their relationship; as a result the countries have joined to join some of

the famous infrastructures of Bangladesh. The result was shown regarding the construction &

introduction of various roads, highways, bridges, and many more. Padma bridge, one of the most

iconic bridges, Dhaka – Chittagong highway, are co-jointly formed by Sino – Bangla construction

teams. Although we maintain such high-end relationship, but it is necessary to learn more from

our trading partner, to strengthen our position in the sub-continent, which has been completely

wiped out. If Sino – Bangla relation can be strengthened to next level, and if we can enter into

Chinese market, our customer – base will certainly increase, hence betterment for the economy as

a whole.

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