Chinese President Xi Jinping lands in Dhaka today. The visit is expected to be accompanied by $40 billion in loans and grants to the country. According to Bangladesh Bank provisional data, in the fiscal year 2015-16, Bangladesh imported products worth $9.64 billion from China against its export of $808 million. The total trade gap between two countries stood at over $8.8 billion. In the last fiscal, Bangladesh sold China $341 million worth of clothing products. “China’s investment in producing textile machinery and RMG backward linkage industry will help Bangladesh reduce the trade gap as manufacturers will have machinery and raw materials, especially fabric and other related products for the RMG sector, at a more affordable price,” Exporters Association of Bangladesh (EAB) president Abdus Salam Murshedy told the Dhaka Tribune. Currently, Bangladesh has to import 70% of the fabric for the woven sector and establishing factories in this field could help importers by supplying from the local source, Salam said. In the years to come, the demand for RMG raw materials will increase as the production capacity will also increase to meet $50 billion export target by 2021. To meet the growing demand, Bangladesh needs investment from home and abroad, he added. “Investment in RMG backward linkage by China will help Bangladesh reduce trade gap at least to some extent. But investment in technology and machinery production is not an easy feat,” AB Mirza Azizul Islam, former finance adviser of a caretaker government told the Dhaka Tribune. Bangladesh has to concentrate on increasing exports to China and in this case, it has to look into the rules of origin and see if there is any problem that hampers export, said Islam. “Meanwhile the government will have to ensure utility services,” he said. “China should come with big investment plan here. They can relocate those sectors to Bangladesh that are not cost effective due to higher labour costs in China,” former FBCCI president Mir Nasir Hossain told the Dhaka Tribune. There will be a trade gap but Bangladesh has to reduce it by utilising the opportunities and trade advantages offered by China, said Nasir. “Since China is the number one import destination for Bangladesh, we have to look into the market diversification as well as products to reduce trade gap,” he added. “We should also focus on goods that China imports for their local consumption.” In a recent comment, Chinese Ambassador in Dhaka Ma Mingqiang said that the country may well be the top investing country in Bangladesh as the current relation between the two countries had reached an unprecedented level. The trade analysts and business leaders urged the government to remove trade barriers and bottlenecks in attracting Foreign Direct Investment (FDI) here, which has remained sluggish. According to BB statistics, net inflow of FDI from China increased by 5% to $52.37 million in FY16, which was $49.84 million in the previous fiscal.

A feasibility study on the project and the acquisition of the 313.23 hectare land needed for the zone have already been completed. Bangladesh Prime Minister Sheikh Hasina and Chinese President Xi Jinping are set to lay the foundation stone of the project, formally known as Anwara 2 Economic Zone, through a video conference in the capital today. As per a Memorandum of Understanding (MoU) signed on June 16 this year, state-owned firm China Harbour Engineering Company Ltd (CHEC) was appointed to develop the site, which is 39km from the Chittagong Port, 28km from Chittagong city and 46km from Shah Amanat International Airport. “The zone will accommodate 150-200 industrial units including ship-building, pharmaceuticals, electronics, agro-based, IT, chemical, power and textile and textile accessories,” Bangladesh Economic Zones Authority (BEZA) Executive Chairman Paban Chowdhury told the Dhaka Tribune. “We hope that the first government-to-government initiative for establishing an exclusive economic zone will create a congenial business atmosphere for luring Chinese companies, generate employment and spur economic activities. “As per the agreement, Chinese investors will get preference in the economic zone. Other local and foreign can also invest,” he said. Of the proposed land for the economic zone, 117.8 hectares belong to the government. The Chittagong district administration is working to acquire the rest from private land owners. The move to set up the zone was undertaken soon after Sheikh Hasina’s visit to China in 2014. In September last year, Ecnec approved the proposal for the Chinese economic and industrial zone. “We have already handed over 291 acres of land to BEZA. Acquisition of the rest of the land from private land owners is under way. The mammoth project has already commenced with the construction of the main road to the site,” said Goutam Baroi, Upazila Nirbahi Officer of Anwara. BEZA Executive Chairman Paban said that the establishment of the exclusive economic zone would be a milestone for Bangladesh and open up a new window of foreign investment opportunity for the country. He said that it would take minimum two years to complete the project. Business community leaders expressed optimism that economic activities in Chittagong would get a boost through the establishment of the exclusive industrial zone. Moinuddin Ahmed, the first vice-president of BGMEA, told the Dhaka Tribune that the establishment of an exclusive economic zone in the region was the fulfilment of a long-felt demand. “It will definitely help achieve our export target of $50 billion by the end of 2021. “The high-tech industrialisation has led to a serious labourer crisis in China. Consequently, the cost of production has gone up due to wage hike. Perhaps China is now planning to relocate their labour-intensive industries to other low-wage countries like Bangladesh,” Moinuddin added.

