In 2015, Bangladesh became part of the Chinese global infrastructure development strategy known as the Belt and Road Initiative (BRI), mainly via one of its special projects known as the Bangladesh, China, India and Myanmar Economic Corridor (BCIM). Eight years later, much of the initial enthusiasm seems to have vanished as a result of several factors, including the impact of the pandemic, Beijing's own reassessment of its ambitions, Russia's war against Ukraine, and the US government's push for influence in the region, known as its Indo-Pacific strategy, resulting in a slower pace of development seven years after Chinese President Xi Jinping's visit in 2016.
As a rapidly growing economy in South Asia with a thriving ready-made garments export industry, a burgeoning local manufacturing industry and a robust inflow of remittances from overseas workers, Bangladesh has pushed for infrastructure development to become an upper-middle-income economy by 2031. This economic ambition has turned China into its largest trading partner of the past decade. Therefore, Xi's October 2016 visit signified a promising opportunity for the country to take China's help in developing various infrastructure projects such as railways, power plants and other initiatives.
In 2016, China put forward proposals to invest a total of approximately USD 40 billion in Bangladesh. Of this amount, USD 24.45 billion was designated for infrastructure projects as assistance, while USD 13.6 billion was allocated for joint venture investments. Additionally, China pledged to provide USD 20 billion in loans for various development projects.
During that same year, Bangladesh signed agreements for eight projects, with a total of more than USD 9.45 billion financed by China. These projects included the Padma Bridge rail link (valued at USD 3.3 billion), the Payra 320 MW coal-powered Thermal Power Plant (worth USD 1.56 billion), an investment in the Development of National ICT Infra-Network for the Bangladesh Government project (with a budget of USD 1 billion), and a power grid network strengthening project (valued at USD 1.32 billion).
The Twitter account of The Belt and Road Initiative Sri Lanka (BRISL) explains how the 169 km long Padma Bridge Rail Link Project is a key component of this cooperation as it establishes shorter rail connectivity between the capital Dhaka, and the central and south-western regions of Bangladesh including the port of Payra.
Chinese and Bangladeshi engineers work together for the 172 km #PadmaBridge Rail Link Project in Keraniganj, Bangladesh, one of the most significant Belt and Road Initiative projects under construction by the China Railway Group Limited. #China-#Bangladesh #BRI pic.twitter.com/AVGHCIctmX
— BRISL (@BRI_SL) February 3, 2023
Between 2018 and 2019, China made significant investments in Bangladesh's power sector. During Bangladesh Prime Minister Sheikh Hasina's visit to China in 2019, nine new investments, including two loan deals, were signed between the two nations.
According to the China Global Investment tracker, China invested a total of USD 7.07 billion from 2018 to 2022 and has been directly involved in construction projects worth around USD 16 billion.
Bangladesh's concerns: from a debt trap to unclean energy
Yet despite this seemingly win-win situation, Dhaka has its own concerns about China's role and requests to align its strategy with BRI's goals. Dhaka has also expressed concerns about the slow disbursement of funds for key BRI projects that may face challenges such as budgetary constraints and extended timelines.
Perhaps the main concern is the risk of falling into China's debt trap. Indeed the economic troubles faced by Pakistan and Sri Lanka have prompted Bangladesh to reassess its involvement in BRI-related infrastructure projects driven by China.
The Finance Minister of Bangladesh voiced his concerns in August 2022, urging developing nations to rethink their decision to take out more loans under China's Belt and Road Initiative.
Bangladesh’s Finance Minister AHM Mustafa Kamal has warned that developing countries must think twice about taking more loans through China’s Belt and Road Initiative as global (BRI) inflation and slowing growth add to the strains on indebted emerging markets. pic.twitter.com/k6dafFv90U
— Global Watch (@GlobalWatch_) August 10, 2022
Reports indicated that Bangladesh owed China approximately USD 4 billion in 2022, which amounted to 6 percent of its total foreign debt at that time. In July 2022, the country requested a bailout package of USD 4.5 million as its dwindling foreign reserves are making it difficult to import the goods necessary to keep its economy rolling. Bangladesh sounded alarms in 2022 about an impending economic crisis caused by a myriad of factors, including widespread loan defaults crippling the banking sector, depleting foreign currency reserves due to capital flights, and more. To mitigate the ongoing economic crisis, Bangladesh has already cancelled or postponed several infrastructure projects, such as highway upgrades and constructing a 5G network for the state-owned telecom provider Teletalk.
