Vol. 5 Num 633 Fri. March 10, 2006  

Low-cost Chinese items lead to huge Sino-Bangla trade gap
China overtakes India as Bangladesh's number one import source

Low-cost Chinese products are making Bangladesh more dependent on the Asian economic giant, contributing to a widening trade gap of more than one billion dollars between the two countries in just six months of the current fiscal year.

Bangladesh imported goods worth US$1,037 million from China during July-December period of the 2005-06 financial year while its export reached a meagre $27.9 million.

"Trade gap between Bangladesh and China is widening alarmingly and it may hit two billion dollars in the current financial year," said a highly placed source at the commerce ministry.

Bangladesh had a trade deficit of $918 million with China in 2002-03 fiscal year, reaching $1,152 million in 2003-04 and $1,584 million in the 2004-05 fiscal, according to Bangladesh Bank (BB) and Export Promotion Bureau (EPB) statistics.

China has emerged as number one import source for Bangladesh, beating India for the first time in the first half of the current fiscal year.

"In terms of price, Chinese products are unbeatable no matter how their quality is. There are high-quality Chinese products, but they are hardly being imported," Fazlul Huq, president of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), told The Daily Star.

Although China has been the dominating source of woven fabrics and raw cotton for long, all types of machinery and electronic imports from China have also gone up in the recent times, he observed.

Lots of Chinese readymade garments are now available in local market, Huq said noting that import from China surged mainly due to its wide range of products and prices.

Raw cotton, boilers, machinery and mechanical appliances, knitted fabrics, man-made staple fibre and man-made filament, electric machinery and equipment, fertiliser, buses and covered vans, organic chemicals and special woven fabrics are some of the major products Bangladesh now import from China, according to the central bank.

On the other hand, Bangladesh exports raw jute, leather, frozen foods, jute and jute goods and chemicals to China.

"Chinese goods are cheap compared to the same standard products of India. China is set to dominate Bangladesh market as the importers here are now shifting from India," said an importer at Polwel Super Market in Dhaka.

China offers goods with wide price range and importers cling to China due to its easy trade procedure and speedy shipment, he mentioned.

According to sources, China usually sends its products to Bangladesh within 25 days on an average by completing all the formalities while import from India takes 35 days.

Bangladesh's import from India was $2,030 million in 2004-05 fiscal while the amount was $1,642 million from China. India exported goods worth $1,602 million to Bangladesh in 2003-04 financial year while China exported products worth $1,198 million.

In 2002-2003 fiscal year, Bangladesh imported goods worth $1,358 million from India against $938 million from China.

Although Indian products dominated Bangladesh market for a long time, Bangladesh's trade deficit with the neighbouring country is showing a declining trend in the recent months.

Bangladesh imported goods worth $820 million from India during July-December period of 2005-06 fiscal while its export amounted to $105 million, leaving a trade deficit of $715 million with the neighbour during the period, according to BB and EPB statistics.

Bangladesh had a trade deficit of $1,274 million with India in 2002-03 fiscal year, increasing to $1,513 million in 2003-04 and $1,886 million in 2004-05 fiscal.

Cereals, raw cotton, boilers, machinery and mechanical appliances and parts, mineral fuels and oils and products of their distillation, bituminous substances and mineral waxes, vegetables, vehicles and accessories, prepared animal fodder, plastic and rubber, organic chemicals, iron and steel, electric machinery and equipment, plastering materials, lime and cement are imported from India.

Bangladesh's exports to India include fertiliser, raw jute, leather, frozen foods, jute goods, woven garments and agri-products.