National perspective plans ‘Vision 2021’ and ‘Vision 2041’ were launched by Bangladesh to transform itself from least developed countries (LDCs) to a middle-income country, and become a developed nation by 2041. ‘Vision 2041’ aims to amplify Bangladesh’s bilateral trade strategies to uprgrade its industrial eco-system and make substantial investments in infrastructure, says a Textile Today report. Primarily, the vision aims to establish a strong trade relationship with leading Asian economic giants like China to make ‘Export Policy 2018-2021’ a reality.
Bangladesh-China close ties spur infrastructure investments
Bangladesh seems to have succeeded in establishing a close relationship with China. This can be gauged from the credit lines offered by China for key infrastructure projects in Bangladesh and investment inflows in power and energy, textiles, weaving, leather, footwear, construction, light engineering, and stock exchange.
This elevated strategic partnership is a result of recent visits by the Chinese President Xi Jinping in October 2016 to Bangladesh and Prime Minister Sheikh Hasina’s visit to China in July 2019. With strengthened bilateral relationship, China has granted duty-free access to 97 per cent Bangladeshi products from July 1, 2020. The Tariff Commission of the State Council of China has also implemented zero-tariffs on 8,256 products originating from Bangladesh. Additionally, China’s duty -free coverage has freshly included 5,161 numbers of products. This resulted in the trade between Bangladesh and China in FY 2019-20 increasing to $ 12.14 billion through the export to China were only $ 600.11 million.
Growth opportunities in China’s RMG market
Over the last 10 years, from CY 2010-2019, China’s RMG market has increased by 368 per cent while its RMG imports have hovered around 0.50 per cent. The annual average imports of its knitwear and woven garments, which had fallen in in 2009 due to the world financial crises, bounced back by 29.23 per cent in CY 2010 and by 45.09 per cent in CY 2011. Since CY 2012 the imports of HS Code 61 & 62 had been following cyclical growth and fall.
Unfortunately, Bangladesh could not explore the growth opportunities in knitwear market as Vietnam is nearer to China than Bangladesh. Also, as a member state of ASEAN, Vietnam enjoys duty free facilities given by China, since ASEAN-China Free Trade Area (ACFTA) January 1, 2010.
Duty free advantage helps Vietnam outstep Bangladesh
The share of Vietnam’s knitwear exports to China has been continuously increasing as the country had been able to grab market share of other smaller exporting countries. However, exports by rest of the World are forecasted to increase in CY 2020 and CY 2021. Over the last three years, Bangladesh’s exports of top 10 knitwear products have increased. These include knitted T-shirts, singlets, jerseys, trousers, shirts, whose exports have grown by double-digit CAGR, indicating the high potential of Bangladesh in export of these items.
However, Bangladesh’s knitwear exports to China are expected to decline by CY 2021 if the country fails to explore the Chinese duty free facility up to the optimal level.