Back in 2020, Bangladesh enjoyed duty-free access for 97 percent of its exports to China. By 2022, that number increased to 98 percent, adding 383 new products, including leather and leather goods. In September 2024, China extended duty-free access to 100 percent of products from Bangladesh and other least developed countries (LDCs), a benefit that will remain in place until 2028. This announcement came after Chief Adviser Dr. Muhammad Yunus met with Chinese President Xi Jinping during his recent visit to China.
However, despite six years of duty-free access, Bangladesh’s exports to China have not seen significant growth. In the last fiscal year (2023-24), exports to China totaled $715.38 million, accounting for only 1.6 percent of Bangladesh’s total exports.
Industry experts say that China is known as the world’s manufacturing hub and is largely self-sufficient in many industries. While it does import various goods, it offers tariff benefits to several countries, including Bangladesh, which has been receiving these benefits even before 2020. Despite this, Bangladesh’s exports to China have not grown as expected. In fact, exports have declined. In the 2018-19 fiscal year, Bangladesh exported $830 million worth of goods to China, but by 2023-24, that figure had dropped to $715 million.
Analysts point out that a significant portion of Chinese investments is now flowing into Vietnam. The products manufactured with those investments are then exported back to China. Bangladesh could take a similar approach—attracting Chinese investment, producing goods locally, and using the duty-free advantage to enter the Chinese market competitively. Talks have been ongoing about setting up a Chinese economic zone in Bangladesh, but progress has been slow. If these plans move forward and Bangladesh successfully redirects strategic Chinese investments, it could create real economic benefits. That should be the country’s strategy. Unfortunately, foreign investment—including from China—remains limited in Bangladesh.
Professor Mustafizur Rahman, a distinguished fellow at the Center for Policy Dialogue (CPD), told Bonik Barta, “After LDC graduation, any country can voluntarily extend duty-free access. For example, the European Union has said Bangladesh will continue to receive the benefit for three years post-graduation, and the UK has also committed to three years. In the same way, China has now confirmed that Bangladesh will remain under duty-free access until 2028, or two years after graduation. Initially, Bangladesh had duty-free access for 63 percent of products, which later expanded to 97 percent. Since 2022, almost all products have been covered, and this benefit will now continue until 2028.”
Despite China offering a great opportunity, Bangladesh has not been able to take full advantage of it, said Mustafizur Rahman. He explained, “For a long time, Bangladesh has had duty-free access for many products in China. But due to a lack of production capacity, we haven’t been able to utilize this benefit properly. China imports goods worth $2.8 trillion, yet our exports to the country barely cross $700 million. The opportunity is there, but we need to figure out how to attract both domestic and foreign investment—especially from China—so we can fully leverage this duty-free access. Because if we can’t use the benefit, even if it’s extended for 50 years instead of two, it won’t make any difference for us.”
International trade experts believe that shifting China’s manufacturing capacity to Bangladesh is a strategic move. Since Bangladesh enjoys trade privileges in certain markets, China could use this as an advantage by relocating some of its production here. For example, Chinese products entering the US market faces tariff protection. However, if those same products are manufactured in Bangladesh—where such tariff protections do not apply—they could be exported to the US more easily. If this strategy is implemented, it could create jobs in Bangladesh and contribute to GDP growth through exports. But despite years of effort, Bangladesh has yet to develop the kind of investment-friendly infrastructure needed to attract Chinese manufacturers. Even if factories were to move here, there is still a shortage of skilled workers. As a result, any investment from China would likely focus on labor-intensive industries, while high-value-added production would go elsewhere—as has already happened. So, at this stage, there is no strong reason to believe Bangladesh will gain anything significant from the latest announcement.
Professor Abu Hena Reza Hasan from Dhaka University’s Department of International Business told Bonik Barta, “Bangladesh has already been receiving this duty-free benefit, along with 30 African nations under the LDC category. The only new aspect of this announcement is the extension until 2028. Bangladesh is set to graduate from LDC status in 2026, after which there will be a transition period. China has now confirmed that all LDCs, including Bangladesh, will continue receiving duty-free access until 2028. Some preferred countries had already been given this extension. Now, Bangladesh needs to assess what specific benefits it can secure during the one or two years after LDC graduation. Because, in reality, the products covered under China’s duty-free policy are not the ones Bangladesh has strong production capacity in.”
Abu Hena Reza Hasan further explained, “China mainly imports products where it lacks a cost advantage. These are mostly raw materials for industries, something Bangladesh doesn’t produce. Vietnam, on the other hand, does. Bangladesh’s strength lies in ready-made garments, but China is largely self-sufficient in that sector. Still, some Bangladeshi apparel does make its way into the Chinese market. Given this reality, Bangladesh doesn’t have many exportable products. So, even with duty-free access, we haven’t been able to make the most of it yet. However, if Bangladesh could establish itself as part of China’s backward linkage supply chain, the potential would be huge. Countries like Thailand and Vietnam have already taken advantage of this kind of opportunity.”
Officials at the Ministry of Commerce are also not overly optimistic about China’s latest duty-free access announcement. They believe a closer assessment is needed to understand what kind of trade flexibility China is actually offering Bangladesh. In 2022, Bangladesh’s commercial wing in Beijing conducted a review and submitted a report to the ministry, stating that capturing a significant share of the Chinese market is nearly impossible for Bangladesh.
The report also highlighted the massive trade deficit between the two countries. In the 2019-20 fiscal year, Bangladesh imported goods worth $50 billion from the global market, with $11 billion coming from China alone. In contrast, China imported goods worth $2.4 trillion from around the world, but Bangladesh’s share in that was only $600 million. In other words, while over 20 percent of Bangladesh’s total imports come from China, its exports to China account for less than 2 percent of the country’s total imports.
To address this gap, China introduced duty-free access for 97 percent of Bangladeshi products under the tariff line in July 2020. Later, the Chinese government expanded this benefit to include leather and leather goods, increasing the coverage to 98 percent. However, despite these advantages, Bangladesh’s commercial wing cautioned that expanding exports to China with traditional products alone would still be a major challenge.
China’s massive market is highly competitive. Only high-quality foreign companies can compete with local manufacturers and suppliers. However, based on consumer behavior trends, the demand for high-value-added products is expected to rise steadily. To increase exports to China, Bangladesh must focus on high-quality products and aggressive online marketing. Currently, none of China’s top 20 import items come from Bangladesh. This means traditional products alone is not enough to compete in the Chinese market, according to the commercial wing.
The commercial wing also analyzed the top 10 products Bangladesh exports to China. The data showed that out of five traditional export items, three have seen a decline—woven garments, knitwear, and seafood, including crustaceans and mollusks. On the other hand, exports of five non-traditional items have increased. These include iron and steel, wigs and human hair, footwear and leather products, copper and related items, and aluminum products.
Trade adviser Sheikh Bashiruddin sees significant potential for Bangladeshi jute products in China. Speaking to Bonik Barta, he said, “Expanding Bangladesh’s trade is essential, and the same applies to China. The country has a massive domestic market, offering both opportunities and challenges for Bangladeshi products. By leveraging China’s favorable tariff policies, Bangladesh can significantly boost its exports. If we focus on jute products alone, China could become the largest market. Right now, after Turkey, China is the second-largest market for Bangladeshi jute goods.”