Bangladesh PM visits Beijing as China, India eye influence

Bangladesh's Prime Minister Sheikh Hasina has embarked on a three-day official trip to China, starting from Monday, marking her first visit to the Asian giant in five years.  

In Beijing, she is expected to hold talks with Chinese leaders and ink a number of bilateral trade and loan agreements, worth billions of dollars.

Bangladeshi media reported that both sides could sign over 20 memoranda of understanding relating to an array of large-scale investments, duty-free provisions and facilitation of trade in local currencies, as well as other issues. 

Over the past decade, Bangladesh has increasingly attracted the attention of both China and India as both Beijing and New Delhi seek to expand their influence in Asia

While Bangladesh and India share deep historical, cultural and linguistic ties, China is Bangladesh's largest trading partner and a major investor.

Balancing strategic ties

Experts view Hasina's China trip as an attempt to balance Dhaka's strategic relations with both powers, pointing to  a project proposal on the Teesta River which would be funded by China. The so-called Teesta River Comprehensive Management and Restoration Project is tagged at around $1 billion (€920 million).

But the river flows between India and Bangladesh, and the dredging and embanking plans are likely to cause friction with New Delhi. India's Siliguri Corridor, often called the Chicken's Neck, is near the proposed project site. It is a geopolitically sensitive passage connecting northeastern Indian states to the rest of India through a narrow strip of Indian territory measuring 20-22 kilometers (12-14 miles) at its narrowest section.

India fears China might aim to establish its presence near the corridor under the guise of development work with Bangladesh.

New Delhi has recently expressed interest in participating in the project, and is planning to send a technical team to Dhaka to discuss the details.

Munshi Faiz Ahmed, who served as Bangladesh's ambassador to China from 2007 to 2012, said that Dhaka should adopt a balanced approach.

"Each country has its own demands, and we occasionally need to recognize that. The Teesta project is substantial. If we involve India in certain aspects and China in others, I don't foresee any issues," he told DW.

Prime Minister Hasina stated that Bangladesh will make decisions based on its own interests.

China, India wrestle for regional influence

China and India have been increasingly vying for economic and political influence in the Indian Ocean region. 

Beijing has been actively securing operational rights for ports in countries like Pakistan, Sri Lanka, Myanmar and Djibouti, and proposing investments in the Maldives and Bangladesh.

This has caused significant concern in New Delhi.

In a bid to counterbalance China's moves, India has secured rights to operate the Chabahar port in Iran, and recently gained the rights to operate the Sittwe port in Myanmar.

India is also reportedly looking to operate the Mongla Port in Bangladesh and build a new terminal there.

Ali Riaz, a Bangladesh expert and professor at Illinois State University in the US, believes the growing geopolitical rivalry between India and China puts Dhaka in a tough spot.

"Both parties are essentially offering such proposals to Bangladesh to safeguard their geopolitical and strategic interests, keeping their national interests in mind," he said.

"This will not be limited to economic dispute, it will inevitably turn into a political conflict. The fact that Bangladesh is consciously entering into this conflict is worrisome," he told DW.

Close trade and financial ties

While hopes are high for the Hasina's visit, Bangladesh and China have already inked billions of dollars' worth of infrastructure deals in recent years. Some observers are already warning that reliance on Chinese money will make Dhaka beholden to Beijing.

Bangladesh's foreign loans have increased two fold in the past seven years, from around $45 billion in 2016-17 to more than $100 billion in 2023-2024.

Most of this new debt is spent on major infrastructure construction, power generation and various development activities.

Hasina's trip to China could potentially secure an additional loan of $20 billion for Bangladesh, with $15 billion allocated for infrastructure projects. The remainder would serve to facilitate payments for imports from China.

Economist Zahid Hussain believes that Bangladesh's foreign debt-to-GDP ratio is still at a manageable level, relative to the size of its economy. At  the same time, he warns there could be adverse effects without Bangladesh boosting its exports and ensuring an increase in foreign remittances.

"It's unlikely that a loan of this size would be offered without any terms. The issue is what the government might have to offer in exchange," Hussain told DW.

"China typically prescribes which company to procure products from when providing a loan. In such instances, there's no room for competitive bidding. If such a condition exists, there won't be a chance to acquire the highest quality product at the most affordable price," he added.

A debt trap?

Critics also point to Sri Lanka's experience, where Colombo had to cede control of its southern port of Hambantota to China on a 99-year lease after it failed to repay its debts.

But Faiz Ahmad, the former diplomat, believes that the situation in Bangladesh will not mirror that of Sri Lanka. "Which country poses no risk when it comes to borrowing?" he questioned, saying that Beijing, on several occasions, "has even waived off a third of the total loan amount."

"In case of Sri Lanka," he added, "If you don't do your due diligence before taking a loan, you put yourself at risk. It's not fair then to point fingers at China."

Riaz, however, stressed that Bangladesh should remain cautious.

"The Bangladeshi government should be transparent to its people. We need to know whether Bangladesh is putting its future in a mortgage?"

Edited by: Srinivas Mazumdaru