China Bangladesh Economic

Cooperation
48 Victory day of Bangladesh
th
 Country Comparison
Country Bangladesh China

Area 0.14 million Sq KM 9.59 million Sq KM

Population 163 Million (Apprx 2018) 1,427 million (apprx 2018)

GDP USD 831 Billion (PPP 2018) USD 27.33 Trillion (PPP 2018)

Per Capita GDP 4,992 (PPP, 2018) 19,520 (PPP, 2018)

GDP Growth 7.9% (2018) 6.9% (2018)

Main Industries Textile, Pharmacetecal products, Mining, Manufacturing,

Electronics, Tea, Rice Construction, Power
 Historical Background

• Faxian travelled by foot to

Bangladesh at about 400 AD.

• The treasure voyage went to

Sonargaon, once the capital of
Bangladesh.

• Chinese monks, scholars and

traders frequently visited the then
Bengal from Qing dynasty period.

• Southwestern Silk road

connecting Bengal and China. Treasure voyage route (Source: Wikipedia)
 Diplomatic relation
• Bangladesh-Pakistan Liberation war (1971)
– The Bangladeshis elicited the help of India
– China had earlier fought a war with India in 1962 and became an
ally of Pakistan. 
– Soviet Union was in favor of Bangladesh, but USA was supporting
Pakistan not
– China was trying to make good relation with USA (Ping Pong
diplomacy, 1971) using Pakistan as conduit

• Despite the support of most countries in the world,

Bangladesh's UN membership was vetoed by China until 1974
 Diplomatic relation
• The situation dramatically changed after August 15, 1975
– A military Coup was happened
– Bangabandhu Sheikh Mujibor rahaman was killed
– President Ziaur Rahman who restored free market in Bangladesh restored the
relationship

• China recognized the independence of Bangladesh in August 31, 1975

• Diplomatic relations in late 1975.
• Ziaur Rahman visited China in 1977, first visit of Bangladeshi head of
state to china.
• Ziaur Rahman is called key architect of modern China Bangladesh
relationship .
 China – Bangladesh diplomatic relation
• President Ziaur Rahman, who restored free markets in Bangladesh,
visited Beijing and the laid the groundwork for the relationship;
while numerous Chinese leaders visited Dhaka in the late 1970s
• By the mid-1980s, China had forged close military, commercial and
cultural ties with Bangladesh and also supplied it with military aid
and equipment.[14] 
• The then-president of Bangladesh Hossain Mohammad Ershad
 was warmly received in Beijing in July 1987.
• In 1989, A Bangladesh-China friendship bridge was constructed
and inaugurated over river Buriganga connecting Dhaka and 
Munshiganj by the Chinese as a token of this newly advancing
diplomatic and military relationship
 Diplomatic relation
• Bangladesh has an embassy in Beijing and
consulates in Hong Kong and Kunming.
• China has an embassy in Dhaka.
• Both countries are members of the BCIM forum
Bangladesh-China-India-Myanmar Forum for
Regional Cooperation).
• According to Chinese government designations,
Bangladesh and China are "strategic partnership
of cooperation"
 Diplomatic relation
On 4 October 2000, the Government of Bangladesh issued a
postal stamp marking the 25th anniversary of the
establishment of Bangladesh-China diplomatic relations
 Diplomatic relation
• For 30 years of set up diplomatic relationship, both countries
declared 2005 as the “Bangladesh-China Friendship Year”
Bangladesh China international conference center

• Build in 2001

• Situated at Dhaka

• It was designed
by Beijing Institute
of Architectural
Designs and
Research.

Bangladesh China international conference center

 Ongoing negotiation : Yunan provice to
access Bay of Bengal
• The landlocked Yunnan
province of China has
sought economic
cooperation with
Bangladesh to help gain
access to the Bay of
Bengal.
• Bangladesh too, has
offered to set up a
Special Economic Zone
for China
 Ongoing negotiation : Chittagong Kunming
road
• China and Bangladesh have been negotiating and have decided to
build a 900 km highway project to connect Chittagong and Kunming
through Myanmar.

• This would overcome the long sea passage, from the east coast of
China through Singapore (for trans-shipment) to Bangladesh,

• Will also lower transport costs and add to the economy of Yunnan
province.

• This also fits well with their joint initiative of improving Chittagong
port infrastructure for dual use, for merchant vessels and also for
the navies of both countries
Major importing countries for Bangladesh

Source: trendeconomy.com
Major exporting countries from Bangladesh

Source: trendeconomy.com
China to Bangladesh major exporting goods

Source: trendeconomy.com
Bangladesh to China Major exporting goods

Source: trendeconomy.com
 Bilateral Trade
Billion 8.00
1.00

1992- 2015 Source: comtrade.un.org

 Economic relation
• Bangladesh is third largest trade partner of China in South Asia.
But, the bilateral trade between them is highly tilted in favor of
Beijing

