India has gone into overdrive to initiate new projects in Bangladesh and improve cross-border trade. This week it delivered ten broad-gauge locomotives to Dhaka, and earlier this month, that is, July 2020, it launched a multi-modal transport link opening up supply lines from Chittagong port to its northeastern states. This is in the wake of China’s successful economic diplomacy.
China announced tariff exemptions for 97 percent of all exports from Bangladesh (excluding narcotics-based products) from 1 July 2020. This decision addressed Bangladesh’s yawning trade deficit with China and the economic hardships caused by the pandemic. Beijing’s moves coincided opportunely with the India-China military face-off in Eastern Ladakh.
Dhaka Has Become More Beijing-Friendly Over Time
India had given duty-free concessions to several Bangladesh products almost a decade earlier, but the ground reality in that country has changed. Dhaka has become more Beijing-friendly over time. Although China’s recognition of Bangladesh as a sovereign country was as late as 1975 –– the advantages that China enjoys over India have hugely increased since then. Apart from its enlarged economic footprint, there are concerted efforts to counter India’s cultural and language advantage.
China is now the largest supplier of arms to Bangladesh. It is its second-largest arms-export destination, behind only Pakistan. Bangladesh has acquired two submarines, five maritime patrol vessels, 16 fighter jets, 44 tanks and anti-ship and surface-to-surface missiles from China. Beijing is also constructing the country’s first submarine base at Pekua in Cox’s Bazar.
China replaced India as Bangladesh’s largest trading partner in 2015.
In 2016, the relationship between Dhaka and Beijing was upgraded during Chinese President Xi Jinping’s visit. With Bangladesh deciding to join the Belt and Road Initiative (BRI), 27 bilateral agreements were signed for investment and Dhaka was offered USD40 billion in aid (USD 26 billion for BRI and USD 14 billion in joint ventures). This clearly outshines India’s USD 2 billion economic package.
- China is now the largest supplier of arms to Bangladesh.
- China replaced India as Bangladesh’s largest trading partner in 2015.
- China’s increasing economic influence in Bangladesh is evident.
- Should India drag its feet, China could extend the China Myanmar Economic Corridor to Bangladesh.
- Either way it would increase Bangladesh’s exports to China manifold and change its strategic outlook –– Bangladesh would no longer feel ‘India-locked’.
- China is seen by influential Bangladeshis as the only balancing factor that allows them to live comfortably with a very large neighbour.
China’s Increasing Economic Influence In Bangladesh
China’s increasing economic influence in Bangladesh is evident. Barring Japanese construction of the Dhaka Metro Rail, China controls all big construction projects. China bid against India to acquire 49 percent stake in the Dhaka Stock Exchange.
Partly under Indian pressure, the award of a deep sea port at Sonadia in Cox’s Bazar to China was cancelled.
It has been relocated to Payra, where it will be financed by India. However, Chinese companies have won USD 600 million worth of construction projects at the port. The China Harbour Engineering Company will construct the main port infrastructure, while the China State Engineering and Construction Company will be responsible for the riparian aspects of the port and construction of housing, healthcare and education facilities around it.
Chinese companies are the biggest suppliers of telecom hardware and control the network.
Alibaba has purchased a 20 percent stake in ‘bKash’, Bangladesh’s largest mobile financial service-provider.
Bangladesh May No Longer Feel ‘India-Locked’
Special government-to-government economic zones are being built where Chinese firms will relocate. They will help Chinese companies beat the new US tariffs by exporting from Bangladesh, just as they are trying to do from Laos, Vietnam and Cambodia. In the Mirsarai Special Economic Zone in Chittagong, Chinese companies are expected to invest big –– the state-owned Kunming Iron and Steel Holding Company has already announced an investment of USD 2.13 billion.
A land link to Kunming is planned through the Bangladesh-China-India-Myanmar or BCIM corridor.
Should India drag its feet, China could extend the China Myanmar Economic Corridor to Bangladesh. Either way it would increase Bangladesh’s exports to China manifold and change its strategic outlook –– Bangladesh would no longer feel ‘India-locked’.
As and when the Rakhine problem is resolved by Myanmar, Bangladesh would also get access to the Chinese deep-sea port at Kyaukpyu on the western tip of Myanmar.
How China Is Countering India’s Soft Power Advantages in Bangladesh
China is also countering India’s soft power advantages in Bangladesh.
It has increased the number of student scholarships to China, set up a large number of Mandarin learning centres –– Confucius Institutes have been opened at Dhaka University and North-South University, the number of visits by cultural troupes have increased, engagement with think-tanks has been intensified, and cooperation in military medicine and sports expanded.
China has also launched an extensive ‘sister-city’ programme with Bangladesh and sent large shipments of medical equipment during the COVID crisis along with teams of doctors.
All of this was accompanied with great publicity. India sent medical assistance too but it was hardly noticed in the media. China’s positive image in public discourse points to considerable support among the intelligentsia, media and civil society.
China also enjoys the advantage that unlike India, it is not perceived as a coercive and interventionist power by the political class in Bangladesh.
There is widespread support for close relations with China in both Sheikh Hasina’s Awami League as well as its main rival, the Begum Khalida Zia-led Bangladesh Nationalist Party. The ruling Sheikh Hasina government needs Chinese help for economic growth, and as a counter-balance to India, the BNP, marginalised by India, sees every reason to woo its strategic rival.
China Is Seen By Influential Bangladeshis As The Only ‘Balancing Factor’
India has put all its eggs in the Awami League’s basket which may be advantageous in the short run. In the long run it may have to pay for carrying the baggage of the Awami League’s mis-governance. Despite this, some claim that several of Sheikh Hasina’s ministers have a distinct pro-China tilt.
Bangladesh watchers comment on the apparent difference in the diplomatic styles between India and China – that Indian diplomacy is almost ‘vice-regal’, while the Chinese is diametrically opposite and therefore more acceptable.
Although this equilibrium can change over time, as of now, China is seen by influential Bangladeshis as the only balancing factor that allows them to live comfortably with a very large neighbour.
How India can counter the myriad points of influence developed by China in Bangladesh will be the real test of its diplomacy in the years to come. India’s smaller neighbours are clearly using the India-China rivalry to their advantage by remaining non-committal about their preference between the two. For the time being, China is successfully exploiting the feeling of ‘collective asymmetry’ among India’s smaller neighbours.
(The writer is a senior journalist based in Delhi. This is an opinion piece and the views expressed are the author’s own. The Quint neither endorses nor is responsible for them.)