Bangladesh missing out on China market opportunity

When China widened duty-free access to 97 percent of Bangladeshi products in 2020 and later extended the concession to almost all goods in 2024, it appeared to offer Bangladesh a rare opening.

Yet years later, Dhaka is still struggling to find much to sell.

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It is against this backdrop that Prime Minister Tarique Rahman is visiting Beijing, seeking to reinvigorate a relationship shaped far more by what Bangladesh buys from China than by what it exports there.

While exporters say the thought of narrowing the trade gap to zero is unrealistic, economists suggest that Bangladesh should bring Chinese investors into its export drive, not only for capital, but also for market knowledge, distribution networks and access to Chinese consumers.

Bangladesh imports nearly $20 billion worth of goods from China annually, mainly machinery, industrial equipment and raw materials that power its factories, but exports only a fraction in return.

China already offers Bangladesh preferential access under provisions for least developed countries (LDCs), but duty-free benefits alone have failed to deliver a breakthrough.

The challenge is structural.

More than 80 percent of Bangladesh’s exports consist of ready-made garments (RMG), while China itself is the world’s largest apparel exporter, shipping nearly $300 billion worth of clothing annually and accounting for around 30 percent of the global market.

China imports more than $2.58 trillion worth of goods annually. Interestingly, the country also imports around $10 billion worth of apparel every year.

Even if Bangladesh managed to capture that entire market duty-free, it would still amount to only about half of what Bangladesh imports from China.

According to Export Promotion Bureau (EPB) data, Bangladesh exported goods worth $742.50 million to China during July–May of FY2025–26, edging closer to the $1 billion mark. Exports to China stood at $694.49 million in FY2024–25 and $715.37 million in FY2023–24.

Meanwhile, imports from China have continued to rise as Bangladesh has become more deeply integrated into global manufacturing supply chains.

Bangladesh’s export industries, particularly garment factories, rely heavily on imported raw materials, much of which come from China and India due to limited domestic supply capacity.

According to Bangladesh Bank data, Bangladesh imported goods worth $18.19 billion from China in FY2024–25, accounting for around 27 percent of the country’s total import bill, up from $16.63 billion in FY2023–24.

Quarterly imports reached $4.64 billion in July–September 2025 and $4.58 billion in October–December.

Bangladesh and China are also discussing a possible free trade agreement (FTA) to deepen trade and investment ties. A joint feasibility study has already been completed, although formal negotiations remain at an early stage.

However, Dhaka may move cautiously, as import duties on Chinese goods generate significant government revenue.

China also remains strategically important as Bangladesh explores pathways to join the China-led Regional Comprehensive Economic Partnership (RCEP).

Chinese investment has already gained a substantial foothold in Bangladesh.

According to the Chinese Enterprises Association in Bangladesh, nearly 2,000 Chinese companies are operating in the country with investment totalling around $3 billion, particularly in the garment sector.

‘IMPOSSIBLE TO OVERTAKE’

Mohammed Amirul Haque, chairman of Seacom Group and president of the Chittagong Chamber of Commerce and Industry (CCCI), said replacing China as Bangladesh’s main source of industrial inputs is virtually impossible.

“China remains Bangladesh’s preferred sourcing destination because of competitiveness, pricing, supply chains, logistics and shorter lead times,” he said. Most industrial machinery used in Bangladesh is imported from China for those reasons.

Amirul added that maintenance costs are also significantly lower. Chinese technicians can be hired for machinery repairs at around $60 to $100 per day, while technicians from Europe and the US may cost $600 to $800 per day, excluding accommodation expenses.

Mohd Khorshed Alam, president of the Bangladesh-China Chamber of Commerce and Industry (BCCCI), said reducing dependence on China would also be difficult because of pricing advantages.

Importers can source Chinese goods at prices around 28 percent lower than alternative suppliers, he said.

CHINESE PARTICIPATION VITAL

Mohammad Abdur Razzaque, chairman of Research and Policy Integration for Development (RAPID), said Bangladesh’s weak export performance in China shows that duty-free access alone cannot create demand.

“We simply do not yet produce enough of the goods that Chinese consumers and firms want to buy,” he said.

Given China’s dominance in apparel manufacturing, Bangladesh has limited room to expand exports through its traditional basket, he added.

Razzaque argued that the bigger challenge is commercial.

Without integration into Chinese retail networks, distribution channels and sourcing systems, Bangladeshi products will struggle to gain meaningful access to the Chinese market.

“What we need is a new model based on Chinese joint ventures with Bangladeshi entrepreneurs producing specifically for the Chinese market,” he said.

Such partnerships could bring market knowledge, product design, technology, branding and direct links to retailers.

“The tariff door is open, but we still need the products and commercial connections to walk through it.”

Razzaque said an FTA with China could still be useful, especially after Bangladesh graduates from least-developed-country status.

Since China already grants duty-free access, the value of an agreement would lie more in securing long-term preferential treatment, attracting Chinese investment and reducing regulatory and non-tariff barriers.

But Bangladesh must proceed carefully.

“China is the world’s most efficient manufacturing powerhouse with enormous supply-side capacity. A poorly designed FTA could place significant pressure on domestic industries and reduce government revenue,” he said.

He urged Bangladesh to adopt a China-specific export strategy by identifying 20–30 promising products and supporting firms through certification, packaging, product adaptation and stronger commercial representation in major Chinese cities.

Bangladeshi exporters also need direct connections with Chinese importers, retailers, supermarkets and digital platforms.

“Chinese participation will be critical because without their investment, market knowledge and distribution networks, it will be difficult to generate a meaningful export response from Bangladesh.”

Razzaque said Bangladesh should move beyond seeking isolated Chinese projects and instead focus on investment-led production clusters.

Special economic zones could play a central role, particularly if investment brings technology, managerial expertise and access to international markets rather than serving only domestic demand.

Promising sectors include export-oriented electronics and components, renewable-energy equipment, technical textiles including man-made fibres, agro-processing and light engineering.

He added that Bangladesh must improve its investment climate through reliable energy supply, serviced industrial land, faster customs clearance, predictable taxation, transparent profit repatriation procedures, effective one-stop services and digitised regulatory approvals.