China offers trade pact to boost investment, supply chain ties
Beijing proposes two MoUs with Bangladesh to boost trade and investment; want those signed in June
China has offered to work with Bangladesh to stabilise industrial supply chains and ensure smooth trade flows, amid global volatility triggered by fresh US tariffs.
According to the Economic Relations Division (ERD), Beijing has proposed two memorandums of understanding (MoUs) to boost investment, expand exports, and gain broader access to global markets. The proposals aim to counter restrictive trade measures imposed by third countries and promote free, open trade – while opposing efforts to "politicise or weaponise" supply chains.
China hopes to sign the MoUs during the 15th meeting of the Bangladesh-China Joint Economic Commission, scheduled for June. One agreement focuses on technical and investment cooperation, the other on reinforcing supply chain resilience. ERD officials expect the agreements to help swiftly resolve bilateral trade issues.
The proposals align with Bangladesh's push to attract Chinese investment through new economic zones. This month, Dhaka will host a Chinese business delegation exploring relocation opportunities, driven partly by US tariffs that have encouraged Chinese firms to move production abroad.
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"Bangladesh should prioritise sectors of strategic interest," said Professor Dr Mostafizur Rahman, a distinguished fellow at the Centre for Policy Dialogue (CPD). He pointed to sectors covered in the MoUs – such as man-made fibre, light engineering, pharmaceuticals, agro-processing, cold chain logistics, and infrastructure – as aligned with national priorities.
Rahman added that low-cost financing from China should be considered in the agreements, though he cautioned against interpreting them as conflicting with Bangladesh's ties to other nations.
On 23 March, the Chinese Embassy in Dhaka sent the draft MoUs to the ERD, which held an inter-ministerial review meeting on 23 April chaired by Additional Secretary Mirana Mahrukh. China has also proposed updating the 1996 investment protection agreement between the two countries.
Despite China's vast market, Bangladesh's exports there remain modest – just $715 million in FY2022-23, or 1.61% of total exports. Meanwhile, imports from China were nearly $28 billion, making up about a third of Bangladesh's total imports, largely in industrial raw materials and machinery.
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The draft MoU on trade cooperation proposes forming a joint working group to enhance supply chain links, especially among SMEs. The focus would include trade facilitation, digitalisation, and green trade. The second MoU emphasises resisting third-party trade restrictions and strengthening bilateral industrial cooperation.
Dr MA Razzaque, chairman of RAPID, said China's interest in agricultural cold chain logistics could significantly boost Bangladesh's export potential in that sector.
Al Mamun Mridha, former secretary general of the Bangladesh-China Chamber of Commerce and Industries, said tariff and non-tariff barriers often hinder investment. A joint working group could help resolve these issues and potentially negotiate better terms for infrastructure financing.
3 economic zones for China
To attract more investment, the Bangladesh Economic Zones Authority (Beza) has finalised plans for a Chinese Economic Zone in Anwara, Chattogram, and approved two others in Chandpur and Bhola. Chinese interest is growing, marked by strong participation in last month's investment summit and a visit by Yunnan province Governor Wang Yubo.
Chinese Commerce Minister Wang Wentao is expected in May, leading a 200-member business delegation to explore opportunities. Chowdhury Ashik Mahmud Bin Harun, executive chairman of Bida and Beza, recently said that timely support could help Chinese firms make swift investment decisions.
China has also pledged to extend Bangladesh's duty-free access for two years after its LDC graduation. Meanwhile, Bangladesh has applied to join the ASEAN bloc and the China-led Regional Comprehensive Economic Partnership (RCEP), and the two sides have exchanged a joint feasibility study for a future Free Trade Agreement.
