India-Pakistan commerce

Bangladesh has been boasting the best financial progress charges among the many international locations of South Asia over the previous 10 years. The nation’s GDP per capita has reached USD 2,500, a quantity that surpasses these of the neighboring India and Pakistan. Dhaka is eager on fostering relations with Beijing, New Delhi and Washington concurrently. Nevertheless, amidst the continuing tectonic shifts within the world political system and economic system, extreme diversification of relations is more likely to hurt their effectivity.

Ports open for all

The inner political crises in Pakistan and Myanmar have considerably halted China’s joint initiatives with these nations, together with the development of transport infrastructure—motorways, railroads, and seaports within the strategically essential Bay of Bengal. Due to its geographic location, giant inhabitants and spectacular financial indicators, Bangladesh has attracted Beijing’s consideration as a promising vacation spot for the Belt and Highway Initiative. In October 2016, Chinese language President Xi Jinping visited the nation, successfully signaling Chinese language companies and state firms to launch full-scale operations there. In July 2019, Bangladesh Prime Minister Sheikh Hasina visited Beijing and reiterated her intention to deepen the partnership in commerce, funding, protection and infrastructure.

As of 2022, greater than 500 Chinese language firms had been lively in Bangladesh constructing roads, bridges, tunnels, energy crops, and modernizing seaports. As reported by Chinese language Ambassador to Bangladesh Li Jiming, the quantity of Chinese language funding within the nation’s economic system in 2021 tripled as in comparison with 2020, reaching USD 1.26 billion. This grew to become doable largely as a result of a major enchancment within the funding local weather and the ever-present introduction of public-private partnerships. In complete, the checklist of funding initiatives has greater than 60 positions, and the full quantity of doable investments exceeds USD 40 billion.

The Padma Bridge Rail Hyperlink Undertaking with an eponymous multi-purpose bridge, connecting the southwest with the northern and jap areas, could be seen because the flagship undertaking. Sooner or later, the plan requires establishing common high-speed site visitors between Dhaka and Kolkata, India. Growing the connectivity of the completely different areas will enable a fuller use of the financial potential and enhance dwelling requirements of the inhabitants within the areas mendacity distant from the capital. The bridge itself (greater than 6 km in size, put in on 42 underwater pylons for rail and street site visitors, its price reaching USD 3.6 billion) is at the moment probably the most refined engineering construction within the nation. The inaugural occasion was held in June 2022.

One other precedence is the implementation of high-speed Web networks all through Bangladesh in accordance with the federal government’s Digital Bangladesh idea, with the assistance of China Worldwide Railway Group (CRIG) and Huawei.

An essential space of worldwide cooperation is the Payra Port undertaking within the south. Nevertheless, the destiny of the undertaking has not but been finalized. The price of development, in keeping with the unique plan, ranged from USD 11 and USD 15 billion, which prompted the federal government to announce a waiver of deepwater port standing in 2021, to hurry up the commissioning of the power and to cut back the prices. The modified model retains the bridge over the river, the street and entry railroads, together with a 75-kilometer-long canal. However, the development of residential neighborhoods, a leisure space, social infrastructure, an airport, a container terminal and a liquefied pure fuel storage facility has been cancelled in the meanwhile. The laying of a railroad from Payra to Dhaka is feasible solely by 2030. In response to the adjustment, ships with a draft of as much as 18 m are to be obtained within the port of Matarbari, with the development at the moment carried out on the expense of Japanese traders, after which the cargo might be delivered by lighters to the ports of Payra, Mongla and Chittagong. Nevertheless, there are not any ensures of this initiative’s implementation both.

To date, till the state of affairs turns into clearer, Chinese language companies have principally most well-liked to maneuver a lot of cargo turnover to Chittagong. There may be hypothesis that the Sheikh Hasina authorities has determined to take this step to cut back China’s affect and to reassure its Indian companions.

However, it’s too early to low cost the Larger Payra undertaking: Dhaka is exploring the opportunity of a port-based financial growth zone that may home clothes, footwear and pharmaceutical crops, cement and oil refineries, a coal-fired thermal energy plant, fish processing and fertilizer manufacturing amenities, in addition to ship restore amenities. On this type, Payra might have a major optimistic affect on the nationwide socio-economic growth—however once more all of it rests on the supply of funding.

Numerous plans

Throughout his go to to Bangladesh in August 2022, then-Chinese language Overseas Minister Wang Yi met the nation’s management to debate the problems of commerce and financial cooperation growth, assist for infrastructure constructing, in addition to the repatriation of Rohingya refugees. The top of Chinese language diplomacy referred to as Dhaka a “strategic growth companion” and pledged to assist the nation’s pursuits in numerous worldwide venues. As a measure of help, it was agreed that 98% of Bangladeshi items and providers supplied on the Chinese language market ought to be introduced underneath the duty-free association. The 2 sides have signed cooperation agreements and memoranda of understanding in cultural and humanitarian change domains, infrastructure development, in addition to the response to pure and man-caused disasters.

In response to the Overseas Ministry of Bangladesh, China will present most help to resolve the disaster attributable to the mass inflow of Rohingya refugees. Because the early 2021 alone, some 700,000 folks have migrated from the border areas of Myanmar to Bangladesh after the army took over in Myanmar early in 2021. Fairly probably, Beijing expects to succeed in agreements with Nay Pyi Taw on safety ensures for among the refugees who should not related to insurgents and terrorists, and their subsequent lodging in Myanmar areas, particularly designated by the army authorities.

