Bangladesh Opts For China-Pak Axis To Boost Its Economy By Reducing Dependence On India

(MENAFN- The Arabian Post)

By Nitya Chakraborty

Sidelined by the trump 2.0 administration and rebuffed by India, Bangladesh interim government is exploring all avenues to rejuvenate the country's ailing Economy by expanding its trade and investment relationship with Pakistan and China. The objective is to reduce the dependence on India in major areas where the outsourcing is possible from these two friendly countries.

Chief Adviser Dr. Mohammad Yunus is paying a visit to China on March 26-29 this year which according to the Chinese ambassador in Dhaka is going to be the most important visit by any Bangladesh leader in the last 50 years as the two countries are taking the relations to a new height. Dr. Yunus will have first ever his bilateral meeting with the Chinese President Xi Jinping on March 28.

Apart from political discussions, the most important part will be the assistance being sought by Bangladesh chief adviser from China in expanding and building new manufacturing facilities in the country. Bangladesh wants Chinese companies to set up large number of factories in various core sectors of the economy. Dr. Yunus will have a separate meeting with the leading CEOs of the Chinese manufacturing companies. He will invite them to set up units in Bangladesh to turn the country into a major manufacturing hub of South Asia.

It is recalled that the former Bangladesh Prime Minister Sheikh Hasina visited Beijing in the second week of July last year in the midst of the students movement against her government. She could not complete her schedule and left in a huff as the talks did not proceed as she desired. She returned to Dhaka to deal with the student movement. At that meeting, the Chinese government officials refused to agree to some of the financial assistance proposals submitted by her.

After the ouster of the Sheikh Hasina and her fleeing to India on August 5 and the installation of the interim government led by Dr. Yunus on August 8 last year, China has been active in cultivating the political parties apart from the members of the interim government. Already high level delegations of the BNP and the Jamait Islami have visited Beijing and had talks with the Chinese leaders. China is in touch with the new students party National Citizens Party (NCP). That way, the Chinese government has cultivated all the stakeholders in the present political arena of Bangladesh. This visit of Dr. Yunus is taking place in the wake of the completion of the political consultations of the Chinese leaders with the other political constituents.

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As of now, there is general agreement among the non-Awami League pro active parties that the relations with India can be restored only after India agrees to the extradition of Hasina to Dhaka for trial. Since India has given all signals that it will not agree to that, major initiatives from Bangladesh for normalization of relations have not been taken. Only the routine talks like control on border and other areas of low key operations are being maintained. The Bangladesh government has also prepared draft roadmap for reducing dependence on India for economic growth and replacing the same by expanding areas of collaboration with China and Pakistan. A paper has already been prepared suggesting the possibilities for outsourcing from Pakistan to replace the Indian goods which have been coming to Bangladesh for decades.

Though the Bangladesh political situation is in turmoil and there is no definite date about the timing of the next elections, experts in China are confident of having good ties with whatever formation comes to the government after elections. China is more advantageously placed vis a vis Pakistan in Bangladesh economy as Beijing has successfully launched a number of projects in the country. China watchers say that the future of the China-Bangladesh relationship is intertwined with Bangladesh's journey through political reform and economic recovery. Despite recent challenges, the long-standing friendship between the two nations provides a robust platform for collaboration. Bangladesh will be getting maximum benefits by collaborating with Beijing in the manufacturing sector.

Interim govt sources say Bangladesh stands to benefit from enhanced trade ties with Pakistan as local traders are optimistic about getting more competitive prices and a broader range of raw material sources. Currently, trade dynamics favour Pakistan, with Bangladesh importing cotton, yarn, fabrics, and essential commodities from the country. However, these imports are still considerably lower than those from China and India - Bangladesh's top two trading partners.

Historically, the trade relationship between Bangladesh and Pakistan has been lukewarm, preventing Pakistan from becoming a major sourcing hub. For instance, Bangladesh exported goods worth $39.77 million to Pakistan in the July–December of the current fiscal year, according to the Export Promotion Bureau (EPB).

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In the fiscal year 2023–24, Bangladesh's exports to Pakistan totalled $61.98 million, a 31.78 percent decline from $83.59 million in 2022–23. This was far outweighed by Bangladesh's imports from Pakistan, which stood at $372.1 million in the July-December period of FY25, according to Bangladesh Bank data. In FY24, imports from Pakistan amounted to $627.8 million, down from $698.7 million in FY23.

Although there are no formal trade restrictions between the two South Asian neighbours, Pakistan has yet to emerge as a major sourcing destination due to weak trade relations. In FY24, Bangladesh imported goods worth $16.63 billion from China, representing 26.4 percent of the country's total imports for that year. That same year, imports from India stood at $9 billion, accounting for 14.3 percent of Bangladesh's total imports.

By contrast, imports from Pakistan amounted to just $627.8 million, or 1 percent of the total, making Pakistan Bangladesh's 20th largest import destination. A majority of this amount, $476.3 million, was spent on cotton imports. Mohammad Abdur Razzaque, chairman of Research and Policy Integration for Development, said that Bangladesh needs a reliable, competitive and diversified supply of key commodities, including food and energy, for future economic growth. Pakistan could be a valuable sourcing destination in this regard, increasing competition among supplying countries.

Abul Kasem Khan, former president of the Dhaka Chamber of Commerce and Industry (DCCI), said Bangladesh would benefit from expanding trade with Pakistan, which has been largely stagnant for the past 15 years.“It would be a positive development for business,” he said, highlighting price competitiveness as a key factor. Khan said Bangladesh could source Pakistani cotton and denim fabrics at lower, more competitive prices.

According to the Pakistan Business Council (PBC)'s assessment, Pakistan has an export potential of at least $2.95 billion in Bangladesh, mainly in textiles, agriculture, foodstuffs, chemicals, base metals, plastics and cement products. The top 25 commodities alone had an estimated export potential of $1.24 billion in 2020, yet Pakistan's actual exports for these items amounted to just $435.78 million, according to the analysis. Already in January this year, the chambers of commerce bodies of Pakistan and Bangladesh have signed a memorandum for the setting up of a Pakistan-Bangladesh joint Business Council. (IPA Service )

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