Friday 29th of March 2024
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Headlines : * Surging dengue cases in Americas cause alarm as potentially worst-ever season looms   * Russian veto points to `grim future` for North Korea sanctions enforcement   * Bus plunges off South Africa bridge, killing 45   * 16 new Covid cases reported in country   * Japan to provide 2,294 m Japanese Yen to Bangladesh; deals signed   * BNP wants to nullify meaning of independence: Obaidul Quader   * Rain with temporary gusty wind likely over Country   * 3 die as bus hits auto-rickshaw in M`sing   * 15 ferries, 20 launches to ply on Daulatdia-Paturia route during Eid   * Six houses gutted in Rangamati fire  

   Op-ed
BANGLADESH’S ECONOMIC RELATIONSHIP WITH “CHINDIA”
  Date : 29-03-2024

Juhayr Mahin and Shabrina Iffat Anika: The concept of Chindia was first brought by Indian economist and politician, Jairam Ramesh. He visualized this concept as both countries’ economies are the fastest growing in the world, if the both countries collaborate together, they will succeed to become the world`s strongest economy. The economic strength of both countries complements each other, as China is strong at manufacturing and infrastructure and on the other hand India is strong in services and information technology. But the collaboration is not going on the right path because of some recent and past contention. Nowadays China is steadily moving toward the service industry as well as India is moving toward manufacturing industry.

A proverb says, “No one is rich enough to do without a neighbor”. Bangladesh has a friendly relationship with both China and India, Chindia. Chindia is our biggest trade partner and also, we have many past and ongoing agreements with each other. Bangladesh received financial and technical support from both China and India. Over the years, Bangladesh executed many social development projects including lessening poverty, ensuring education to all, increasing women empowerment and involving them to the workforce, encouraging young talents and so on.  These developments made Bangladesh’s economy stronger which leads to it being one of the fastest growing economies in Asia. This made other countries interested in making economic partnerships with Bangladesh. China and India are also on that list. The economic relationship with both countries is also growing and it is expected that the economic contribution of Chindia will bring good for Bangladesh.

Economic relationship with China:

Although Bangladesh and China don’t share any border line, Bangladesh always found China an “all weather friend” as well as a strategic partner. Being the largest trading partner, China is the maximum source of import for Bangladesh. In the fiscal year 2019-20, the total commerce between these two countries was over $12.13 billion (USD).

Bangladesh has seen the largest inflow of Foreign Direct Investment (FDI) from Chinese investors because of seeing the vast scope of profitability in Bangladesh`s finance, mobile payment, and automotive industries. Bangladesh has received $625 million (USD) FDI from its strategic partner.  In terms of growth rate, according to the data of Bangladesh Bank, China`s FDI stock in Bangladesh, achieved an increase of 10.9 times and an average annual compound growth of 36.30% in 8 years (2011- 19).

China was associated with many infrastructure developments in Bangladesh. Bangladesh-ChinaFriendshipBridge was a token of friendship from China. To lessen the power crisis in Bangladesh, many projects were completed and some are ongoing where China played an important role by supplying equipment and technical support.

Recently, in June 2020 China announced zero-tariff on 97% of Bangladeshi products which came into action from 1st July 2020. This Duty-Free (DF) access has been applied to 8,256 products originating from Bangladesh among the total 8,549 products recognized in the Chinese tariff-line. Previously only 3,095 Bangladeshi products were having preferential tariff facilities because of being a member of Asia Pacific Trade agreement. This emerged some areas of opportunities in the Chinese market for Bangladesh such as plastics, oil seeds and oleaginous fruits, pharmaceutical products and fish and crustaceans etc. The offering flowed from China’s duty-free, quota-free program for the Least Developed Countries (LDC). Although for Bangladesh it might be considered as a delayed posture from China as Bangladesh is moving towards becoming a middle-income country (MIC) by 2024 and its upliftment to MIC will vanish this privilege.

Several bilateral agreements and MoUs took place that boost trade between the two countries. Different loan agreements are promised at lower prices in the form of grants, interest free loans, Government Concessional Loans (GLC) and Preferential Buyer’s Credit (PBC). The ongoing investment projects of China are the Padma Multipurpose Bridge Project, Karnafuli Tunnel, Dhaka-Chittagong Highway Four Lane Upgradation, Payra Port Development, Chittagong-Cox`s Bazar Railway Project, Power Grid Network Strengthening Project, Dhaka-Ashulia Elevated Expressway, Dhaka-Sylhet Four Lane Highway etc. In addition, China has promised around $30 billion (USD) worth of financial assistance to Bangladesh.

