POL101.9
Assignment: Bangladesh-China economic and strategic
relations
Submitted to: Dr. M Jashim Uddin (MJU)
Full Time Faculty
Associate Professor
North South University
Submitted by: Rafid Khandaker
2111686620
Date: 6.7.2022
Bangladesh-China economic and strategic relations
Diplomatic relations between China and Bangladesh have been cordially maintained for
decades, beginning from the late 70s under President Ziaur Rahman, and has continued under
Khaleda Zia, Mohammad Ershad and currently Sheikh Hasina. Both countries have shown
significant interest in further strengthening diplomatic and economic relations, and are already
in the process of making that happen. However, certain questions, such as whether or not
Bangladesh will fall into a Chinese debt trap, and how India will react to the alliance, must be
answered.
Bangladesh’s interests and benefits in Sino-Bangladeshi relations
In order to answer these questions, we must first look at the interests of both nations that are
driving their diplomatic and economic ventures. For Bangladesh, China is an invaluable ally in
the face of Indian regional domination. India surrounds Bangladesh from 3 out of 4 sides, and is
a behemoth compared to the tiny landmass of Bangladesh. This allows India to exercise
significant influence and pressure on Bangladesh, as well as other small South Asian countries.
That is where China comes in, swooping in to offer aid to these nations, positioning itself as a
geopolitical rival to India. Hence, Bangladesh-China relations are inextricably tied with Indian
influence in the region, and will have significant effects on Bangladesh-India relations as well.
However, Bangladesh doesn’t just benefit from a Chinese alliance geopolitically, but also
economically. China is Bangladesh’s largest trade partner, and Bangladesh is China’s 3rd largest
trade partner. Trade between the two countries have soared to $14.7 billion by 2015, with
imports from China increasing by 20% and exports to China increasing by 40% between 2010
and 2015 (M. Shahidul Islam, 2016). Still, there exists a trade gap between the two economies,
with Bangladesh’s trade gap with China rising from $6.80 billion USD in 2013-14 to $7.43 billion
USD in 2014-15. In order to combat this trade gap, production has started in Bangladesh by the
labor-intensive Chinese sunset industries, especially in the garments and light-engineering
industries. The goods that are produced are exported back to China, as well as other foreign
nations, thus improving Bangladesh’s current account in the balance of payments.
Furthermore, recently China has announced that 97% of exports from Dhaka will receive tariff
exemption from 1 July, 2022, boosting the number of duty-free Bangladeshi exports to China
from 3095 to 8256.
During the COVID-19 pandemic, China has offered substantial aid to Bangladesh. Notably, over
3 million surgical and N-95 masks, over 110,000 sets of PPE and a large number of test kits,
thermometers, ventilators, and sanitizers was given to Bangladesh by its Northern ally.
Bangladesh has also sent aid to China in order to combat the coronavirus, giving medical
accessories, including masks, gowns, caps and gloves.
When it comes to the infrastructure in Bangladesh, China has made significant investments in it,
by aiding Bangladesh in building ‘friendship bridges’. China is also involved in the building of
other physical infrastructure such as ports, power plants, roads, etc. Bangladesh has also
agreed to allow China to form economic and industrial zones in Dhaka and Chittagong, which
will be exclusive to Chinese investors only. The Chinese government has selected the Chinese
firm China Harbour Engineering Company Limited (CHEC) to be in charge of developing these
economic zones. This initiative was taken first in 2014 by Sheikh Hasina when she went on a
visit to China. The initiative, once completed, is expected to house upwards of 400 factories in
the economic zones and only in three years is set to bring in over $2 billion USD Chinese
investment to Bangladesh. Furthermore, during Xi Jinping’s Bangladesh visit in 2016, many
trade agreements and memorandums of understanding were signed by the two countries,
further bolstering their economic ties.
China’s interests and benefits in Sino-Bangladeshi relations
When it comes to China’s interests in Bangladesh, China has a lot to gain geopolitically and
economically from the alliance as well. For starters, as discussed before, Bangladesh is a
valuable ally for China in its tussle with India. China and Bangladesh are not that far away, and
are only separated by a thin strip of Indian land, the Siliguri corridor, which also connects
Northeast India with mainland India. Now, in the case of a full-on war breaking out between the
two behemoths if it were to happen, China would most likely have its eyes set on Northeast
India, and would attempt to station troops at the Siliguri corridor in order to cut off Northeast
India from the rest of the country. In this scenario, Bangladesh will have a vital role to play, as it
would be India’s best option to send troops and supplies over to the Northeast and retain
control over it. But if China is able to get Bangladesh on its side, Northeast India will essentially
be cut off from the mainland, effectively giving China dominion over it. (Mohsin 1992: 67-68)
Bangladesh is also a vital strategic ally for China in its maritime endeavors. The Chinese follow
the Mahanian theory, named after the great American naval strategist Alfred Mahan (Holmes &
Yoshihara 2007). This theory emphasizes the importance of naval affairs in a country’s
economic and commercial prowess, and therefore a strong navy and naval bases in foreign
waters are a necessity. For China, the application of this theory means domination of the Indian
Ocean, and Bangladesh provides a great avenue for them to achieve that, mainly through the
Bay of Bengal. This issue is especially important for China as it is becoming more and more
dependent on maritime international trade, especially for energy. Energy supply is at the heart
of China’s economic growth – and this is of utmost importance to China’s ambitions of
bolstering its national power. (Len 2015: 7). This crucial energy supply is, to a great extent,
dependent on the Indian Ocean and its Sea Lines of Communication (SLOC) (Holmes &
Yoshihara 2008: 368-73; Paul 2010). Most of China’s imported energy, about 80%, come from
West Asia and Africa, and is transported through the Indian Ocean and then pass through the
Strait of Malacca (Len 2015: 4; Albert 2016). Because this need for energy is not likely to
subside, China’s reliance on the Indian Ocean will not either. Therefore, the importance of
Bangladesh in China’s economic and strategic calculations will also continue to rise.
