Panda bonds and renminbi: What may China offer Bangladesh during PM's visit
To cement these financial linkages on the ground, Beijing has additionally floated proposals to sign a bilateral currency swap agreement, upgrade the existing Bangladesh-China investment agreement, and establish a Chinese bank operating directly within Bangladesh
As Prime Minister Tarique Rahman prepares for an official visit to China from 23 to 26 June, Dhaka is carefully reviewing a series of financial and economic initiatives proposed by Beijing.
These proposals aim to fundamentally reshape bilateral trade, infrastructure financing, and currency dynamics between the two nations.
The push for Panda bonds
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Among the most significant financial instruments under consideration is the introduction of Panda bonds. Panda bonds are yuan-denominated bonds issued by Chinese entities to various state financial authorities within China's domestic bond market.
By the issuance of these bonds, Bangladesh can tap into China's vast pool of domestic liquidity to raise capital.
A high-level delegation from the Export-Import Bank of China recently visited Bangladesh to hold crucial meetings with officials from Bangladesh Bank, the Ministry of Finance, and the Economic Relations Division (ERD) to flesh out the Panda bond framework.
Tied directly to the adoption of the Chinese currency is Beijing's proposal for Bangladesh to participate in the Cross-border Interbank Payment System.
The system serves as China's official financial market infrastructure dedicated to clearing and settling international transactions in renminbi (yuan).
By joining it and integrating into the Cross-border Interbank Payment System network, Bangladesh may gain a streamlined mechanism to settle bilateral trade directly in yuan, reducing its transactional dependence on traditional global settlement systems.
Broader regional financial architecture
Beijing's proposals extend far beyond bilateral bonds, urging Dhaka to integrate into several regional financial and economic frameworks. Chief among these is Bangladesh's potential participation in the Shanghai Cooperation Organisation Development Bank.
The development bank is a China-backed multilateral financial institution consisting of 10 member states, including major regional powers like India, Russia, and Iran.
The bank's primary operational focus is to finance large-scale infrastructure, industrial development, and technological modernisation projects across its member territories while enhancing regional connectivity.
Crucially, a core institutional objective of this multilateral lender is to expand the use of national currencies -- particularly the Chinese yuan -- in international trade and financial settlements, thereby systematically reducing global reliance on the US dollar.
Furthermore, China has invited Bangladesh to join the Global Development Initiative and has proposed launching formal negotiations on a bilateral Free Trade Agreement (FTA).
To cement these financial linkages on the ground, Beijing has additionally floated proposals to sign a bilateral currency swap agreement, upgrade the existing Bangladesh-China investment agreement, and establish a Chinese bank operating directly within Bangladesh.
Green mining and critical minerals
The financial tie-ups proposed by Beijing also intersect with global green transition strategies.
China has requested that Bangladesh join the International Economic and Trade Cooperation Initiative on Green Mining and Minerals.
Launched at the 20th G20 Summit, this multilateral framework is designed to strengthen international supply chains for critical minerals. It aims to standardise cooperation in the mineral sector.
For Bangladesh, aligning with this initiative could provide a strategic pathway to secure necessary resources as the government simultaneously seeks Chinese investment and technology transfer for domestic renewable energy generation and electric vehicle (EV) manufacturing.
