Long dependent on North American and European consumer markets for export earnings, Dhaka is re-engineering its bilateral trade strategy with Beijing, transitioning from a relationship defined almost purely by inbound imports to one focused on bilateral export expansion.
During the first 11 months (July–May) of the outgoing FY26, Bangladesh’s exports to China climbed by 16% year-on-year to reach $742.50 million.
Trade analysts and macroeconomists project that once the final June performance logs are consolidated, total annual shipments to China will approach the $1 billion threshold for the first time in history.
Against this economic backdrop, Prime Minister Tarique Rahman is scheduled to undertake an official state visit to Beijing from June 23-26.
The administration views this diplomatic mission as a strategic window to deepen economic cooperation, with trade leadership anticipating that the bilateral negotiations could establish a framework to triple outbound shipments to $3 billion over the next three fiscal cycles.
China represents one of the largest consumer markets globally, with an import appetite spanning agricultural commodities, industrial raw materials, consumer goods, and high-tech components.
Since 2020, Beijing has systematically expanded market access for Dhaka under its Least Developed Country (LDC) concessions—progressing from 97% to 98%, and ultimately granting 100% duty-free quota-free (DFQF) access across all tariff lines.
Despite full tariff exemptions, Bangladesh’s export volumes have underperformed relative to market size due to systemic concentration risks.
Data from the Export Promotion Bureau (EPB) shows that current volumes remain heavily dependent on three traditional sectors: Ready-Made Garments (RMG), jute products, and raw or semi-processed leather.
Since China is itself the world's largest apparel manufacturer, economists emphasize that relying solely on textile shipments limits long-term growth, highlighting the urgent need for product diversification.
Structural bottlenecks
According to M Masrur Reaz, chairman of the Policy Exchange Bangladesh, the primary operational constraint is a lack of export diversity. A significant portion of China's high-volume imports consists of product categories that do not exist within Bangladesh's domestic manufacturing index.
Where production capacity does exist, local firms frequently encounter structural compliance challenges:
- Expanding beyond primary garments into higher-value technical components and processed commodities.
- Aligning local production processes with strict Chinese Sanitary and Phytosanitary (SPS) standards and international quality benchmarks.
- Building industrial capacity to fulfill high-volume purchase orders required by large Chinese distribution networks.
Despite positive growth in export trends, the bilateral trade balance remains heavily skewed in Beijing's favor.
During the first 10 months of the current FY26, Bangladesh’s inbound shipments from China totaled approximately $18 billion, compared to outbound shipments of just over $670 million.
Bilateral Trade Imbalance Profiles
Inbound Chinese Imports ──▶ $18bn (Textile inputs, electronics, capital machinery)
Outbound Bangladesh Logs ──▶ $0.67bn (Garments, jute, marine foods, leather)
▼
Net Bilateral Deficit: $17.33bn
Accountable for ~75% of Bangladesh's entire global trade deficit
This leaves a net bilateral trade deficit of $17.33 billion over a 10-month period, accounting for nearly three-quarters of Bangladesh's total global trade deficit.
These imports consist primarily of intermediate textile inputs, synthetic yarns, electrical machinery, and capital equipment.
Since domestic industrial manufacturing relies heavily on these supply chains, eliminating the deficit entirely is unfeasible; however, expanding target exports offers a viable path to narrowing the gap.
Currency depreciation
The bilateral trading framework faces additional challenges from the depreciation of the Bangladeshi Taka against the Chinese Yuan (CNY).
Over the past 18 months, the Taka has depreciated against both the US Dollar and the Yuan, increasing the landed cost of raw materials, electronics, and light engineering components imported from China.
This currency depreciation directly impacts manufacturing operating costs, reducing the price competitiveness of local factories in international markets.
Furthermore, the weakening of the Taka increases the local currency cost of servicing outstanding infrastructure loans funded through Chinese development credit lines.
Mohammad Khorshed Alam, President of the Bangladesh-China Chamber of Commerce and Industry (BCCCI), suggests that attracting targeted Chinese foreign direct investment (FDI) represents the most viable path forward.
By encouraging Chinese manufacturing firms to set up operations within Bangladesh's Special Economic Zones (SEZs), companies can manufacture goods locally for duty-free re-export back to China, helping to automate technology transfers, expand employment opportunities, and build domestic industrial capacity.
To diversify away from RMG concentration, trade groups and state planners have identified several non-traditional sectors with high potential in the Chinese market:
- Transitioning from raw hides to high-value finished leather goods and consumer footwear.
- Expanding shipments of processed crabs, eels, and deep-sea marine products.
- Securing biosecurity clearances for seasonal fruits (such as mangoes and jackfruits), sesame seeds, and processed dry foods.
- Exporting plastics, ceramics, and mineral-based industrial materials.
To support these sectors, trade analysts recommend establishing dedicated single-country trade exhibitions across major Chinese provinces, integrating with prominent Chinese e-commerce platforms, and building institutional linkages between regional supply networks.