China’s economic and geopolitical interests in Bangladesh and the Indian Ocean come at an
intersection when we take into account the interests of its rivals in the region, India and the US.
India has similar goals with the Indian Ocean as China, but holds more control over it, which
China would undoubtedly like to see change. China is also unhappy with the US’s “pivot to Asia”
policy (Santis 2012; Silove 2016), which it deems to be an effort to contain China’s power and
influence in the region, and is supported by India (Burgess 2015). All these issues make it so
that China’s efforts of gaining maritime might in the Indian Ocean are ever more important. To
this end, it is speculated that China deems Bangladesh as very attractive, and this is in line with
China’s interest in establishing a deep-sea port in Sonadia Island off Cox’s Bazar, Bangladesh.
Another dimension of Bangladesh-China relations is China’s ‘Security through Development’
philosophy. China has learned a lesson from the downfall of the Soviet Union that military
might alone cannot ensure national strength and endurance, and economic prosperity and
power are just as important. To this end, China is on a mission to strengthen economic ties with
countries in Asia and Africa. China’s economic rise will help to ensure that it holds its rightful
place as a leader in today’s multipolar world, something which has long been the ambition of
the Chinese. China also emphasizes its commitment to respect countries’ sovereignty and
security, that is to say it has a policy of non-interference in the internal affairs of other nations.
Chinese officials, such as Chinese Foreign Minister Wang Yi and President Xi Jinping have stated
that they do not seek to lead the world or be a hegemonic or expansionary force, but instead
wish to work with other nations as cooperative partners. This is heartening to countries allied
with China such as Bangladesh, as it reassures that their internal matters will not be meddled
with by a stronger, outside force.
Concerns and roadblocks for the alliance
Now that the ins and outs of Bangladesh-China relations have been more or less discussed, the
challenges and obstacles that stand in their way must also be addressed. Firstly, we must go
back in history to the time of the liberation of Bangladesh from Pakistan. China, then, was very
much opposed to the liberation movement, and supported a united Pakistan. This might cause
strains in the relations between the two nations, especially among the more passionate
Bengalis who remember the days of the liberation war and are not willing to forgive.
On the other hand, India played a major role in aiding Bangladesh emerge victorious in the war
and liberate itself from Pakistan, and the friendly ties between the two nations that resulted
from this can still be felt today in Bangladeshi civil and political society. Due to this and several
other factors such as its geographical advantages, India holds significant influence in the
Bangladeshi market, and this is a big threat for China, and can undermine Bangladesh-China
relations. Therefore, Bangladesh must be careful when treading diplomatic ground with its
neighbors, so as to not offend one too much in an effort to please the other, as well not to hurt
domestic sentiments of those who view India in a positive manner due to the historical and
cultural ties.
When we move into the modern day, one of the most glaring issues with the Bangladesh-China
relations is the immense trade gap between the two nations. China exports to Bangladesh way
more than it imports from it, and this gap has widened ever so steadily between 2000-2013,
going from $697.27 million USD to $5865.88 million USD. However, Bangladesh can still has the
opportunity better capitalize on trade with China. According to research done by Dr. Ma
Razzaque, head of Research and Policy Integration for Development (RAPID), just capturing 1%
of the share of China’s imports will make way for Bangladesh to earn about $25 billion.
Some have also brought up concerns about Bangladesh falling into a ‘debt-trap’ by becoming
too reliant on Chinese loans. Examples of countries falling into such debt-traps are Pakistan and
Sri Lanka, who are suffering now because of their excessive dependence on said Chinese loans.
However, the numbers show a more promising picture for Bangladesh when compared to its
South Asian counterparts. For instance, the debt ratio to nominal GDP for Sri Lanka and
Pakistan are 104% and 41%, but for Bangladesh it is only about 22%. Bangladesh avoids overreliance on China due to its strong ties with India and Japan, and by rejecting projects it deems
economically unsustainable.
Conclusion
Therefore, even though there are several obstacles facing Bangladesh and China in their bid to
fortifying their alliance, they are nothing impossible to overcome. All these obstacles must be
addressed diplomatically in order to usher in an era of prosperous Sino-Bangladeshi relations,
an era that will benefit both nations to a great extent. Research and evidence has shown that
the relationship between the countries is already bearing fruit, and is set to be even more
fruitful in the future. But only time will tell if the fruit will be sweet of taste or tinged with
sourness, and if China will keep its promise being anti-hegemonic or go down the far-tootravelled path of expansionism.
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