An all weather friend? Chinese investment in Bangladesh reach seven billion dollars

By Arafat Islam Joy*

Bangladesh and China have enjoyed friendly relations since establishing diplomatic ties in January 1976. Since then, associations between China and Bangladesh have risen exponentially. Bilateral ties between the two countries started solidifying, identifying each other’s interests and priorities. The relationship has undergone a tremendous transformation to the extent that China is now considered by many in Bangladesh as an ‘all-weather friend.’

During the past five years, Sino-Bangladesh ties have attracted a lot of attention as they show a dynamic and changing cooperation. Without sharing state borders, these two countries have developed solid relations and partnerships in every aspect and every field of development. Also, regular high-level bilateral talks and visits between the two countries have strengthened the relationship. Following this political culture, Prime Minister Sheikh Hasina visited China on a three-day bilateral visit.

PM’s China visit

At the invitation of Premier Li Qiang of the People’s Republic of China, Prime Minister Sheikh Hasina of Bangladesh paid an official visit to China from 8 to 10 July. This is Prime Minister Hasina’s fifth visit to China and her first visit after being re-elected in January. The primary goals of this visit were to strengthen cooperation in investment, trade, and financial support.

During the visit, Hasina was given a warm welcome. On her arrival at the Great Hall of the People, the prime minister was received by the Chinese premier. She held meetings with the top leaders, including Chinese Premier Li Qiang, Chinese President Xi Jinping, and Jin Liqun, President of the Asian Infrastructure Investment Bank.

Leaders of the two countries agreed to stay committed to the Five Principles of Peaceful Coexistence, carry forward the long-standing friendship, foster greater synergy between development strategies of the two countries, advance the Belt and Road cooperation, and elevate the bilateral relationship to a comprehensive strategic cooperative partnership. The two sides had in-depth exchanges of views on bilateral relations and international and regional issues of mutual interest and reached extensive consensus.

Outcome of PM’s visit

Building bridges with China is one of Bangladesh's principal foreign policy priorities. This was reaffirmed with Bangladesh Prime Minister’s visit to China. During her visit, various bilateral issues were discussed with the Chinese leadership. Economic issues dominated the agenda, but they also discussed the Rohingya issue, business, trade and commerce, investments, and bilateral relations alongside various regional and international matters.

The immediate outcome of the visit was signing some agreements between the two governments, primarily stressing strengthening economic cooperation between the two countries. Bangladesh and China signed 21 instruments, including three renewed Memorandums of Understanding (MoUs), and announced seven additional projects following a delegation-level bilateral meeting between the Bangladesh prime minister and her Chinese counterpart at the Great Hall of the People.

Among them are significant instruments of cooperation in the economic and banking sector, trade and investment, digital economy, infrastructure development, assistance in disaster management, construction of 6th and 9th Bangladesh-China friendship bridges, export of agricultural products from Bangladesh, and people-to-people connectivity. Regarding defense cooperation, the two sides agreed to strengthen exchanges at all levels and between various armed forces and departments and deepen practical defense cooperation.

From an economic point of view, this visit was essential for Bangladesh. Over the past decade, China has become one of Bangladesh's development partners through massive investment. The development speed will increase if this relationship between Bangladesh and China strengthens. Currently, Chinese investment in Bangladesh is about 7 billion dollars.

China also offered Bangladesh one billion Yuan (about $140 million) as economic assistance. Along with this, Beijing said it attaches utmost importance to its relationship with Dhaka and assured Bangladesh of continued support for its development journey.

Again, the Chinese president said during the bilateral meeting with Hasina that China will help Bangladesh economically in four ways: grants, interest-free loans, concessional loans, and commercial loans. The two sides agreed to enhance cooperation in financial regulation and encouraged increased use of local currency settlement in bilateral trade.

The Bangladesh side welcomed Chinese banks to establish branches in Bangladesh and vice versa. The Chinese side has also supported continuing the zero-tariff treatment on 98 percent of taxable items in Bangladesh for a transitional period beyond 2026, when Bangladesh will graduate from LDC status.

Currently, China is Bangladesh's single largest trading partner. According to the Ministry of Commerce, bilateral trade with China is about 24 billion dollars. In the fiscal year 2022-23, Bangladesh exported goods worth $677 million to China and imported goods worth $22.90 billion from China.

China is Bangladesh's single largest trading partner. According to the Ministry of Commerce, bilateral trade with China is $24 billion

The prime minister told Chinese businessmen in Beijing, 'Now is the right time to invest in Bangladesh.' The Prime Minister also highlighted the investment opportunities in Bangladesh and the activities undertaken by the government in this regard.

Notably, some agreements were also signed between the two countries' private sectors. Multiple Bangladeshi and Chinese companies signed 16 Memorandums of Understanding (MoU), four of which will bring $490 million to Bangladesh as investments. The MoUs were signed during a summit titled “The Rise of Bengal Tiger: Summit on Trade, Business and Investment Opportunities Between Bangladesh and China", where it was agreed that the Chinese companies would invest in Bangladesh's textile, solar power, fintech, and technology sectors.

Way forward

China understands and sympathizes with the tremendous costs that Bangladesh has borne regarding the Rohingya issue. China has a massive influence in Myanmar, and China will stand by Bangladesh in resolving the Rohingya crisis – a message conveyed to Chinese diplomats ahead of the Prime Minister's visit to China.

It can be assumed that there was a detailed discussion about this during the visit. Not only Rohingya repatriation, but Bangladesh can also seek help from China for the vast amount of money they need to support them in the future. It is evident that Bangladesh has taken a step forward in the path of good relations through this visit of the Prime Minister.

China stands ready to take this visit as an opportunity further to deepen political mutual trust between the two countries, strengthen the synergy of development strategies, consolidate traditional friendship, and work together to realize the Chinese Dream of National Rejuvenation and Bangladesh’s “Vision 2041”.

The two sides also decided to take the opportunity to celebrate the 50th anniversary of establishing China-Bangladesh diplomatic relations in 2025 to plan together for the future development of bilateral ties and take the China-Bangladesh relationship to another new height.

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*Dhaka-based researcher and freelance columnist

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