China Grants Tariff Exemptions To 97% Of Bangladesh’s Imported Products

China has provided a huge trade boost to Bangladeshi businesses by granting duty-free access to a total of 97% of Bangladeshi imported products, effective July 1.

Bangladesh's Foreign Ministry said the measure was approved by the State Council of the Chinese Finance Ministry.

Bangladesh has a huge trade imbalance with China. The Federation of Bangladesh Chambers of Commerce and Industries said the trade volume between the two countries amounted to $14.68 billion in fiscal 2019. However, while Bangladesh imported $13.86 billion of goods from China it exported only $831 million to China.

"We still import more than [we] export from China, [the new tariff exemptions] will create more possibilities to minimize the trade deficit," said Obaidul Azam, a senior official at the Bangladeshi Commerce Ministry.

Mohammed Touhidul Islam, senior information officer of the Ministry of Foreign Affairs said Bangladesh “already receives tariff-exemption for 3,095 items under the Asia Pacific Trade Agreement. As a result of the latest announcement, a total of 8,256 goods from Bangladesh will be exempted of Chinese tariffs.”

“[Bangladeshi] business will certainly see a big jump with the latest 97% duty free access to these products,” said Borhan Uddin, the director-general for East Asia and Asia-Pacific in the Bangladeshi Foreign Ministry. “It’s a good sign [during the covid-19] pandemic. And we for a long time were examining the access and working with [China] and will work to nourish the bilateral relationship.”

The decision emerged only one month after Bangladesh Prime Minister Sheikh Hasina and Chinese President Xi Jinping held a discussion to upgrade their bilateral relations during the pandemic.

Joyeeta Bhattacharjee, senior fellow at the Observer Research Foundation, an independent think tank based in India, noted that China has been deeply involved in Bangladesh, most recently offering help to alleviate the covid-19 pandemic.

Bangladesh has recorded at least 100,000 covid-19 cases, though the actual figure is believed to be much higher.

“Covid-19 is not only challenging the existing healthcare facilities in the impoverished nation but also [has] impacted the economy of the country,” Bhattacharjee wrote. “Like the trend globally, Bangladesh’s economic growth is likely to falter due to [the] outbreak of [the] Covid-19 pandemic. Bangladesh is desperately seeking support of the international community to tackle the challenges because of the spread of the pandemic.”

China has also offered to invest about $24 billion in Bangladesh, under terms of the Belt Road Initiative, Beijing’s massive global infrastructure development strategy.

“Bangladesh is an important partner of China in South Asia,” Bhattacharjee noted. “Bangladesh and China today enjoy a warm and friendly relationship and have formed a strategic partnership. The two countries share a close military and economic relationship.”

One of China’s most important ongoing infrastructure projects in Bangladesh is the Padma Bridge – which, when completed, is expected to link almost 30 million people in Bangladesh's southwest to the rest of the country, and increase regional trade and collaboration.

The multipurpose road-rail bridge is being built across the Padma River and will eventually be the largest bridge in Bangladesh.

The bridge will be about four miles long and cost nearly $4 billion.