Narrowing the trade imbalance with Beijing through higher export and creating a stable domestic environment to net the spin-offs from the fastest-growing economy may benefit Bangladesh as China overtook the United States to be worlds largest economy. Economists and business entrepreneurs came up with such observations as the latest data from the International Monetary Fund (IMF) gave China top slot in the global economic order with a size of 17.6 trillion US dollars, outweighing Americas strength of $17.4 trillion. To reap the benefit, they specially focused the imperative for ensuring political stability, good governance and macroeconomic stability, apart from creating enough infrastructures. Economists noted that China, which happens to be Bangladeshs biggest source of imports, will now concentrate more on high-tech industries to retain and build on the topmost position through further speeding up its economic development. And, in the process, the economic superpower would move away from labour-intensive manufacturing industries. Already, according to sources, many of the manufacturing enterprises in China are looking to move production into lower-cost geographies in the phasing-out process. They, most notably, have set their sights on Vietnam, Laos, Cambodia, and even in India at Bangladeshs next door. The economists who talked to the FE hold high hopes that Bangladesh can also avail the opportunities. To attract the foreign companies, they stressed the need for creating an investment- friendly ambience, political stability, good governance and further development of the countrys infrastructures: power and energy, roads, ports and communications networks. Over the past three decades, China has achieved enormous economic growth and reached the highest position. But it will not help us much unless there is political stability, local investment and an increase in our export ability, said former advisor of the caretaker government Dr. Mirza Azizul Islam. According to new data from the International Monetary Fund (IMF), China has just pushed off the United States as the worlds top economy. The measurement, known as Purchasing Power Parity, shows that Chinese consumers are able to buy more shoes, Starbucks and cars than Americans can with their money - a clear sign of Chinas rising wealth and superpower status. In 2014, the IMF-estimated size of the US economy was $17.4 trillion and that of China $17.6 trillion. Asked about the implications of Chinas envious economic growth, the economists said that apparently Bangladesh would not get any benefit but, if manoeuvred tactfully, it might net some trickledown effects. To attract foreign investment, first you need to have local investment as a gesture of environment conducive for others, said the former adviser, also stressing the need for ensuring good governance and establishing the rule of law. As Chinese wages are rising, some production units, especially in steel, autos, electronics, textiles, apparels, and wood products, are moving to the LDCs and other developing countries to have comparative advantages. Besides apparel industry, the adviser focused more on IT sector, pharmaceuticals, ceramics and light-engineering industries which can attract more investment from the emerging economy. Ahsan H Mansur, executive director of the private think-tank Policy Research Institute (PRI), also stressed the need for focusing more on intermediate goods to feed the growing economy. He noted that around 90 per cent of the countrys exports are consumer-end products with little or no intermediate goods. This needs to be changed as trade in intermediate goods is the fastest component of global trade. The economists also are in favour of setting up an economic zone for Chinese investors to encourage them to set up their industries. Both the economists stressed diversifying exports, especially going for non-traditional items, to enrich the export basket, now confined within a limited range. At present about 90 per cent of the countrys export earning comes from eight items-too scanty to cater to an unfolding vast global market. Although countrys exports to China made a quantum leap in the last fiscal (2013-14), indicating it as a new and very potential export market, the total trade is highly tilted in favour of Beijing. Merchandise shipments to China mounted to US$ 746.198 million in the last fiscal as against the import bill of about 7.0 billion US dollars. Officials and entrepreneurs attributed the phenomenal rise mainly to the zero-tariff access it provided to Bangladesh as well as its switchover to high-end fashion-design items and also graduation to hi-tech industry from basic products. Currently, Bangladesh as a least-developed country (LDC) got duty-and quota-free access for 4,788 products to the Chinese market, as of July 2010. The trading list, according to Bangladesh Tariff Commission, accounts for 67 per cent of the countrys export basket. The items Bangladesh exports to China include readymade garments and textiles, fish and crabs, leather and leather goods, jute and jute-yarn and plastic waste, according to EPB data. Apparel products constitute a third of the exportable, as the country goes on banking extensively on this lone sector for decades. China is gradually drifting away from the basic RMG items because of high cost and switching over to high-tech industries, leaving a big scope for Bangladesh to grab the market, said Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) immediate past senior vice-president Mohammad Hatem. We are very optimistic about being able to grab the China market and hope to increase our exports to the tune of one billion dollars within a couple of years, said Mr Hatem. Over the last two years, a good number of Chinese business delegations have visited Bangladesh and showed their keen interest in investing especially in textiles, agro-processing, energy and power, pharmaceuticals, communications and infrastructure development. But they did not return due to political uncertainties, frequent hartal calls, blockades and strikes in last two years. According to apparel manufacturers, China is the leader of the global textile trade and its yearly export from the sector hit as high as $175 billion. The size of the Chinese domestic apparel market stands at $310 billion whereas the global market for garments stands at $450 billion. China is shifting from the textile and clothing industry to high-tech and heavy industries because of rapidly growing cost of production. As they are shifting from textile and apparel manufacturing, they have to procure apparels from another country to meet the growing demands of its huge population. Bangladesh has a great scope, said BGMEA president Atiqul Islam after a meeting with Chinese delegation last year. Bangladesh is the second-largest apparel exporter after China and cooperation between Bangladesh and China could help us grab the vast apparel market in that country, he added. Chinas accumulated investment (including investment from Hong Kong and Taiwan) in Bangladesh EPZ reached 1.42 billion US dollars at the end of 2013, providing jobs for more than 76,000 Bangladeshis. Chinese accumulated aid to Bangladesh accounted for one billion US dollars at the end of 2013. Meanwhile, Bangladesh and China have signed a number of agreements. Those include joint ventures to establish a 1320-megawatt coal-fired power plant, creation of a Chinese economic and investment zone in Chittagong, an economic and technical cooperation agreement, and commitments on disaster rescue equipment and on a flood prevention and management study. The two countries, however, failed to reach a consensus on the projects of deep-sea port and tunnel under Karnaphuli River during Prime Minister Sheikh Hasinas recent visit to China. To reap benefits from the growing Chinese economy, stakeholders suggested early implementation of the projects.
Posted on: Sun, 12 Oct 2014 09:22:31 +0000
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