Chinese investment in Bangladesh is increasing, but at a slower pace than in Southeast Asia and mostly in areas with limited long-term value for the economy.

So far this year, three Chinese companies confirmed the investment of $322 million in textile, apparel and manufacturing sectors, with one of the investors promising to create 30,000 jobs in the textile industry, though without clarifying when the factory will be operational.

Officially, Bangladesh saw 1.7 lakh newly unemployed people, mostly victims of lay off, add to its crippling unemployment problem, one of the key factors that led to last year’s uprising, mainly led by youths, bringing down the past Awami League regime.

Bangladesh Bureau of Statistics estimated the number of unemployed people last year to be more than 26 lakh.

“Beijing is leveraging duty-free access that Bangladesh continues to enjoy in Europe, Canada, and Australia, and this is why Chinese firms are setting up operations here,” he said.

In 2024, Chinese investments of $208.23 million accounted for 16.40 percent of the overall foreign direct investment, Bangladesh Bank data. Chinese investment stood at $230.25 million in 2023.

In sharp contrast, Vietnam received over $2.5 billion in Chinese investments in 2024 alone, according to the State Council Information Office of China. Since 2004, Beijing’s annual investment in Vietnam has grown at an average rate of 13.5 percent.

China promised in March during chief adviser Muhammad Yunus’s visit to the country about investing $1 billion in FDIs.

“China’s record of acting on its investment promise over the last decade was very poor. A large amount of Chinese promises were not even fulfilled during the last decade,” said Hasan Mehedi, member secretary, Bangladesh Working Group on Ecology and Development, a platform keeping a tab on energy investment.

Chinese investment so far this year

This is the only Chinese company having a concrete estimate of job generation out of its activities – 25,000.

Another Chinese firm, Kaixi Group, has unveiled plans to invest $40 million in the BEPZA Economic Zone at Mirsarai in Chattogram.

The company has long been operating in Bangladesh’s undergarments segment, employing about 3,700 local workers. The company gave no estimate on how many jobs their new project could create.

China Lesso Group, on the other hand, has confirmed a $32.77 million investment in Bangladesh. The Bangladesh Economic Zones Authority (BEZA) has already allocated the company 12.5 acres of land in the National Special Economic Zone.

The Lesso Group aims at producing PVC and PEX pipes, solar panels, kitchen equipment, sanitary ware, and other household manufacturing products.

What these investments have to offer

From the industry perspective, these three Chinese investments have little to offer to Bangladesh’s economy. Local business leaders said that the ventures will create employment in the traditional way, without contributing to the development of high-end skills or technology transfer.

China is investing in traditional textile factories which Bangladeshi companies can expertly run without any help, Fazlee Shamim Ehsan, executive president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA).

China could have invested in areas of RMG and areas which make Bangladesh rely on imports, draining its foreign currency reserve.

“A meaningful Chinese investment could have been building polyester spinning facilities or BOPP film factories,” said Shamim.

“What we really need is Chinese investment in high-tech electronics and advanced manufacturing. In Vietnam and Cambodia, China is setting up semiconductor plants. In Bangladesh, they are just building average garment factories,” he added.

“If China invested in such industries here, we would build new technological capacity and diversify our exports,” said Shamim.

BIDA, however, said this year’s Chinese investments in the RMG sector are not traditional garment ventures. Emphasising higher-end segments, companies such as Kaixi and Handa have invested in textiles and apparel.

“With this investment, Kaixi will produce products such as lingerie. Previously, Bangladesh had no such high-end investment in this category, so it cannot be described as a traditional garments venture. Handa, meanwhile, is building an end-to-end value chain, with both knitting and dyeing at the new facility. In addition, Handa’s synthetic products will add high-end value to the country’s textile sector,” said Nahian Rahman Rochi, Head of Business Development at BIDA.

Dhaka University’s former economics professor MM Akash considered Chinese real investment so far this year and its promise made to the chief adviser rather insignificant.

Bangladesh would not have received FDI in this situation, he said, adding that it was the changed global scenario triggered by the US tariff that sent some Chinese investment toward Bangladesh. “Geopolitically, China is expanding its footprint here,” he said.

“China is redirecting investments to countries like Bangladesh as a way of cushioning the impact of the US trade war,” he said, warning that closer business ties with China could strain Dhaka’s relations with Washington.

BIDA, however, hopes that these projects will at least help break the ongoing FDI drought and pave the way for broader foreign investment in other sectors.

Bangladesh Bank data shows total FDI inflows fell to $1.27 billion in 2024, down from $1.46 billion in 2023 — a year-on-year decline of $193.74 million.