The Influence of Business Environment Between USA and China on Bangladesh Economy and Trade

To comprehend the current trade dynamics between the United States and China, it is essential to analyze the distinct trading patterns of these two global giants. Historically, China has been endowed with abundant resources and advancements in various sectors such as agriculture, science, finance, and military. This wealth of resources has made China a target for foreign invasions throughout its history, leading to significant economic challenges exacerbated by trade wars and unequal treaties.

The Current Economic Landscape

Despite a tumultuous past, China's economy has experienced remarkable growth since the 1950s, with its unique socialist economic model serving as an inspiration for many developing nations, including Bangladesh. The rapid technological advancements in China, particularly in the production of replica products, have posed a competitive challenge to other countries. China is primarily an export-oriented nation, with its most significant exports being steel and raw materials for high-tech products. The ten leading exports from China include electrical machinery, machinery (including computers), furniture, clothing, optical instruments, plastic articles, vehicles, iron and steel products, and toys.

Electrical machinery alone accounts for approximately 26.4% of China's total export revenue (Workman, 2018). Additionally, China is increasing its foreign direct investment in developing countries, which has led to substantial debt for some nations, such as Pakistan, which is seeking assistance from the International Monetary Fund (IMF). The United States' influence over the IMF has complicated this situation, as it has hesitated to grant bailouts that might benefit China. As of now, China holds a staggering $3.1 trillion in foreign exchange reserves, dwarfing the U.S. reserves of approximately $1.2 trillion (Trading Economics, N.D.).

Trade Relations between the U.S. and China

In 2009, China emerged as the third-largest market for U.S. exports, with significant exports from the U.S. including aerospace products, oilseeds, motor vehicles, semiconductors, and pharmaceuticals. Initially, the U.S. enjoyed a favorable trade balance with China, but the situation shifted post-2009 as China sought to balance trade. The ongoing trade war between the two countries is driven by both economic and political factors. Economists predict that by 2050, China's economy may surpass that of the U.S., raising concerns about the implications of such a shift in global power dynamics.

China's Belt and Road Initiative has further expanded its influence in South Asia and beyond, leading to criticism from the U.S. In response to perceived economic threats, former President Donald Trump initiated the "Make America Great Again" campaign, accusing China of unfair trade practices. Key issues identified by the U.S. include intellectual property theft and the growing trade deficit, which stood at $375 billion in December 2017. The imbalance in trade can be attributed to several factors, including China's low labor costs, which have prompted U.S. manufacturers to relocate production to China, resulting in a surge of imported Chinese goods.

Impact on Bangladesh's Economy

The ongoing trade tensions between the U.S. and China have multifaceted implications for Bangladesh's economy and trade. While some negative effects have already manifested, such as a decrease in rawhide prices, there are also potential benefits. For instance, tariffs imposed on Chinese clothing could lead to an increase in demand for Bangladeshi garments as American consumers look for alternatives. This could result in the U.S. lowering tariffs on Bangladeshi clothing imports, thereby benefiting the country's textile industry.

As the world's largest importer of cotton and the second-largest exporter of ready-made garments, Bangladesh stands to gain if U.S. tariffs on Chinese cotton lead to lower prices. However, the long-term consequences of the trade war could adversely affect global trade dynamics. Trump's administration appears more focused on bilateral relationships rather than adhering to global trade regulations set by organizations like the WTO. The imposition of tariffs could undermine these regulations, raising questions about the WTO's ability to mediate and restore balance between these two economic powerhouses.

In conclusion, while the trade environment between the U.S. and China poses both challenges and opportunities for Bangladesh, the overarching dynamics of the trade war require careful navigation to ensure sustainable economic growth and stability for all parties involved.