By: Megha Mittal, Research Analyst, GSDN

In 21^st Century, it has become increasingly evident that global stage is shifting its power towards the East. The way China is trying to expand its influence across Asia has drawn significant attention, particularly in the region of South Asia, where region’s complex geopolitical landscape is undergoing through a vast transformation. Bangladesh is one of major key player of this region being the second largest economy of South Asia.

The relationship of Bangladesh–China can be traced back from the liberation of Bangladesh when China has recognized the state of Bangladesh and both the nations started to maintain the diplomatic relations in 1975. This relation reaches its zenith in 2006 when China left India behind and became the largest trading partner of Bangladesh despite the fact that both the nations do not share the territorial borders.

The historical ties between the two nations go beyond official diplomatic relations. Cultural and commercial connections have existed since antiquity, when trade between China and South Asia was enabled by the Silk Road. This long history fosters cultural affinities that improve contemporary diplomatic relations particularly in the wake of Chinese President Xi Jinping’s October 2016 visit to Bangladesh.

Economic Entanglement

Economic cooperation has been the main driver of relations between Bangladesh and China. For 13 years running, China has been Bangladesh’s biggest trading partner. Bangladesh has increased its level of interaction with China since 2017. China is now Bangladesh’s biggest trading partner, with over US$ 40 billion in Chinese investments. Over US$ 9.75 billion have been invested by China in transit projects in Bangladesh, including current projects like the Dasher Kandi Sewerage Treatment Plant, Bangabandhu Tunnel, and Padma Bridge Rail Link. The growth of infrastructure, economic collaboration, and general bilateral ties between China and Bangladesh have all benefited greatly from these events. Beijing’s presence in the Indo-Pacific region has grown as a result of its collaboration with Bangladesh.

With a total flow of US$ 940 million in the fiscal year 2021–2022, China has also emerged as Bangladesh’s top source of foreign direct investment (FDI). With 104 investors working in eight export-processing zones, it has also been recognised as the leading foreign investor in Bangladesh in 2022. The COVID-19 epidemic presented significant obstacles, yet bilateral trade between the two nations increased by an astounding 58% in the preceding year, demonstrating the robustness of their trading relationship.

Enhanced Defence Collaboration

Over the past five years, Bangladesh and China have increased their military cooperation and increased transparency. After Pakistan, Bangladesh has emerged as China’s second-biggest buyer of weaponry, receiving almost 17% of China’s military exports between 2016 and 2020. The two nations’ defence cooperation has grown to include joint defence production as well as military personnel training in China.

In order to improve its naval capabilities, Bangladesh purchased submarines from China in 2016 despite prior problems with defence hardware supplied by China. Bangladesh’s first submarine base, BNS Sheikh Hasina, was officially opened in Cox’s Bazar by Prime Minister Sheikh Hasina in March 2023. Built for USD $1.2 billion, the facility can house multiple warships and six submarines. It was built by China. As of right now, two Chinese-built submarines are docked in this naval base.

According to defence strategists, Bangladesh will benefit from its growing military alliance with China, which will also put pressure on India. According to these observers, China’s military actions in Bangladesh, including the possible missile station, constitute psychological warfare against India and could cause political changes at home and the emergence of pro-China organisations there. Although the defence cooperation is within their sovereign rights, some analysts worry that China’s efforts could go too far and affect the dynamics of the area. To further strengthen bilateral military cooperation, China has signed a contract to supply the Bangladesh Air Force with 23 Hongdu K-8W intermediate training planes.

Strategic Balancing Act

The portrayal of China as a “friend for attaining development” and India as a “political friend” captures the nuanced stance that Bangladesh has tried to uphold. As international tensions increase and commercial interests entwine with internal politics, Bangladesh may find it more challenging to maintain this separation and make difficult strategic decisions.
The Indo-Pacific region has also seen a rise in geopolitical tensions during and after the COVID-19 pandemic. Bangladesh is now directly involved in the US and Chinese foreign policy objectives. Bangladesh has received an invitation from the United States to become a partner in the Indo-Pacific Strategy. China has responded by threatening to sour relations with Bangladesh if it joins the Quad and by requesting that Bangladesh take part in its

“The Global Security Initiative and the Global Development Initiative”.

China encouraged non-interference in Bangladesh’s internal issues before to the country’s most recent elections, sending a subliminal message to the US and its allies to stay out of Bangladesh’s internal political matters. Similarly, during the high-level “2+2” foreign and defence ministry dialogue with the US last September, India expressed a nuanced view on Bangladesh’s democratic process. At a press conference following the dialogue, Indian Foreign Secretary Vinay Mohan Kwatra declared, “The election in Bangladesh is their internal matter, and it is for the people of Bangladesh to decide their future.”

