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November 23, 2018

Bangladesh benefiting from US-China trade spat

The ongoing trade spat between the US and China has benefited Bangladesh’s readymade export industry, with orders increasing from both China and the US, a new study has revealed.

The ongoing trade spat between the US and China has benefited Bangladesh’s readymade export industry, with orders increasing from both China and the US, a new study has revealed.

“It is an opportune moment for Bangladesh as China also announced tariff cuts on goods imports from the country,” Abul Kasem Khan, president of the Dhaka Chamber of Commerce and Industry, told delegates at a recent seminar in the capital.

Ali Ahmed, chief executive officer of Bangladesh Foreign Trade Institute and author of the report, ‘Trade war and its implications for Bangladesh‘, added that buyers are turning to Bangladesh in anticipation of the US imposing tariffs on garments from China.

According to the report, growth in RMG exports to the US has increased in the first nine months of the year but only marginally – to 6.46% from 6.41% in 2017. Ahmed said this is primarily because the majority of relocations are currently going to Vietnam, Cambodia, and Myanmar.

The CEO added that any benefits Bangladesh receives from the US/China trade spat, have been upset by the depreciation of the Chinese RMB. “That is an upsetting factor. Still, our exports with China will hopefully increase,” he asserted.

Bangladesh is also set to benefit in its cotton purchase as China stops buying from the US to subsidise its domestic growers and to end the previous stocks. The southeast Asian country previously purchased just over US$1bn worth of cotton from the US. Already the price of cotton has fallen 10% year-on-year in the October-November period due to oversupply, Ahmed told delegates.

Bangladesh is also expecting to benefit from increased investment from Chinese sunset industries that are looking for new destinations as production costs in China rise due to higher tariff measures by the US and a shortage of skilled labour.

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