Angered, China says will never back Bangladesh jute sector

China has said it will never consider cooperating Bangladesh’s state-owned jute and textile mills.

Angered by a government decision not to take loan to revive the trouble-ridden Bangladesh Jute Mills Corporation, China expressed its resentment in a letter sent to Bangladesh recently.

Earlier, the project of Balancing, Modernisation, Rehabilitation and Expansion (BMRE) of the public sector jute mills was under government-to-government cooperation. But later Bangladesh decided not to continue with it, which angered China.

“Since the Bangladeshi side has unilaterally cancelled this project, the Chinese side shall no longer consider further cooperation in the field of textile and jute in the future,” said the letter signed by Liu Zhenhua, Economic and Commercial Counsellor of China in Bangladesh.

China and Bangladesh engaged in a strategic partnership in October 2016 with over two dozen memorandums of understanding signed between Prime Minister Sheikh Hasina and Chinese President Xi Jinping. Projects under the MoUs were supposed to be implemented at a cost of $20 billion during 2016-2020.

Chinese financing in the country consists of both costlier and concessional loans including buyers’ credit.

Currently a number of mega projects, including Padma railway link, is underway with Chinese financing.

The government took several initiatives over the last one decade to revive the troubled BJMC, where China had shown interest to engage in the process through BMRE project. Both sides had a number of meetings in this regard, but at one point Bangladesh backtracked and decided not to take conditional funds from China for the BJMC.

The Bangladesh government provided Tk 7,477 crore in the last one decade to make 22 jute mills under the BJMC economically viable. But that never happened as they kept incurring losses every year.

In July last year, all the BJMC mills were completely shut down by the government and workers were laid off.

Asked about the issue BJMC Chairman MD Abdur Rauf said he was aware of the development.

“It was the government's decision not to continue with the G2G financing process with us. As our mills have remained closed since July last year, we have been facing trouble for alternative financing,” he told the Business Insider Bangladesh.