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Ship purchase, trade support to dominate PM’s crucial China visit

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PM Sheikh hasina bangladesh Brown University

Bangladesh is set to sign agreements with China to procure four large ships including two crude oil mother tankers with Chinese loans during Prime Minister Sheikh Hasina’s upcoming visit to Beijing.

Experts describe the trip as crucial for the country’s regional geopolitics and for maintaining developmental momentum amid economic challenges.

Officials say incorporating these vessels, which also includes two mother bulk carriers for transporting coal, food grains, cement clinkers, and other goods into Bangladesh’s existing fleet, will reduce the country’s dependency on foreign ships for transporting highly sensitive products such as fuel oil.

During the prime minister’s visit, scheduled for 8-11 July, an announcement is expected regarding a trade support package from Beijing in Chinese currency, equivalent to $5 billion, with an interest rate of 1% and a grace period of 20 years.

The Bangladesh Shipping Corporation (BSC) will purchase the ships using financing from trade support at a cost of 1,676.54 million Yuan, which is around Tk2,486 crore.

The government anticipates receiving around $20 billion in funding from China across multiple sectors during the visit, with a significant portion allocated to various development projects.

$2b budget support, CEPA commencement and more

During the Prime Minister’s visit, an announcement may be made regarding China providing reserve support or budget support to Bangladesh, as stated by Chinese Ambassador to Dhaka, Yao Wen. Sources indicate that Bangladesh has requested $2 billion in budget support from China.

Additionally, there could be announcements about the official commencement of the Comprehensive Economic Partnership Agreement (CEPA), along with initiatives related to bilateral trade and investment, the construction of a metro rail, development projects in the southern region including Payra Port, and securing Chinese loans for Bangladesh’s infrastructure development.

According to sources, around 17 Memorandums of Understanding (MoUs), agreements, or letters of intent may be exchanged across various sectors during the visit.

Additionally, Prime Minister Sheikh Hasina and Chinese President Xi Jinping will officially inaugurate several projects in Bangladesh completed with Chinese funding. These include the 1320 MW coal power plant by S Alam Group and the Single Point Mooring with Double Pipeline project.

The Bangladesh Bank may also sign an MoU with China’s National Financial Regulatory Administration to initiate trade in Taka-Yuan.

Mother tankers to transport fuel to single point mooring

Officials from the Bangladesh Shipping Corporation (BSC) said the ships will be purchased with a loan from the Chinese Exim Bank for 20 years with a five-year grace period at an interest rate of 2%. The China National Machinery Import and Export Corporation will supply them.

Each crude oil mother tanker has a capacity of 114,000 deadweight tonnage (DWT), while the mother bulk carriers have a capacity of 81,500 DWT. The construction period for the ships is estimated to be 32-34 months.

A senior BSC official, who wished to remain anonymous, told the news reporter that all the processes for purchasing these four ships with Chinese financing have been completed. A formal agreement signing or announcement in this regard may occur during the prime minister’s visit.

Commodore Mahmudul Malek, managing director of the Bangladesh Shipping Corporation, said the Economic Relations Division (ERD) will sign the agreement on behalf of Bangladesh. The construction of the ships will commence immediately after the contract signing and they are expected to be delivered within two years.

Regarding the crude oil mother tankers, he said the mother tankers will transport oil near the Single Point Mooring with Double Pipeline Project.

Each crude oil mother tanker will cost Tk780.84 crore. The import cost of each mother bulk carrier is Tk462.31 crore.

According to BSC officials, the ships will transport around 20 lakh tonnes of crude oil and 15.2 lakh tonnes of cargo annually.

The BSC currently does not have such large mother tankers. Officials say the government aims to ensure Bangladesh’s fuel supply by transporting crude oil using these new ships.

Previously, the BSC purchased three product oil tankers and three bulk carriers with a loan of Tk1,500 crore from China, which were added to the BSC’s fleet in 2018 and 2019.

MoU on infrastructure and construction

Furthermore, an MoU on Deepening Cooperation in Infrastructure and Engineering Construction is scheduled to be signed between Bangladesh’s Economic Relations Division and China’s Ministry of Commerce during the prime minister’s visit.

Additionally, the Economic Relations Division (ERD) may sign a separate MoU with the China International Development Agency to join the China-led Global Development Initiative. The ERD will also sign another MoU with this Chinese organisation regarding the implementation of the 9th Bangladesh-China Friendship Bridge Project in Bangladesh, funded by China.

A joint statement by the two leaders is expected to announce the completion of the joint feasibility study for the Comprehensive Economic Partnership Agreement (CEPA) and the commencement of bilateral negotiations. Negotiations for the China-Bangladesh Bilateral Investment Treaty are also set to begin.

Announcements regarding the implementation of the sewage collection system under the Dasherkandi STP catchment project for Dhaka city, along with projects for water supply, sanitation, drainage, solid waste management, and faecal sludge management in municipalities funded by China, may be made during the visit.

Additionally, it is anticipated that the two leaders may jointly inaugurate the Modernisation of Telecommunication Network for Digital Connectivity project.

“Primarily national interest”

Shahab Enam Khan, professor of international relations at Jahangirnagar University, said the prime minister’s visit to China is primarily driven by national interests.

“Essentially, economic considerations outweigh geopolitical issues during this tour,” he said.

He, however, added, “Maintaining political balance between the US, China, and Myanmar is also a key aspect of the visit. The Rohingya crisis poses a security threat to the region, prompting Bangladesh to seek China’s assistance in resolving this issue.”

