Redirection boosts exports to US: ADB

The trade war between China and the United States has become a boon for Bangladesh, with its exports to the market of the world's largest economy booming, the Asian Development Bank said.

Due to the trade redirection, Bangladesh's export share to the US market among the developing Asia nations in the first half of 2019 has increased by 13.4 per cent, the bank said in a recent report.

The report said Bangladesh has started benefiting since 2017 when the trade tensions between the world's two largest economies flared up.

Economists and trade experts, however, said Bangladesh's benefit from the frictions would not sustain unless it could attract the Chinese investments.

The ADB has said the US import from China has plunged by 12 per cent in the first half of the year, compared with the same period of 2018.

In contrast, US imports from the rest of the developing Asia climbed by about 10 per cent.

For example, importation from Vietnam jumped 33 per cent, 20 per cent from China Taipei, and 13 per cent from Bangladesh.

While Bangladesh has mostly gained from its garment and textile products shipment to the US market, Vietnam and China Taipei did it from increased exports of electronics and machinery, the ADB said.

Economists are not so excited about the export boom.

Executive director of the Policy Research Institute (PRI) Dr Ahsan H Mansur said Bangladesh is getting benefit from the "order-redirection" rather than "investment-redirection" as trade war escalated.

If Bangladesh fails to tap the Chinese investments, its export growth to the US and other countries will not expand much in the future, he told the FE.

He argued the government should act promptly to create an environment so that it can draw foreign investments, Dr Mansur said.

Former economics professor of Dhaka University Dr MA Taslim told the FE it is a good piece of news for the country that Bangladesh is benefiting from the trade war.

Although it is still not much significant in the overall trade volume, but the opportunities have opened to harness the unfolding situation, he added.

He suggested the government improve the business climate, develop the skilled manpower and build proper infrastructure to maximise the benefits.

"Trade redirection as well as the China's recent policy of improving local consumption will force many Chinese export-oriented industries to relocate to other countries," Dr Taslim said. "Bangladesh can attract Chinese investment through improving its business climate," he added.

ADB's country director Dr Manmohan Parkash said Vietnam has grabbed the highest benefit because of its product diversification.

But Bangladesh's benefits are not significant because it highly concentrates on single product of apparels, Mr Parkash said.

He suggested Bangladesh ease of doing business and develop skilled manpower.

ADB's senior economist in Dhaka Soon Chan Hong has recently said despite global economic slowing, export growth is expected to be strong at 10 per cent in FY2020 for Bangladesh as it benefits from trade redirection caused by the current trade tensions.

Bangladesh's exports to the US market advanced by 14.92 per cent to $6.88 billion during the FY 2018-19, up from $5.98 billion a year earlier.

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