China-Bangladesh currency clearance agreement can increase trade by 'an unimaginable scale': Li Jiming, Ambassador of China

The Ambassador of China, His Excellency Li Jiming, has said Bangladesh can increase its exports to the $17 trillion Chinese market by participating in various Chinese trade expositions and fairs to familiarise Chinese consumers with its products.

In a recent interview with The Business Standard, Ambassador Li Jiming said currency clearing arrangements between the two central banks to help use the RMB and Taka in transactions can increase trade by "an unimaginable scale." He also underscored the need to encourage more Chinese market-oriented investment by Bangladeshi businesses and bilateral Free Trade Agreements (FTA).

In response to a question, Ambassador Li Jiming explained the significance of the visit of Chinese State Councillor and Foreign Minister Mr Wang Yi to Dhaka on 6 and 7 August and commented that the visit would "deepen strategic integration, and further enhance practical cooperation" between the two countries.

He also explained the Chinese government's position on US House Speaker Nancy Pelosi's recent visit to Taiwan and the Chinese reaction to the visit.

The following is an edited transcription of the interview:

What was the significance of the visit of Chinese Foreign Minister Wang Yi to Dhaka? Was it looking for ways to improve regional security amid heightened tensions? Or was it for more economic integration as the Bangladesh Prime Minister suggested that South Asia, Southeast Asia and China could work together for economic progress overcoming the impact of the Russia-Ukraine war and sanctions?

China and Bangladesh are amicable neighbours and strategic partners of cooperation. The visit of the Chinese State Councillor and Foreign Minister Mr Wang Yi aims at continuing traditional friendship and upgrading mutually beneficial cooperation. Upon arrival in Dhaka, Mr Wang first visited the Bangabandhu Memorial Museum, where he recalled the history of friendly interactions between the two countries, and felt the solid historical, social and people-to-people bases for our bilateral relationship.

The Hon'ble Prime Minister Sheikh Hasina appreciated the Chinese side for the tribute to Bangabandhu and highlighted that Bangladesh cherishes friendship with China. She underscored that Bangladesh sees China as an important partner for maintaining peace and achieving common development, and it is an irreplaceable option for Bangladesh to deepen solidarity and cooperation with China. Bangladesh will stick to the one-China principle and see Taiwan as an integral part of Chinese territory.

The two sides agreed to strengthen mutual political trust. Based on the Five Principles of Peaceful Coexistence, we support each other to defend independence, national dignity and core interests, and to follow a development path suited to our respective national conditions. We are willing to keep exchange on the governance of the country.

The two sides agreed to have an even closer coordination on development strategies. The Belt and Road Initiative and the Vision 2041 perspective plan will further integrate. Cooperation will be deepened in the fields of infrastructure, digital economy, green development and so on. In order to further encourage Bangladesh's export to China, the Chinese side announced duty-free treatment of 98% tariff lines goods originating from Bangladesh.

The two sides agreed to tighten social and cultural exchange. We signed a new culture and tourism exchange program, and decided to elevate exchange and cooperation on poverty reduction. China welcomes Bangladeshi students to return to China to resume studies. Flights between the two countries will be increased gradually.

Through the visit, China and Bangladesh renewed commitments to traditional friendship, reiterated the one-China principle, agreed to deepen strategic integration, and further enhanced practical cooperation, thereby jointly infusing power of stability to the region and beyond against an uneasy international environment. The visit was fruitful and of great success.

Now almost all Bangladeshi products (98%) have come under China's duty-free offer. How can Bangladesh businesses make best use of the offer? What are the strengths you see in Bangladesh's private sector and what more do you think will be needed for them to gain bigger footprints in the huge Chinese market?

The Chinese Government has granted duty-free treatment of 97% tariff line goods originating from Bangladesh exported to China on July 1st of 2020 and it has had a positive effect. The duty-free treatment of 98% tariff lines goods originating from Bangladesh exported to China will take effect on September 1st 2022, which will further help to boost Bangladesh's export to China.

To boost Bangladesh's export to China, here are some points I would like to share:

First, we recommend Bangladesh's enterprises and exporters to participate in China's International Import Expo (CIIE). Exporters from Bangladesh have been invited to CIIE for four consecutive years. Like previous CIIEs, standard booths for Bangladeshi enterprises will be set up during the 5th CIIE to be held this November. Bangladeshi enterprises are also welcome to the China-South Asia Exposition in Kunming, which is my hometown. Again, free booths are always provided to our Bangladeshi friends. And the China Import and Export Fair in Guangzhou (Canton Fair) is another influential fair that is worth participating in.

Second, Bangladesh needs more Chinese market-oriented investment. Be it 97% or 98% duty-free treatment, Bangladesh needs to produce what the Chinese market needs in order to boost export. China's investment in Bangladesh in 2021 amounted to 1.26 billion dollars and grew almost threefold. With an accumulated investment of nearly $3 billion, China remains a prominent FDI source for Bangladesh. The good news is that the Chinese Economic and Industrial Zone, as the first industrial park, will soon be built in Chattogram, which is of landmark significance. It is hoped that more Chinese enterprises could be attracted to invest here to improve the manufacturing industry and industrial structure of the country, therefore, Bangladesh will have more diversified exportable products and thereby enjoy more opportunities to grasp the Chinese market.

Third, Bangladesh needs to advance studies on the bilateral Free Trade Agreement (FTA). In preparation for Bangladesh's graduation from the LDCs in 2026, we are glad to notice that the Bangladeshi side has shown a positive attitude and opened consideration on FTA with trade partners, including China. It is the proper time for our two countries to promote mutual consensus and deepen a joint feasibility study on FTA. FTA between China and Bangladesh would definitely help to make a preferable arrangement.