Shabab Khan further said during the visit, the highest priority is being given to forex stability, deferred payment arrangements, and budgetary support. Natural resource management is also a key focus area.

“The government is particularly seeking China’s assistance in managing Bangladesh’s internal water resources. This includes not only the Teesta River but also overall inland water management,” he explained.

Professor Shahab Enam Khan said, “The government aims for Chinese funding to enhance Bangladesh’s infrastructure. This development is not only beneficial for Bangladesh itself but also aims to accelerate infrastructure projects funded by China to improve connectivity with neighbouring countries.”

He further said, “Bangladesh anticipates China’s cooperation in enhancing digital connectivity. Technology transfer from China and Chinese investments will be crucial during the prime minister’s visit. China plays a pivotal role as a development partner coordinating overall development efforts in Bangladesh.”

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UK inflation holds at 2% in June: official data

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UK Inflation

Britain’s inflation rate held steady in June after returning to the Bank of England’s target the previous month, official data showed Wednesday, confounding expectations for another modest slowdown.

The Consumer Prices Index was unchanged at 2.0 percent in June from the same level in May, the Office for National Statistics said in a statement, compared with market forecasts of 1.9 percent.

“Hotel prices rose strongly, while second-hand car costs fell but by less than this time last year,” said ONS chief executive Grant Fitzner.
“However, these were offset by falling clothing prices, with widespread sales driving down their cost.

“Meanwhile, the cost of both raw materials and goods leaving factories fell on the month, though factory gate prices remain above where they were a year ago.”

Analysts said the data could cause the Bank of England to sit tight for a while longer before starting to cut interest rates.

“The chances of an interest rate cut in August have diminished a bit more,” said Paul Dales, chief UK economist at research consultancy Capital Economics.

Last month, the BoE kept its key interest rate at a 16-year high of 5.25 percent, despite slowing inflation in May.

Britain’s newly elected Labour government welcomed news that inflation remained at the BoE’s target level.

“It is welcome that inflation is at target,” said Darren Jones, Chief Secretary to the Treasury, in a statement.

“But we know that for families across Britain prices remain high… (which) is why this government is taking the tough decisions now to fix the foundations” of the UK economy, he said.

Labour, led by new Prime Minister Keir Starmer, has pledged immediate action to grow the economy after the centre-left party won a landslide general election victory to end 14 years of Conservative rule.

Later on Wednesday, King Charles III will read out Labour’s first programme for government in a decade and a half, when the UK parliament formally reopens following the July 4 election.
Elevated interest rates have worsened a UK cost-of-living squeeze because they increase borrowing repayments, thereby cutting disposable incomes and crimping economic activity.

The BoE began a series of rate hikes in late 2021 to combat inflation, which rose after countries emerged from Covid lockdowns and accelerated after the invasion of Ukraine by key oil and gas producer Russia.

 

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China’s economy grew less than expected in second quarter: official data

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china gdp

China’s economy grew 4.7 percent year-on-year in the second quarter of 2024, official data showed Monday, less than analysts had expected.

“By quarter, the GDP for the first quarter increased by 5.3 percent year on year and for the second quarter 4.7 percent,” Beijing’s National Bureau of Statistics (NBS) said in a statement.

The figures were much lower than the 5.1 percent predicted by analysts polled by Bloomberg.

Retail sales — a key gauge of consumption — also slowed to just two percent in June, the NBS said, down from 3.7 percent in May.

The world’s second-largest economy is grappling with a real estate debt crisis, weakening consumption, an ageing population and trade tensions with Western rivals.

Top officials are meeting in Beijing on Monday for a key plenum, with all eyes on how they might kickstart lacklustre growth.

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Concerns Mount Over Revenue Loss as South Asia’s Largest Land Port Curtails Operations

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truck eid

Bangladeshi officials are grappling with fears of revenue loss as the largest land port in South Asia, situated along the India-Bangladesh border, has ceased operations for 10 hours each day since July 11.

The Petrapole Land Port in India, crucial for trade between the two nations, has been shutting down from 6 PM to 8 AM daily, without providing any explanation for the closure, according to officials from the Benapole Land Authority in Bangladesh. This unexpected halt has left Bangladeshi authorities and traders in a state of uncertainty, as there is no indication of when the operations might resume to normalcy.

Industry insiders warn that this disruption could lead to a significant revenue shortfall at Benapole port due to decreased imports, adversely affecting Bangladeshi importers with delayed product deliveries.

Rezaul Karim, Director of Traffic at Benapole Land Port Authority, emphasized that while Benapole has been maintaining 24-hour operations, Petrapole’s recent restrictions are hindering cargo truck movements after evening.

“We have inquired with the Petrapole port authority about the reasons for halting trade services after evening. They responded that the matter is under discussion with relevant authorities,” Karim said.

Sultan Mahmud Bipul, Secretary of Benapole C&F Agent Association International Checkpost Affairs, highlighted the fiscal implications of this disruption. “Benapole port has set a revenue target of Tk6,705 crore from imported goods for the fiscal year 2024-25. If the 24-hour import facility remains discontinued, it will severely impact our revenue targets,” he noted.

Ziaur Rahman, General Secretary of Benapole Landport Importers and Exporters Association, pointed out the severe impact on trade, particularly with perishable goods. “Traders dealing with perishable food products are incurring the biggest losses due to this halt. The inability of goods trucks to enter after evening will widen the trade deficit,” Rahman remarked.

As the situation unfolds, the Benapole Land Port Authority and associated trade bodies continue to seek clarity and resolution from their Indian counterparts to mitigate the economic repercussions of this operational disruption.

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