Moreover, China is training Bangladeshi people in the areas of public administration, science and technology, agriculture, healthcare and arts through their China-aid framework program. China also provides government scholarships for Bangladeshi students to study in China. From 2013 to 2019, nearly 3,000 officials and technical staff received short-term training under the China-aid framework. About 100 Bangladeshi officials and young scholars have been successfully recommended to study for a higher degree in China.

Economic relationship with India:

Bangladesh and India share the fifth-longest land border in the world (4,096 km). India is called Bangladesh’s “True Friend” for cooperating in hard times. Bangladesh and India always worked together to look on the ways how to boost their trade, eliminate threats of terrorism, regional connectivity and integrating their economies. There were some conflicts between these two countries regarding their edging line but most of them are already settled.

Trade between Bangladesh and India has been steadily growing since forever. In 2019 Bangladesh crossed the $1 Billion (USD) mark of exports with 43% growth to India. The total trade between these two countries is around $10 Billion (USD). But recently India’s new customs rules- 2020, that may deny tariff preference to any country in the Indian market, can hurt the increasing growth of Bangladesh’s export. The top imports from India to Bangladesh are refined petroleum, raw cotton, rice and food items, non-retail pure cotton yarn and vehicles. The top exports to India from Bangladesh are non-knit Suits, knit t-shirts, knit sweaters, jute yarn and polyacetals.

Bangladesh and India are common members of SAARC, BIMSTEC, IORA, the Commonwealth and BCIM forum (proposed). The historic land boundary agreement between these two countries was signed on 6 June 2015. These two countries signed a lot of agreements and MoUs over the years regarding resolution of long-pending land and maritime boundaries, assistance in the Hi-tech areas and many more.

Currently the foreign direct investment (FDI) of India in Bangladesh is about $3.11 Billion (USD). The FDI stock of India in Bangladesh has increased about 11.90% in just the last 2 years. The reasons behind the increasing of FDI are an open and diverse economy, low-cost workforce, high growth rate in GDP, and seeing the scope of profitability on many ongoing infrastructure development projects. It is expected that India’s FDI will reach a total of $9 Billion (USD) in near future. The main portion of India’s FDIs are going towards banking industry, textile and wearing industry, cement industry, chemicals and pharmaceuticals industry and power industry.

In Bangladesh development activity, India’s contribution is huge. Previously India has provided many loans to Bangladesh on favorable terms. In 2011, India gave $750 Million (USD) for development of Bangladesh infrastructure. India also offered different amounts of loans in different time periods totaling about $8 billion (USD) of Lines of Credits for Bangladesh’s various sectors, including roads, railways, shipping and ports. For developing the construction of student hostels, academic buildings, cultural centers and orphanages etc. in Bangladesh, 26 Small Development Projects (SDPs) are already being finished and another 55 SDPs have been allocated by Indian’s government.

From 2013, India is exporting 500 Megawatts of electricity every day and this deal is for the period of 35 years. This helped to ease the national electricity shortage in the country. Bangladesh also made a joint venture with India for the 1,320 MW Rampal power plant project. Bangladesh’s first nuclear power plant in Rooppur is also assisted by Indian construction companies.

The regional connectivity between Bangladesh and India is a noteworthy factor in their relationship. Development of road lines, rail lines and marine lines lead to benefits for both sides. The land route from Akhaura land port to Tripura bridged the gap between Bangladesh and Seven sister’s trade which is a big market opportunity for Bangladeshi exporters. The direct route of Kolkata–Agartala road link via Bangladesh has cut the previous transaction cost by half which is an economic advantage for both countries. Both countries are taking initiatives to build more routes for both passenger and goods transports. On December 17, 2020 Chilahati-Haldibari rail track reopened after being closed for over 55 years. Dhaka-Siliguri passenger train planned to start in March 2021, on the occasion of Bangladesh’s 50 years of Independence.

Conclusion

China and India are having an economic competition for winning Bangladesh because of Bangladesh’s strong geopolitical location, and immense market opportunities. So, both countries are trying to increase their economic relationship with Bangladesh. China’s proposed BCIM- Economic Corridor will transform Bangladesh as an industrial nexus and commercial hub which will boost cross border trade along with poverty remission, sustainable development and many more with South and Southeast Asia. On the other hand, road connectivity with India will bring new trade opportunities for Bangladesh. Bangladesh should strategically maintain relationships with Chindia for its own trade and economic advantages.



  
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