Leading economists and foreign-relations experts stressed debt rescheduling by the Chinese side raising the loan-repayment and grace periods to enable Bangladesh to absorb economic shocks, as closer cooperation between the two countries came into the limelight.
Addressing an international seminar on 'Bangladesh-China Relations: A Future Outlook'" they also opined that if China provides credit arrangements to Bangladesh for its import from China, it would help the country address the fragile BoP situation.
Bangladesh Institute of International and Strategic Studies (BIISS) and the Centre for China Studies (SIIS-DU) jointly organised the meet to commemorate the 50th anniversary of the establishment of diplomatic relations between China and Bangladesh.
Md. Touhid Hossain, Adviser for Foreign Affairs of the current interim government, was the chief guest at the seminar which was also addressed by Yao Wen, Ambassador of China in Bangladesh, and Dr Debapriya Bhattacharya, Distinguished Fellow of CPD and Chair of the Committee on White Paper on the State of Bangladesh's Economy.
"Almost a quarter of our imports are coming from China, but the trade deficit is increasing. Trade deficit is increasing at a faster rate than the volume of the trade itself. China has been generous in order by providing us, first, the 97-percent duty- free and quota-free market access. Now it has gone up to 100 per cent, but we know by now in the world, trade does not depend on only market access based on tariffs and other regulatory or other forms of financial considerations. It also depends on the process through which it happens. It also depends on the non-trade barriers which are there," said Dr Debapriya.
"So I think if you look at the future of Bangladesh exports to China, then it is not tariff, it is the non-tariff barriers which we need to look at."
He also stressed the need to look at the lengthy processes. "Quite often it takes to dispute settlement."
Highlighting the need for debt rescheduling with China he said, "As I mentioned, almost 9.0 per cent to 10 per cent of the financial flows are coming from China. And, well, if you look at the debt situation of Bangladesh at this moment, almost 5.6 billion dollars are owed to China which is almost 10 per cent of the total debt of Bangladesh has overseas. So the debt per repayment is becoming an increasing challenge for Bangladesh."
The economist also points out that some of the loans come as supplier's credit.
And shorter repayment period, shorter grace period, and higher commitment charges than others show there are opportunities for streamlining them in the future.
He argues that Chinese loan and debt in Bangladesh definitely demand a bit much closer look.
He suggests making the debt situation more compatible with the upcoming development requirements of this country.
Mr Debapriya also observed that although the foreign-exchange reserves improved in the recent weeks, and the foreign-exchange flow stayed quite sustainable in the recent past, a debt rescheduling is not totally out of picture.
"At this moment, a debt-rescheduling issue may soon come up to look at how we really pay back some of these loans which are really maturing very fast," he told the cutting-edge function at an important crossroads in Bangladesh's political history following the July-August uprising.
About the importance of more Chinese investment in Bangladesh he said China can bring Bangladesh into the regional value chain through investing in the garment and manufacturing sector.
"What is becoming important now to have the Chinese investment more in Bangladesh over here, and where the Chinese investment can go in Bangladesh," he said, adding that it has to go to the Chinese economic and industrial zone which has been allocated in Anwara upazila in Chittagong.
He also argues that more investment in the Anwara EPZ is needed to make the Karnaphuli Tunnel economically viable.
The CPD economist stresses the need for Chinese credit to support Bangladesh's import from that country. Import from China is critical for Bangladesh, and given that Bangladesh does not have adequate foreign exchange now to pay up debt, it is important to get a financing from China in order to underwrite those imports.
"It is the old-fashioned open general licence system that you open up a credit line which can only go to finance the imports which are coming from China and support that one and create no less pressure on our balance-of-payments situation," he said.
He notes that China remains the single-largest provider of financial support to Bangladesh, as of last year (2023). The latest data show Dhaka received nearly US$4.0 billion almost in financial support which is about 9.0 per cent of the total flow which came to Bangladesh in that year.
The economist mentions that Bangladesh imports almost $25 billion of goods from China. It is about 23 per cent of the total imports coming to Bangladesh, and China's investment has now reached almost $1.5 billion.
"And what we see is important also in terms of human development. There're 20,000 students from Bangladesh currently studying in China at this very moment. So if this is one of the benchmarks and if you look at the future, why
Bangladesh should be looking at China as its major source of development cooperation and economic cooperation in the future."
Speaking on the strengths of China, he said, "China, as you may know, remains the driver of global economy at this moment, at least 30per cent of the global good is attributable to China. We make the joke that if China catches cold, then the whole world sneezes. That is the economic situation what we have now. So we are talking about a country which has generated $600 billion of trade surplus. We are talking about a country which has 3000 billion of foreign-exchange reserves."
Foreign Adviser Touhid Hossain said Bangladesh could not capitalise on the duty-free access that China has given for many reasons. "I would say that it's basically our lack of competitiveness in many areas and lack of diversification. I think we need to concentrate on these two. We need to enhance our competitiveness."
He agrees on the issue of debt rescheduling by the Chinese side.
The adviser said Bangladesh and China have very important defence cooperation. "As we all know, China is a major supplier of our defence equipment and the modernisation of our military services that we are looking forward to. I think we need a lot of cooperation in this respect, from China."
About the collaboration in the infrastructure-development sector, he said, "Of course, there are some limitations, as has already been mentioned, and we need to overcome those so that the infrastructure-development cooperation that exists between our two countries becomes more useful, more sustainable."
The foreign affairs' adviser of the interim government also stressed enhanced cooperation in the energy sector, both in green and traditional. Some projects are ongoing in various areas, and he hopes that these will be expedited so that they can be completed in time and become more useful for the Bangladesh economy.
One important area of cooperation between the two countries, as has been already touched by the ambassador, is technological know-how and communications, and Information and Communication Technology, he said.
Seeking Chinese cooperation in resolving the Rohingya crisis he said China has been cooperating in this respect for the return of the refugees. "We know that there is only one solution to this problem, which is that the people who are now in the camps in Bangladesh have to go back to their home. That is the only solution."
"China has been with us and there were trilateral dialogues, but, unfortunately, the previous initiatives have not resulted in any return of any of the Rohingya people to their homeland."
He notes that China has a lot of influence in Myanmar Dhaka looks forward to more active Chinese role in ensuring that these people, who are in a very deplorable situation, can be sent back.
"There their rights have been trampled upon, and they should be allowed to go back with rights and security so that we can get over this problem once and for all, and it is not repeated one again and again. Cash has been in the past," the foreign adviser opined.
He said both countries, from the very beginning, supported each other on the matters of core interest and work together on a path to realising the respective development.
"Now, in the current situation, as Bangladesh has witnessed the most significant political change in its national history, the future of Bangladesh in a post- revolution setting requires a more comprehensive approach," he said.
Ambassador AFM Gousal Azam Sarker, Chairman, BIISS, presided over the seminar where Major-General Iftekhar Anis, Director-General, BIISS, delivered the welcome address.
Dr Yang Jiemian, Professor, Director of the Academic Advisory Council, SIIS, made a special remark during the session.
There were three working sessions in the international seminar. The first working session titled 'The Impact of Bangladesh's Changing Political Landscape on Regional Dynamics' was moderated by Ambassador Farooq Sobhan, former Foreign Secretary. The second working session titled 'Bangladesh's Political, Economic, and Social Reforms and the Trends' was moderated by Dr Zhang Jiu'an, Associate Research Fellow, Academy of Contemporary China and World Studies. Professor Amena Mohsin, Department of International Relations, the University of Dhaka, moderated the third working session titled 'Strengthening China-Bangladesh Cooperation and Advancing the Comprehensive Strategic Cooperative Partnership'.
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