Last but not the least, bilateral financial and currency cooperation is strongly recommended to help facilitate trade and economic cooperation. If we could use RMB and Taka in bilateral trade, it will reduce transaction costs and mitigate exchange risk. If we could have a currency clearing arrangement between the central banks of our two countries, the cross-border payment and settlement of RMB will boost Chinese investment in Bangladesh and China's import of Bangladeshi goods on an unimaginable scale.

China had granted zero-duty market access to 97% of Bangladeshi products in July last year, which was later raised to 98%. Trade data shows in nine months till March (July-March of FY21), Bangladesh's exports to China saw their lowest growth (9.68%) among major trading partners. What are the factors, you see, that held Bangladesh back from gaining much from the duty-free offer?

According to statistics from China's customs, in 2021, Bangladesh's export to China amounted to 1.05 billion dollars, exceeding $1 billion for the first time, and registering a year-on-year growth rate of 30.9%. From January to May of 2022, Bangladesh's export to China reached 410 million dollars. So Bangladesh's exports to China are gaining momentum.

As to measures to further enhance Bangladesh's export, I have just shared my views on the question above, namely, we recommend Bangladesh's enterprises and exporters participate in various expositions to China to make Bangladeshi goods known to more Chinese consumers. We also encourage more Chinese market-oriented investment, the bilateral Free Trade Agreement (FTA), and bilateral financial and currency cooperation to help facilitate trade and economic cooperation.

Which Bangladeshi products do have the potential to be among China's top 20 import goods?

At present, according to statistics from the Bangladesh government, more than 60% of Bangladesh's exports to China are garment products. So garment products are still the top product exported to China.

To Bangladeshi exporters' main concern, several kinds of basic leather products are added into the duty-free treatment of the 98% lines, providing more opportunities to Bangladesh's leather industry. It is noticed that programs such as the "Bangladesh leather and leather products promotion webinar" are undergoing and helping Chinese manufacturing enterprises related to leather products form business relations with Bangladesh's leather exporters.

Meanwhile, Bangladesh has many high-quality agricultural, livestock and fishery products. For example, the national fish of Bangladesh, the hilsa, is among both the 97% and the 98% zero tariff lines and has already acquired inspection and quarantine access to the Chinese market. Bangladesh's mango, jackfruit, guava, honey, and beef, are all listed as duty-free products in both the 97% and the 98% tariff lines.

All of the goods mentioned above in Bangladesh have the potential to become star products in the Chinese market. And we are happy to see the brand of "made in Bangladesh'' is earning its reputation.

What are the areas you feel Bangladesh and China have scope to cooperate more? Development of infrastructures for regional connectivity by road, rail and sea; or anything else?

China and Bangladesh enjoy a wide range of cooperation areas and a sound basis for cooperation. On the basis of our traditional cooperation in infrastructure construction, we will encourage more Chinese companies to expand their investment areas and carry out cooperation in agribusiness, food processing industry, ICT, wind and solar power, exploration and exploitation, etc.

Why is China reacting so strongly towards Nancy Pelosi's visit to Taiwan?

Taiwan has been an inseparable part of China's territory for 1,800 years. In 1943, the leaders of China, the United States and Britain issued the Cairo Declaration, which clearly states that all territories Japan stole from the Chinese, such as Taiwan, shall be restored to China. The Potsdam Declaration of 1945 affirmed that the terms of the Cairo Declaration would be carried out. United Nations General Assembly Resolution 2758, passed in 1971, recognised that the representatives of the government of the People's Republic of China are the only lawful representatives of China to the United Nations. When China and the United States established diplomatic relations on Jan. 1, 1979, the US recognised in the joint communique with China that the government of the PRC is the sole legal government of China.

However, the US unilaterally provoked the current crisis. Despite China's many representations, the US still allowed its Speaker of the House of Representatives and the third top official of the US Government Nancy Pelosi to visit Taiwan, which is a major event upgrading the substantive relations between the US and Taiwan and sends a very wrong signal to "Taiwan independence" separatist forces. Faced with this, China has no choice but to fight back. The responsibility and consequence of the current tensions are all on the US and the "Taiwan independence" separatist forces.

As a legitimate response, the Chinese armed forces conduct military exercises in waters off China's Taiwan island to safeguard the sovereignty and territorial integrity of China. Our measures are open and proportionate. They are in line with both domestic law and international law and practices. They are beyond reproach.

What is China's future plan for Taiwan?

Taiwan is part of China. It is an indisputable fact. China's complete reunification is a process that cannot be halted. The Communist Party of China is committed to the historic mission of resolving the Taiwan question. Peaceful reunification and "one country, two systems" are our basic principles for resolving the Taiwan question and the best approach to realising national reunification.

We will work with the greatest sincerity and exert our utmost efforts to achieve peaceful reunification. But we will not renounce the use of force, and reserve the option of taking all necessary measures. The future of Taiwan lies in China's reunification, and the well-being of the people in Taiwan hinges on the rejuvenation of the Chinese nation.

Once peaceful reunification is achieved under "one country, two systems", it will lay new foundations for China to make further progress and achieve national rejuvenation. At the same time, it will create huge opportunities for social and economic development in Taiwan and bring tangible benefits to the people of Taiwan. Peaceful cross-Straits reunification is of benefit not only to the Chinese nation but to all peoples and the international community as a whole.

Will Nancy Pelosi's visit accelerate the unification of Taiwan with mainland China?

Pelosi's visit proved to be a complete farce. It has not only backfired on the US but also irritated the Chinese people and made our minds tougher and solidarity stronger to achieve the reunification of the country. The international community has taken this opportunity to further enhance consensus on the one-China principle, too. Ever since Pelosi's visit, more than 170 countries and international organisations, including Bangladesh, have reiterated their commitment to the one-China principle.