The depreciation of Chinese currency and the threat for its further adjustment are causing concerns for the country’s export industries, economists and industry people warned, citing competitive edge for the Chinese exporters over Bangladesh due to weakened Yuan. They said the government and the Bangladesh Bank should act immediately to offset the damage to be caused to the exporters in a period of negative export growth amid political uncertainty and crash in Euro against Taka. China on August 11 devalued its currency Yuan by about two per cent to support its exporters and increase economic growth. ‘What is good for growth in China is unfortunately bad for Bangladesh,’ Atiqul Islam, president of BGMEA, told New Age on Tuesday. ‘Chinese exporters got policy support from their government… we also need special package from our government to withstand the headwinds affecting garment industries and retain our global market share,’ he said. In 2014, China grabbed 37.5 per cent apparel market of the world followed by Bangladesh with only 4.85 per cent or worth US$ 25.50 billion. The ‘Made in China’ apparel items are the main competitors of apparel products originating from Bangladesh in European and the US markets, industry people said. Ma Jun, chief economist at People’s Bank of China, at a media briefing in Beijing last Sunday indicated further adjustment of Yuan to best serve its economy and exporters. The PBC called it a free-market reform but some saw it as the start of a long-term Yuan depreciation to spur Chinese exports. Bangladesh exported goods worth US$ 458.12 million to China in 2012-13 fiscal year against imports worth US$ 6.30 billion. Khondaker Golam Moazzem, additional research director at the Centre for Policy Dialogue, said exports from Bangladesh to a particular country where China remains a competing source would encounter pressure from the buyers, as the weakened Yuan will help Chinese exporters to sell their products at cheaper rates. ‘The government should keep a vigil on the entire development, as far as currency devaluation of China is concerned. Any further Yuan weakening attempt against the US dollar will be a real concern for exporters,’ Moazzem told New Age on Monday. ‘We have to face stiff competition in a third country that is equally important for Bangladesh and China for exporting products if another bout of devaluation takes place in China,’ he said. Moazzem, however, added that imports from China could be lower than before if Bangladeshi importers negotiate efficiently with their Chinese counterparts, as the depreciated Yuan would help reduce prices for Chinese manufacturers and exporters. Abdus Salam Murshedi, president of Exporter’ Association of Bangladesh, said the government and the central bank must come forward with a special package to the rescue of the country’s export sector, as the nearly US$ 32 billion export industry in July slumped 11.96 per cent from a year earlier. ‘China will emerge as a real threat for our existence in export business, while the Chinese exporters are blessed with depreciated Yuan, we are cursed with appreciated Bangladesh currency against Euro,’ Salam Murshedi said. He said the government should at least lower the petroleum prices in line with the plummeting oil prices in the international market and not involve in ‘managed currency’ formula that kept Taka appreciated against US dollar