• China has bolstered its economic aid to Bangladesh to address

concerns of trade imbalance

• Under the auspices of the Asia Pacific Trade Agreement (APTA),

China removed tariff barriers to 84 types of commodities imported
from Bangladesh and is working to reduce tariffs over the trade of
jute and textile, which are Bangladesh's chief domestic products.
 Trade Value
• Annual import from China jumped by 14 per cent in FY 18 and stood at $
1,1706 million ($11.70 billion).
• Imports from China represent 34% of Bangladesh’s total.
• Exports to China declined to $694.96 million in FY18 from $949.41 million,
or nearly 27 per cent in FY '17.
• The big jump in import from China compared with a sharp decline in
export left bilateral trade deficit to record $11.01 billion in FY'18.
• This is for the first time Bangladesh's trade gap with any trading partner
crossed the $10 billion level.
• Bilateral trade with China stood at $ 12.40 billion during the last fiscal year
• In 2015, China became Bangladesh’s top trading, knocking India out of the
position it had held for 40 years.
China export to Bangladesh shares
percentage by commodity
China import of commodities from
Bangladesh
 Intensity of trade
• Trade intensity index measures intensity of trade between two nations
• Two parts. Export intensity index (XII), Import intensity index (MII).

• They can be defined as:

• Where,
– MIIi the country i’s import intensity index,
– mij the country i’s imports from country j
– Miw the country i’s total imports from the world,
– Xjw the country j’s total exports to the world,
– Xw the world total exports,
– Xiw the country i’s total exports to the world
– and i and j represent China and Bangladesh, respectively

• The value indicates how much two countries are engaged each other in terms of export and
ipmort
 Intensity of trade

• In case of export, China export a lot to Bangladesh

then Bangladesh do
• In case of import, Bangladesh imports a lot from
China the China does Source: analysis of bilateral trade between Bangladesh and China, Shahrier Kabir
 Intra-Industry trade
• A large value of IIT implies larger trade between
countries in the same commodity group.

• Formula for calculating ITI:

• The value of IIT index is between 0 and 1. The

closer to 1 means the country has intra industry
trade in the specific sectors. Here we take the
index greater than 0.5 is intra industry index
Intra-Industry trade

Source: analysis of bilateral trade between Bangladesh and China, Shahrier Kabir
 Competitiveness of Bangladesh and China
using Revealed comparative advantage
• Revealed comparative advantage (RCA) is measure to compare the competitiveness of
each country in trade on particular commodity group. It also can indicate the strong
sectors of a country
• RCA is the ratio of the exports of the commodity from source to total exports from the
source, over the same ratio for the world
• RCA Formula :
• Where RCA ic is the revealed comparative advantage of country i of commodity group c.,
The value of i the number of country which can be from 1 to n numbers, again c the
number of commodity group which implies from 1 to m number of products. xic the value
of exports of commodity group c by country i, Xiw denotes total exports by country i, xcw
denotes the value of world exports of commodity group c , and Xw denotes the value of
total world exports
• When RCAic value is greater than unity then it implies to country i has comparative
advantage on commodity group c. The value of RCA can be range from -∞ to +∞, it can be
less than to as much higher as it can be. The higher the value is the stronger the
commodity group is.
Competitiveness of Bangladesh and China
using Revealed comparative advantage
 RCA implication
From the data, the overall outcome is Bangladesh should
improve its comparative advantage to seize the global
market share and improve export.
There are many sectors where Bangladesh can improve its
infrastructure which will lead to export oriented market.
In some sectors the RCA is almost close to China but it
doesn’t mean that they are competing with them because
China’s ongoing industrial restructuring in manufacturing
sectors and environmental policy changes so middle class
consumer will grow in Chinese economy
President Xi Jinping’s visit in Bangladesh 2016
President Xi Jinping’s visit in Bangladesh 2016
Prime Minister Sheikh Hasina’s visit in China 2019

Two countries sign nine

instruments
• 5 agreements,
• 3 memorandums of
understanding (MoUs) and
• 1 document
sectors including power,
investment, culture, tourism,
and technology.
 Arm Trade
• China has become Bangladesh’s top source for arms
imports; and
• Dhaka likewise is China’s second-largest arms export
destination in the world.
• Bangladesh accounts for 20% of all Chinese arms sales.
 Chinese FDI in Bangladesh

