top of page

Why China and India are wooing Bangladesh

The Straits Times (Singapore)
Syed Munir Khasru
July 1, 2021


In the intensifying tussle for influence in South Asia, Bangladesh's location and economy are drawing attention from both Asian giants

Bangladesh, which was once dismissed by former US Secretary of State Henry Kissinger as a "basket case" when it was a newfound nation in 1971, is enroute to becoming one of the "Asian Tigers".

Leaving behind the dark, post-liberation period, its economy is weathering the pandemic well. The International Monetary Fund has projected a 4 per cent rise in gross domestic product for 2022, whereas India's could decline by 10.3 per cent.

Annual growth is 8 per cent and per capita income stands at US$2,227 (S$2,993) in the 2020-21 financial year - 12 per cent higher than India. Add to this a giant market of 164.69 million people, growing manufacturing prowess, and availability of cheap labour, it is no wonder that the country is attracting renewed attention.

But geopolitics also plays a part too. Friction between emerging global superpower China and regional superpower India is elevating Bangladesh's regional importance.

Located at the Bay of Bengal, Bangladesh is in a key strategic position, with both Asian powers eyeing to build ports in the country to boost their presence in the Indian Ocean region.

Chinese aid, Indian historical ties
India-Bangladesh relations have had their fair share of ups and downs. Since the government led by Prime Minister Sheikh Hasina came to power in 2009, ties with India have greatly improved, with Bangladesh now India's largest trading partner in the sub-continent, with bilateral trade pegged at US$9.5 billion in 2019-20.

Both governments have undertaken initiatives for boosting connectivity, while cooperation in the power sector has resulted in private Indian companies investing US$9 billion in Bangladesh. Ms Hasina has also rooted out cross-border anti-India insurgency activities from Bangladesh and strengthened defence cooperation.

However, unresolved water-sharing issues, India's border killings of Bangladeshi nationals and controversial laws on Muslims and expulsion of alleged illegal Bangladeshi migrants remain sources of friction.

Meanwhile, China is considered an "all weather friend" by many in Bangladesh. A Chinese move to exempt tariffs for 97 per cent of Bangladeshi products is a welcome boost in Covid-stricken times for bilateral trade, which stood at US$18 billion in 2019.

Bangladesh now accounts for 20 per cent of China's arms sales.

Bangladesh is also the recipient of billions in loans and other assistance under China's Belt and Road Initiative.

It is building its third largest Payra deep-sea port with Chinese assistance while opening up Mongla and Chattogram ports to the Chinese after access was granted to India. A US$250 million contract to build an airport terminal in Sylhet city was awarded to China over Indian competitors.

And as India drags its feet on water-sharing negotiations for the Teesta River, the lifeline to north-western Bangladesh, the "Teesta River Comprehensive Management and Restoration Project" was inked last year with support from China for a US$1 billion engineering scheme.

That said, moves by Bangladesh to assert cost control on some Chinese-backed rail projects have led to friction.

Sino-India tug of war in South Asia
China's growing influence in Bangladesh is being replicated in other parts of South Asia -a source of concern for India.

Earlier last month, India's External Affairs Minister S. Jaishankar spoke to his Sri Lankan counterpart Dinesh Gunawardena amid Delhi's growing concerns over the proposed Chinese-funded Colombo Port City project.

Despite India's support for Bhutan against China over a still unresolved border dispute, it has not stilled rumblings about reducing Bhutan's dependence on India in the Himalayan kingdom.

In the Maldives, although there has been a renewal of an "India First" policy, China's expanding footprint there, such as the US$200 million China-Maldives Friendship Bridge, has ensured its position in the country.

With the withdrawal of US troops from Afghanistan, the stakes for both India and China's regional security concerns have increased. Though India enjoys cordial relations with the current Afghan regime, China has the advantage of deeper pockets and good ties with Pakistan, a key player in Afghan geopolitics. While Beijing has diplomatic ties with Kabul, it has also been hedging its bets by building up contacts with the Afghan Taleban.

Politics of self-interest
The wooing of Bangladesh by China and India is part of a bigger tussle over regional and maritime security. China, whose economy is heavily dependent on energy exports shipped from the Middle East, is driven by its need to ensure it has friendly relations with littoral states around the Indian ocean.

From India's perspective, the building of Chinese relationships - and the ports and other facilities that come with it - with key countries along the maritime route is a threat, with the likes of Pakistan, Sri Lanka, Bangladesh and the Maldives being part of a strategic "string of pearls" to encircle India and choke its power projection.

Seen in this light, China's BRI is a tool to augment its foothold in South Asia by creating economic dependence, as it did in Sri Lanka. Chinese support for Bangladesh under the BRI framework, it is argued, is part of the same game to undermine India's security and strategic interests.

India too has been wooing Bangladesh in line with its "Act East" policy. Among other things, Delhi is trying to get Dhaka to joining the Indo-Pacific Quad, an informal strategic alliance involving the United States, India, Japan, and Australia. This has elicited a strong reaction from Beijing, with the Chinese Defence Minister Wei Fenghe on a recent visit to Dhaka calling for joint efforts to resist "powers from outside the region setting up a military alliance in South Asia".

Dealing with two giants
Bangladesh has been deftly balancing its relations with the two Asian giants, making it clear that it would not be choosing between the two. While trying to address India's geopolitical concerns, Bangladesh has steadfastly maintained its right to maintain economic cooperation as well as close defence ties with China.

While China has strengthened its economic ties with Bangladesh by bankrolling development projects, India has the benefit of a shared history, values, culture and connectivity with Bangladesh.

The onus is now on the two giants to prove whose strategic objectives are more aligned to the long-term interests of Bangladesh. For now, the country can enjoy the attention it gets from the two rivals. By playing its cards wisely, South Asia's stellar performer can safeguard its economic and strategic interests.

bottom of page