Another source of concern is the impact on the environment. More than 15 infrastructure projects in the BRI plan involve the construction of coal-fired power plants, which an environmental study has termed a “carbon catastrophe”. Many of these projects are encountering opposition from locals who object to land acquisition for the construction of the projects and point to environmental concerns. Since 2016, 12 protesters have lost their lives in various incidents, such as those in Gandamara and Banskhali.
Asian Peoples’ Movement on Debt and Development, a group working for climate justice, has demanded justice for those killed:
On April 17, 2021, a clash between the protesting workers of the Banshkhali Coal Power Plant in Bangladesh and police authorities led to the death of 5 and the injuries of 15. The workers were demanding their due wages from power plant authorities. #JusticeForBanshkhaliWorkers pic.twitter.com/897fwL1kaz
— APMDD (@AsianPeoplesMvt) April 17, 2021
As a result of this push-back, Bangladesh abandoned plans for ten additional coal-fired power plants in 2021 and requested China replace five projects, including three energy projects, in its Belt and Road Initiative portfolio. Beijing has consequently pulled out from the proposed coal-fired power plants.
Still, dependency on China might remain a reality for Dhaka: As Bangladesh transitions towards renewable energy, it will require an estimated USD 80–100 billion to sustain its growth, and may still seek investments from China. As indicated by the Global Coal Finance Tracker, which monitors government-sponsored coal power projects worldwide, more than 70 percent of all coal plants built worldwide have links to Chinese funding.
According to the China Index 2022, which measures China's global influence, Bangladesh has been ranked 54 out of 82 countries, with India following closely at 55th place. Meanwhile, Pakistan ranked number one. The scores of Bangladesh showed that it has a 29 percent vulnerability to Beijing's influence, mostly in its foreign policy, technology and domestic politics spheres.
Balancing Beijing and Washington
Beijing is also reassessing its own BRI strategy because of geostrategic shifts. In 2019, the Bangladesh-China-India-Myanmar (BCIM) Economic Corridor was removed from the list of projects included in the BRI as India decided to withdraw from the initiative. Beijing is now focusing on new initiatives in South Asia: the China-Myanmar Economic Corridor (CMEC), the Trans-Himalayan Multi-dimensional Connectivity Network between Nepal and China, and the China-Pakistan Economic Corridor (CPEC) together with the Gwadar Port Complex.
In Bangladesh, China showed keen interest in investing in the Sonadia deep sea port near Cox's Bazaar as part of its “string of pearls strategy” to encircle India in its maritime neighbourhood, along with investments in Sri Lanka's Hambantota port and Pakistan's Gwadar port. However, Bangladesh ultimately chose not to invest in that port in 2020 as it did not align with its national interests.
China's investment expansions in Bangladesh have indeed raised concerns in India, but also in Washington. The US Pacific Fleet commander, Admiral Samuel J. Paparo, has warned about the potential dangers of Chinese investments in South Asian ports and the impact of Chinese debt traps on local economies. Washington has offered its own US Indo-Pacific strategy as a way to counter Beijing's influence with the support of ASEAN nations, Japan and India.
This has led to an escalation in Sino-Bangladeshi relations: Li Jiming, the Chinese ambassador to Bangladesh, cautioned in May 2021 that Bangladesh's involvement in the Quadrilateral Security Dialogue (Quad), an informal strategic alliance between the United States, India, Japan and Australia, would harm bilateral relations. Bangladesh's foreign minister then denounced the remark, stating that it was “unfortunate” and that the decision was “for Bangladesh to make, not China.” In June 2022, China voiced its discontent with the Quad once more and criticized the United States. As journalist MAK Jilany tweeted:
Chinese Ambassador in Dhaka Li Jiming has said #Bangladesh‘s relations with #China will “substantially damage” if Bangladesh joins with the #US-led initiative named “#Quad.” @MFA_China pic.twitter.com/GaomOOcmDo
— MAK Jilany (@its_me_j2) May 10, 2021
Today, Bangladesh is trying to balance between the BRI and the Indo-Pacific Strategy with its own principle of “Friendship towards all, malice towards none”.
Great article! So useful to catch up on this issue years later. Thank heavens those coal plants are scuttled!