• China became the top source of foreign direct investment (FDI) for
Bangladesh .
• The amount was around one-fifth of the total foreign capital flow into
Bangladesh during the FY 2017-18.
• Chinese FDI in Bangladesh was six times the figure received during FY17
• A large chunk of the Chinese FDI came to the power sector
• The stock of Chinese FDI also stood at $ 1,193.22 million by the end of FY18
• FDI inflow was $ 534.58 million.
 Bangladesh in BRI
• During the visit of President Xi Jinping to Bangladesh in 2016, a number
of MoUs and agreements were signed between Bangladesh and China.
• Bangladesh will receive $26 billion USD for BRI projects
• Bangladesh is a strategic maritime nation and occupies a critical access
position to the Bay of Bengal and Indian Ocean.
• Therefore, one of the six economic corridors of BRI will pass through
Bangladesh
• one of the two maritime corridors of BRI. This corridor, which starts at
Kunming passes through Myanmar, enters Indian north-east and
through Bangladesh, ending up in Kolkata
• This makes Bangladesh the second-largest recipient of Chinese loans
under BRI in South Asia
 Current projects under BRI
• These include a massive 6.5 kilometre
road/rail bridge over the massive Padma river
(which will connect the two sides of the
country for the first time),
• an industrial park in Chittagong,
• a, and
• Building Sea port at Payra.
 Special care for BRI projects
• The second Belt and Road Forum (BRF) was recently held in Beijing. In his address
to the forum, President Xi Jinping also set new guidelines for the BRI to proceed
in the coming years.
• all BRI projects in the future will have to adhere to strict international standards
in quality.
• Projects will also have to be clean and green.
• There will be zero tolerance for any misappropriation or corruption in BRI
projects.
• Special care has to be taken so that all project planning meets the environmental
standards and no damage is done in the construction process to the environment.
• Issues of the so-called “debt trap” also came up for discussion. It was pointed out
that both lending and borrowing countries have to be more responsible for debt
management and borrowing should only be done with capacity of repayment in
mind
 Mutual Benefits from BRI
From Bangladesh Point:
• Infrastructure development
• Can connect with china in land way
• Increase export
• Reducing dependency on India

From China perspective

• Way to Increase FDI in Bangladesh
• Balance the trade gap with Bangladesh
• Increase trade

Win win situation for both countries

 Key issue
Increasing Trade: China is also Bangladesh’s largest trade partner and
trade is growing rapidly. Two-way trade, which was 
worth $12 billion in 2014, is expected to exceed $30 billion by 2021.
Increase in Chinese Investment: As mentioned above, Chinese
investment in Bangladesh has been growing remarkably in recent years.
Between 1977 and 2010, Beijing’s investment in Bangladesh totaled
just $250 million. This rose to roughly $200 million in 2011alone.
BRI is key factor for increase FDI
Bangladesh Need infrastructure development: Like other emerging
economies, Bangladesh is anxious to develop its infrastructure.
However traditional sources of funding have proved inadequate, driving
Dhaka to look to the BRI and China to meet this need.
 Key issues
China is playing an important role in Bangladesh’s infrastructure development. It has
upgraded Chittagong port and is building an industrial park there. It is also constructing road
and railway lines linking this Bay of Bengal port to Kunming in China’s Yunnan province. China
has also built eight friendship bridges in Bangladesh, including the $3.7 billion road and rail
bridge across the Padma River. Additionally, China is investing in a $1 billion project to
improve digital connectivity. And China is investing heavily in Bangladesh’s power sector.
Indeed, most of its investment in the 2018-19 fiscal year went into 
Bangladesh’s energy sector, particularly to coal-fired power plants, including those being
constructed at Chittagong and Payra.
What makes Chinese investment attractive to Bangladesh is the fact that Beijing has shown
willingness to finance infrastructure projects that are important to Dhaka. 
Western funders had refused to fund several such projects in the past. BNP Paribas and the
Norwegian government’s sovereign wealth fund, for instance, declined to finance the Rampal
coal-fired power plant at Khulna for environmental reasons. The World Bank cancelled a $1.2
billion credit for the Padma Multipurpose Bridge project, citing high-level corruption. In
contrast, China is executing these projects. Consequently, Bangladesh views the BRI as an
opportunity to develop its infrastructure.
 Challenges
• Bangladesh-China-India-Myanmar Economic Corridor
(BCIM-EC), a 2,800-km connectivity corridor that proposes
to link Kunming in China with Kolkata in India via
Mandalay and Dhaka.
– This corridor, which will in effect link three subregions — South,
Southeast, and East Asia
– During Hasina’s visit to Beijing, China and Bangladesh signaled
their shared commitment to revive the project.
– Difficult to implement as India opposes
• Unfavorable Balance of trade
• Fear of falling in “debt trap”
 Bangladesh – China relationship prospect
• Bangladesh recently became eligible to graduate to developing country status by 2024.
• It is one of the world’s fastest growing economies. around 8-9% per annum, with average
growth of more than 6%
• 160 million people, the 8th most populous country in the world.
• For development Bangladesh need infrastructural investment.
• In Bangladeshi geopolitics, India has always been at the center while the United States has
had leverage
• India’s coercive tactics created deep resentment among ordinary Bangladeshis, especially
when contrasted with China’s model of noninterference in domestic affairs.
• Bangladesh’s ‘Look East’ policy is essentially designed to lessen its dependence on India
and open up new avenues of cooperation with China and South-East Asia.
• Clearly Prime Minister Sheikh Hasina is now trying to capitalize on the geopolitical
advantage that Bangladesh enjoys as a country which overlooks the strategically
important sea lanes of the Indian Ocean linking China with the Persian Gulf, which have
a role in securing energy supplies for Beijing. Such an approach speaks of her vision to
move ahead with an essentially ‘win-win’ situation