In Depth: After Trump Tariff Hit, Bangladesh Has Needs China Can Meet

At the Bangladesh Investment Summit held in Dhaka in April 2024, the nation’s interim leadership emphasized Bangladesh’s potential as a place where bold, transformative business ideas can become reality. This came as the government sought to restore foreign investor confidence after political turmoil in 2024. Muhammad Yunus, Nobel laureate and interim chief advisor since August 2024, described Bangladesh as fertile ground for global business, aiming to attract renewed foreign capital amid recent challenges. The country is especially interested in involving Chinese firms, already significant players in construction and textiles, to move into new sectors like renewable energy, port development, and river management [para. 1][para. 2][para. 3][para. 4].

Bangladesh benefits from a youthful workforce and is the world’s second-largest apparel exporter after China, but still faces serious constraints regarding resources, infrastructure, and recurring natural disasters [para. 3][para. 11]. Recent years have seen increasing Chinese investment, especially as global supply chains shift under U.S. tariffs, but Chinese companies remain cautious, hoping for political stabilization and faster project approval processes [para. 5].

The country faced a major political crisis in June 2024, when mass student protests erupted against the reinstatement of a contested civil service quota system. This led to the resignation of long-term Prime Minister Sheikh Hasina in August 2024. Yunus now heads the government during this period of uncertainty, with a mission to restore both social order and investor trust, which has been damaged by disruptions such as internet outages and strikes. Following these events, foreign direct investment fell to its lowest level in nearly six years in the July to September quarter of the 2024-2025 fiscal year [para. 6][para. 7][para. 8].

Yunus has made economic “openness” his administration’s central theme, envisioning Bangladesh as a production hub for the world. Bangladesh and China, which established diplomatic ties 50 years ago, already collaborate on major infrastructure projects, and Chinese brands have a visible presence in Bangladesh. During a visit to China in March, Yunus and President Xi Jinping highlighted further cooperation in new sectors, such as clean energy and the digital economy, while China also encourages the modernization of Bangladesh’s ports and economic zones [para. 9][para. 10][para. 11][para. 12].

With a population of 172 million, Bangladesh’s energy demand is high, but the sector is underdeveloped, presenting opportunities for Chinese renewable energy suppliers. The government plans to increase renewable power capacity from 2% to 20% by 2030. Port development is also critical; shallow coastal waters mean cargo ships offload offshore, and Chinese firms could help modernize these facilities, allowing the creation of industrial clusters [para. 13][para. 14][para. 15][para. 16].

U.S. and EU tariffs have pushed Chinese textile firms to Bangladesh, taking advantage of low labor costs. At the end of March, 24 Chinese companies agreed to invest $615 million in Bangladesh, primarily due to the tariff environment and local labor advantages. Some manufacturers are switching export destinations to Europe during temporary U.S. tariff suspensions. Though nearly 20% of Bangladesh’s apparel exports head to the U.S., Chinese business owners are optimistic, noting that competitors like India, Vietnam, and Cambodia face higher tariffs and potential quality issues [para. 17][para. 18][para. 19][para. 20][para. 21][para. 22].

However, ongoing political instability and slower administrative procedures have led to delays in large-scale investments. Many foreign and Chinese investors are waiting for the next general elections, expected between December 2025 and June 2026, before committing further. Nevertheless, there is confidence that Bangladesh’s economic resilience, especially in light industry and garment processing, will drive future growth as stability returns [para. 23][para. 24][para. 25][para. 26][para. 27].