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Growing economic ties with China sparks tension
Shakhawat Hossain | Published: 23:58, Sep 22,2023
Bangladesh's growing economic ties with China sparks tension
The country’s economic ties with China have increased rapidly over the past decade, keeping its Western allies and large neighbour India busy with geopolitics in...
www.newagebd.net
The country’s economic ties with China have increased rapidly over the past decade, keeping its Western allies and large neighbour India busy with geopolitics in the Bay of Bengal region.
The growing interest in the Bay of Bengal region by powerful nations, according to economists and international relations experts, has put the country’s foreign and economic policies under challenge.
The bilateral trade between Bangladesh and China crossed $20.0 billion in the financial year 2021–22 from $3.3 billion in 2009–10, while Chinese companies increased their involvement in the country’s development projects by supplying goods and services worth more than $22 billion during the period.
Economists and international relations experts observed that China had grown its economic ties with Bangladesh faster than any other country over the past decade.
Through the Belt and Road initiative, introduced by China in 2013, the country has provided loans to low- and middle-income countries, including Bangladesh, for infrastructure development.
Until 2022, the cumulative BRI engagement in 147 countries by China stood at $962 billion, according to the Green Finance and Development Centre under Shanghai-based Fudan University.
The lending programme under the BRI has, however, been criticised as debt-trap diplomacy by Western countries, while India also opposes it.
Apparently, to counter the Chinese influence in the Bay and the Indian Ocean, the US, Japan, and France have adopted Indo-Pacific strategies to woo the Indian Ocean littoral.
Bangladesh, sharing a border with India and civil war-torn Myanmar and serving as the gateway to both South and Southeast Asia, has already been pursued by Western countries to support them.
ANM Muniruzzman, president of the Bangladesh Institute of Peace and Security Studies, said Western countries wanted Bangladesh on their side for their own interests.
‘Bangladesh can benefit from these strategies,’ said Muniruzzman, also a retired major general.
He also said the strategies from the Western countries would not pose problems to the country’s policy towards the BRI once the country prioritised its national interests first.
Shahab Enam Khan, a professor in the Department of International Relations at Jahangirnagar University, believes that participating in the Indo-Pacific strategies will not bring about major changes to the country’s present nonaligned policy.
Rather, the strategies will help the country meet its growing needs for foreign investment, he said, adding that the country has benefited from BRI.
Under the BRI project, China has invested around $8 billion in projects like the Padma Bridge Rail Link, the construction of a tunnel under the River Karnaphuli, the Dhaka-Ashulia Elevated Expressway, and the expansion and strengthening of DPDC’s power system network.
Besides their own-funded projects, Chinese construction firms have also won many contracts here under competitive bidding.
The projects include the construction of Padma Bridge across the river Padma and the river training of the same project, Bus Rapid Transit, the Elenga-Hatikumrul-Rangpur highway, and the rail line between Dohazari and Chakaria under Dhaka-Cox’s Bazar Rail Line.
The overall financial involvement with contracts under Chinese companies has been calculated at more than $22 billion by Economic Relations Division officials.
Centre for Policy Dialogue distinguished fellow Mustafizur Rahman said that awarding development projects to Chinese companies through competitive bidding bore no problems.
But awarding contracts without competitive bidding bears risks for any country, he said.
To him, Dhaka has faced challenges in dealing with the growing interest in the region by powerful nations due to rising Chinese engagements in Bangladesh.
The country’s trade link with major trading partners is contributing to challenges other than the growing need for foreign currency to ensure energy security and implement infrastructure projects, he noted.
It becomes a fact that Dhaka relies heavily on Beijing and New Delhi for importing and on Western countries for exporting. Dhaka deals with big trade deficits with both Delhi and Beijing, who together accounted for around 45 per cent of the country’s overall imports and five per cent of exports in 2021–22.
Rahman sees no problem with the growing imports from China and India by the country’s businessmen due to the availability of necessary goods at cheaper rates.
But the export concentration on ready-made garment products and dependency on Western countries were disadvantages for the country, he said.
Dhaka’s $52.08 billion worth of exports in 2021–22 were mainly shipped out to countries on both sides of the Atlantic, with the US, Germany, the UK, France, Spain, and Italy accounting for almost 43 per cent.
Trade-related issues have often been used as weapons by many countries, especially Western ones, to influence their policies in weak countries.
In 2013, the US scrapped duty-free access to RMG items produced in Bangladesh due to labour issues.
More restrictions on the country’s exports are not unlikely from Western countries in the coming days, said Policy Research Institute executive director Ahsan H Mansur.
Countries under the European Union are the biggest consumers of Bangladeshi products, accounting for one-third of the country’s annual exports, which enjoy duty-free facilities under the EU policy of Everything but Arms.
Expressing concern over the human rights situation in Bangladesh, the EU warned that the continuation of the duty-free facility was linked to human rights, including labour rights.
Dhaka needs to keep its export markets secure for its own interest, said Mansur, adding that overseas borrowing sources for implementing development projects should be chosen carefully to avert debt distress in the future.
Referring to the bankruptcy faced by neighbouring Sri Lanka for borrowing risky overseas loans, economists said that Dhaka should avoid taking on projects that are not financially viable.
They said that the country’s economy had faced pressure due to the dollar shortage that pulled down the country’s forex reserves below $20 recently from $48 billion recorded in August 2021.
The country has secured a $4.7 billion loan programme from the International Monetary Fund to meet the balance of payments over the next three years.
It is also facing pressure for a growing repayment of debt that will almost double to $4.02 billion in the next financial year from $2.4 billion paid in 2021–22, according to the Economic Relations Division.
Former Dhaka University International Relations professor Shahiduzzaman said the country was never out of pressure from external sources.
However, external pressure has mounted recently from Western nations on various issues such as human rights, freedom of speech, and extrajudicial killings in the country, he said.
He suggested that the country needed changes to its foreign policy to bolster its economic policy.
