Coronavirus pandemic has completely devastated Bangladesh’s textile industry as export orders have been canceled by European companies. A few months ago, Bangladesh, a country with 162 million population was the fastest growing economy in South Asia. Overtaking India, with 8 percent growth per annum, thanks to booming textile manufacturing industry which contributes around 12 percent to the country’s GDP and constitutes 84 percent of total exports, Bangladesh’s growth-story has come to a screeching halt. And now to bail it out from its misery, the Dragon has swept in with its nefarious plans.
According to Bangladesh officials, effective July 1, as many as 97% Bangladeshi products, in a product list basket, will enjoy duty-free access in the Chinese market. The announcement is expected to help Bangladesh cushion the economic impact of the pandemic which has severely jolted its once upward economy.
Bangladesh has been granted the facility as a Least Developed Country (LDC) that includes 5,161 more Bangladeshi products to enjoy zero-tariff treatment in the Chinese market.
Currently, 3095 Bangladeshi products enjoy duty-free access to Chinese market under Asia – Pacific Trade Agreement (APTA).
There is a gargantuan trade-deficit between the two countries. Dhaka’s import trade from China stands at $13.86 billion whereas the export trade is a measly $831 million. And Dhaka with its irrational optimism is looking to bridge this gap using the ‘zero-tariff’ exports. The numbers are pretty much stacked against Dhaka but it’s good to have such moral high-belief, even when it’s not going to change anything.
Whenever a country is at its low, one country seemingly extends the angel’s hand to it and that country is China. It might look good for the optics—China bailing out a country from its troubles but we have seen enough examples in recent times to make a different assumption.
China and its debt-diplomacy can spell doom for any nation. It looks rosy and plush initially, as was the case with Belt and Roads Initiative (BRI) but now with several years of delay and billions of dollars wasted down like charcoal in a furnace, Beijing has bled dry countries like Kenya, Sri Lanka, and Djibouti.
The reason Beijing is allowing Dhaka to trade its products in the Chinese market with zero tariffs is fairly simple to decode.
China wants to use Bangladesh for the ominous Belts and Roads Initiative. Beijing’s aspiration is to link its Yunnan province to the Indian Ocean, bypassing the long and arduous Malacca Straits. To complete its aforementioned maneuver, Beijing requires access to Chittagong through Bangladesh.
And with China removing all duty from the LDR products, it will now pressurize Bangladesh to bend over backward over this business proposition. Short version—it will try to leverage the zero-tariff deal to make way for its BRI project.
And if the example of another sub-continent country, Sri Lanka serves any reminder, China has begun to choke-hold Bangladesh. It will steadily infiltrate Bangladesh’s textile market with its cheaper products that will spell its end. After all, one can presume, Bangladesh is a Banana Republic minus the unstable governance.
If the relationship strengthens further, it can only be to India’s detriment, and therefore its time that New Delhi takes cognizance of these developments.
India needs to give more access to Bangladeshi products in the country. Under Sheikh Hasina, the bilateral relations have been bitter-sweet but still far better than her predecessors. Consequently, India can still persuade Dhaka to look the other way, while there is still time.
The canceling of orders from European countries like the United Kingdom, Germany, Italy, Spain- the major importers of Bangladeshi garments has hurt more than 1,000 factories which have been shut down. As a result, 3 million workers are out job, with their families facing poverty.
India can pitch in here and try to absorb some of the business, thereby sending a message that New Delhi is there for its neighbors. “China should be kept at bay, whatever it makes”—the mantra New Delhi needs to follow in wake of the recent Chinese activities.