Strategic Crossroads

Bangladesh’s delicate balance between India and China is coming up against more unanticipated obstacles. Although there have been benefits to growth of the state from economic collaboration with China, worries about debt dependency and strategic vulnerability have also been raised concerns. It is becoming more and more difficult for Bangladesh to retain its neutral position given the changing geopolitical conditions in South Asia and the Indo-Pacific area. The nation is juggling intricate matters such as water rights, economic integration, and regional security, which could strain ties with the two titans.

Bangladesh’s Minister of Information and Broadcasting, Muhammad A. Arafat, stated that the country owed over US$ 149.5 billion in external debt. These loans include hazards if they are not handled properly, even though they have funded important infrastructure projects. Bangladesh can learn from other nations’ experiences, such Sri Lanka, which had financial difficulties as a result of an over-reliance on Chinese loans.

The total value of bilateral commerce between China and Bangladesh is US$ 23 billion annually. Less than US$ 1 billion of the total trade comes from exports from Bangladesh to China; the great bulk comes from imports into Bangladesh. Bangladesh’s foreign currency reserves, which are already fighting to survive the inflation brought on by the Russia-Ukraine war, are under pressure from the trade deficit with China. The government was compelled to reduce monthly imports from an average of over US$ 8 billion to less than US$ 5 billion in order to manage the strain on the foreign exchange reserve.

Bangladesh may need to review its foreign policy approach as it develops since finding the ideal balance between China and India may become more difficult to achieve. It might be more successful to take a more nuanced strategy that puts Bangladesh’s long-term interests first while keeping flexible, issue-based alignments. Bangladesh’s predicament and experience highlight the difficulties smaller countries face in areas controlled by rival powers. To successfully negotiate the treacherous seas of regional and global geopolitics in the twenty-first century, among other things, will need deft diplomacy, economic diversification, and a clear understanding of national interests.

Sheikh Hasina, the former prime minister of Bangladesh, wrapped off her formal visit to China in July 2024, a few weeks after spending June 21–22 in India, her nearest neighbour. For more last fifteen years, New Delhi has provided total political support to Hasina and her ruling Awami League, and diplomats in both China and India have been closely monitoring her travels.

With a massive group of 196 people, Hasina visited China accompanied by members of her cabinet, high ranking government officials, and influential businessmen.
The primary goal of Bangladesh’s visit was to obtain US$ 5 billion loan for budget support, primarily to restock the nation’s depleting foreign exchange reserves.

Prior to Hasina’s trip to China, government representatives from both countries bargained for several weeks over Bangladesh’s request for budget support in the amount of US$ 5 billion in Chinese yuan to relieve pressure on Dhaka’s foreign exchange reserves. Things did not, however, progress as anticipated. Bangladesh was looking for low-cost budget support, but China was interested in offering the money as a high-interest trade facility.

During Hasina’s visit to Beijing on July 8–10, nothing changed. Many government officials were expecting China to make a big statement on budget support. That being said, the PM of Bangladesh came back from China virtually broke. A financial support of one billion yuan, or around US$ 137 million, was announced by China.

Many analysts interpreted Hasina’s early return from the vacation home as an indication that she was unhappy with the results.
It was previously believed that Bangladesh had been able to keep its relations with China and India somewhat balanced. However, a lot of observers believe that the nation is no longer in that situation because Bangladesh is becoming much more interested in satisfying Indian demands. It’s possible that China reached the same conclusion.
From a geopolitical perspective, we are now more vulnerable to India. Because we have made a lot of decisions lately even though we are aware that China will not be thrilled,” Hossain stated. She further said, “We are not getting any scope to keep China under consideration [while] meeting India’s expectations.”

Conclusion

The Bangladesh-China relationship has come to represent larger regional dynamics as Bangladesh navigates the increasingly complicated geopolitical landscape of South Asia. Notably, with increasing economic cooperation between these two nations on trade and infrastructure, the Chinese are now being viewed as major players in the growth of Bangladesh. But such a solidifying relationship has also raised questions regarding future strategic dependencies and degradation of Bangladesh’s sovereignty.

Bangladesh’s defence cooperation with China also underlines a careful balancing act that Dhaka must pursue between hostile powers. While military links between Bangladesh and China strengthen its defence, these also risk causing unrest in India, a neighbour, thereby further adding to regional security dynamics.
Domestic efforts continue to keep up the balance between China and India in Bangladesh’s pragmatic foreign policy.

Looking at geopolitics, increasing interdependence, and economic interests, it is going to be hard to keep this balance intact. The present tussle over the financial packages announced during Sheikh Hasina’s trip to China has shown just how tenuous this relationship stands today. Going ahead, Bangladesh will need to think through its strategic priorities with extra  care. It will have to make the required foreign policy fairly flexible and sophisticated in nature so that all these varied influences and interests are kept in due balance with a view to avoiding dependence on any particular power. As Bangladesh joins a more multipolar world community, the nation’s capability to preserve its strategic independence will be the factor determining its future place within it.