President Abdul Hamid has sought duty-free and quota-free entry of all Bangladeshi products into the Chinese market to address the current trade imbalance. ‘We would request you to allow all Bangladeshi products duty-free and quota-free entry into the Chinese market to address the current trade imbalance,’ president Hamid said during his meeting with visiting Chinese president Xi Jinping at Bangabhaban in the capital Friday evening. During the half-an-hour meeting from 6.45 pm, Xi Jinping said China would continue its cooperation as a development partner for the socioeconomic development of Bangladesh. ‘China would consider with due importance increasing Bangladesh export to China,’ said the Chinese president. Abdul Hamid said China is Bangladesh’s largest trading partner and bilateral trade between the two countries has been growing steadily. “I believe your visit is going to usher in a new era in our relations by elevating our ‘closer comprehensive partnership of cooperation’ to a new level of ‘strategic partnership of cooperation’,” he added. President Hamid said Bangladesh and China enjoy excellent bilateral relations and traditional, time-tested friendship and cooperation. “As you have your ‘Chinese dream’, we also have ‘vision 2021’ to become a middle-income country by 2021 and ‘vision 2041’ to become a developed country by 2041. We consider China as a trusted partner in this pursuit,’ he added. Highlighting the friendly relationship with China, Abdul Hamid said it is based on the principles of mutual respect for territorial integrity and sovereignty, non-aggression, non-interference in each other’s internal affairs, equality and cooperation for mutual benefit, and peaceful coexistence. “We have always supported China’s core issues of national interest, particularly its ‘one China policy’,” the president said. He said Bangladesh highly values the Chinese cooperation in the areas of infrastructure development, trade, investment, agriculture, energy and power, ICT and telecommunications which has made positive impacts on our socioeconomic progress. During the meeting, the Chinese president mentioned his meeting with prime minister Sheikh Hasina and said they have decided to take a master plan for boosting the bilateral relations of the two countries. He said there are scopes to expand the bilateral ties in different areas, including trade and agriculture. Mentioning his visit to Dhaka six years ago, Xi Jinping said tremendous change has taken place in the socioeconomic area of Bangladesh. Bangladesh is an important country in South Asia and the relations of the two countries would strengthen further, he added. Foreign minister AH Mahmood Ali, state minister for foreign affairs Shahriar Alam, foreign secretary, president’s military secretary and secretary attended the meeting. Later, Xi Jinping joined a banquet hosted by president Abdul Hamid. Prime minister Sheikh Hasina, former president Hussain Muhammad Ershad, speaker Shirin Sharmin Choudhury, chief justice Surendra Kumar Sinha, cabinet members and envoys of different countries attended the banquet.

Thirteen Chinese companies on Friday signed investment agreements involving $13.60 billion with 13 Bangladeshi companies with the aim of increasing bilateral trade and business between the two Asian countries. The investment agreements between the companies in the area of infrastructure, construction, power and information technology sectors were signed at a programme ‘Bangladesh-China Business Forum’ at the Sonargaon Hotel in Dhaka on the first day of the two-day visit of Chinese president Xi Jinping. The Federation of Bangladesh Chambers of Commerce and Industry and the China Council for the Promotion of International Trade jointly organized the event.Of the 13 Chinese companies, most of the firms are state-owned, while out of the 13 Bangladeshi companies, only two are state-owned. ‘Infrastructure, construction, textile, shipbuilding, automobile, pharmaceuticals and information technology are the potential sectors in Bangladesh and Chinese investors are interested to make investment in the sectors,’ Chen Zhou, vice-president of the CCPIT, said at the event. He said transformation of product is important for sustainable growth and Bangladesh and China have scope to work on the issue. ‘We have just started our journey together and the visit of the president of China brought the two countries (Bangladesh and China) very close,’ commerce minister Tofail Ahmed said. He said Bangladesh government has decided to award a special economic zone to China near Chittagong to attract investment from Chinese entrepreneurs. The commerce minister said the investment policy of Bangladesh is very liberal and the foreign investment is protected by the act of law. ‘I hope BCIM business corridor for Bangladesh, China, India and Myanmar will be established and I see the bright future of business for the two countries,’ Tofail said. He said that though China recognized Bangladesh after 1975, the bilateral trade and business was growing fast and now China was the largest trade partner of Bangladesh. Bangladesh has entered into a new era of trade and business through the multi-billion investment agreements with Chinese companies, said Abdul Matlub Ahmad, president of the FBCCI. He said that people would be benefited through the agreements and it would also be helpful to graduate Bangladesh to middle-income country from lower middle-income one. Matlub welcomed the visiting Chinese business delegation saying that Bangladesh side was enthusiastic in joining with China for greater business and investment collaboration. He said that China would be one of the most strategic and important partners for Bangladesh in Asia and the upcoming ‘silk road’ under the one belt one road initiative would connect Bangladesh with China through multimodal transport networks and it would transform the existing communication and business linkage. On Thursday, seven Chinese companies signed investment and import agreements worth $186 million with 13 Bangladeshi companies.