It’s noteworthy that amid the deepening disaster within the Taiwan Strait, the Bangladeshi authorities affirmed their dedication to the “one China” precept. Taiwan’s consultant workplace in Dhaka had been closed even earlier, in 2008. This was the principle situation for increasing the partnership with China.

China accounted for three-quarters of Bangladesh’s abroad arms purchases between 2010 and 2021. The offers are near USD 3 billion (USD 1 billion with Russia); this consists of the settlement to purchase two submarines, frigates, anti-ship and anti-aircraft missiles, and fighter jets. The entire fight methods are out of date, however Bangladeshi personnel should not but certified to function even this gear. Consequently, the price of coaching, skill-raising applications, upkeep and restore exceeds the price of acquisition, however some other gear imported is much more difficult and costly. The U.S. proposal to produce Apache helicopters and numerous lessons of guided missile weapons to Bangladesh is hardly possible within the foreseeable future.

Who has been ensnared?

Beijing’s initiatives to develop cooperation with Dhaka have brought about concern in some international locations, primarily in India, the place the opportunity of a Chinese language naval base at one of many ports is now contemplated. Nevertheless, PRC officers guarantee that Bangladesh is not going to turn out to be a “jewel within the necklace” of doable army bases overseas, and there are at the moment no plans to construct a protection facility or station PLA items. The Japanese newspaper Nikkei has additionally reported on the approaching institution of a missile upkeep facility within the nation to take care of and improve the missiles beforehand bought from China. Nevertheless, this may hardly be seen as a major army facility or an indication of enlargement.

The following common criticism of Bangladesh-China cooperation is the potential “debt lure” and the lack of sovereignty to a sure extent. Certainly, the underdeveloped infrastructure, together with transport and power infrastructure, is a major constraint to the financial progress of Bangladesh. The nation is at the moment experiencing difficulties as a result of a major rise in gas costs and a dramatic discount in electrical energy era. Overseas change reserves had been depleted by 11% in 2022. The principle finances revenues are related to the export of textiles, clothes, footwear and different mild trade merchandise, however within the present context of common austerity the consumption of such items has decreased considerably the world over; there’s additionally instability of logistics routes.

The scale of Dhaka’s worldwide debt has already exceeded USD 62 billion. In response to Finance Minister Mustafa Kamal of Bangladesh, the federal government ought to account for the expertise of Sri Lanka and Pakistan and take into consideration extra loans. To restructure the liabilities and put the economic system of Bangladesh again on a sound footing, USD 4.5 billion will supposedly be borrowed from the Worldwide Financial Fund, the World Financial institution, the Asian Growth Financial institution and the Japan Worldwide Cooperation Company. It is vital that Japan is the principle holder of Bangladesh’s international debt that exceeds USD 10 billion (2.5% of its GDP). Obligations to Chinese language collectors alone quantity to USD 4 billion, or 1% of GDP, which is clearly not sufficient for the “debt snare”. The Bangladesh Ministry of Finance even needed to make clear the Monetary Occasions report on the alleged catastrophic enhance within the dimension of its debt to China. The Ministry famous that any international undertaking undergoes an intensive professional analysis of its feasibility, usefulness for the nation, and acceptability of economic phrases, so unequal cooperation is just not doable.

Curiously sufficient, again in 2015-2016, 1 / 4 of all international direct funding in Bangladesh got here from the US, and one other 15% was supplied by the UK. Western support and subsidies decreased considerably because of the growth of Sino-Bangladeshi ties underneath the Belt and Highway Initiative and the aggravation of the Rohingya disaster. However, some 14.5% of the nation’s exports are nonetheless despatched to the U.S. (in addition to to Germany).

In April 2022, Overseas Minister Abdul Momen visited Washington, D.C., the place he met with Secretary of State A. Blinken. The main focus was on supporting democracy and civil society in Bangladesh. In January 2023, the Royal Navy’s patrol ship Tamar visited Chattogram Naval Station as an indication of friendship and maritime safety cooperation within the Bay of Bengal.

Given Bangladesh’s essential strategic function, we are able to count on elevated consideration to the nation from the U.S. and its allies, together with, as a part of this initiative, with a view to construct a “free and open Indo-Pacific area”. The West will logically make the most of Dhaka’s need to cut back its debt burden and diversify its sources of earnings.


As we speak, Beijing is Dhaka’s just about solely companion of in growing socially and economically essential infrastructure, though the nation’s authorities is making an attempt to diversify the geography of its companions in each doable approach. China additionally accounts for about 40% of all imported merchandise and at the very least 25% of the nation’s inventory market. Each main events in Bangladesh are unanimously in favor of a bilateral partnership with China. Nevertheless, native politicians are divided over the neighboring India.

However, it’s untimely to speak about Bangladesh’s unequivocal entry into the orbit of Chinese language affect as Dhaka can not but afford to decide on an solely strategic companion. Nevertheless, evidently the “sonar Bangla” (golden Bangladesh) dream can solely be realized in case of inside political stability. It’s tough to count on the West, which emphasizes liberal values no matter cultural specificities and historic expertise, to abstain from interference within the nation’s inside affairs if the federal government in Dhaka pursues an excessively impartial course. Additionally it is price noting that Dhaka has shunned condemning Russia and is pinning its hopes on the bilateral ties with Moscow within the subject of military-technical cooperation, power and agriculture. On this regard, the eye of Washington and allies to Bangladesh within the close to future appears assured.

From our companion RIAC