Bangladesh Prime Minister Sheikh Hasina is set to embark on an important three-day state visit to China from July 8 to 10 at the invitation of Premier Li Qiang. This visit, anticipated to be a significant milestone, aims to enhance the bilateral relationship between the two nations, which have enjoyed a long-standing friendship and strategic partnership. Beijing views this trip as a potential “game changer” that could elevate cooperation and collaboration to unprecedented levels.
During President Xi Jinping’s 2016 visit to Bangladesh, he expressed China’s desire to upgrade its relationship with Bangladesh from a “strategic partnership” to a “comprehensive strategic cooperation partnership.” A Memorandum of Understanding (MoU) was signed in the presence of President Xi and Prime Minister Hasina regarding Bangladesh’s participation in the Belt and Road Initiative (BRI). Additionally, decisions were made about China’s debt and financing several mega projects in Bangladesh.
Over the past eight years, China’s role as a key development partner has grown, with current bilateral trade between the two countries standing at US$23 billion. According to the Ministry of Foreign Affairs, Bangladesh will seek additional loans amounting to US$20 billion during this visit. US$15 billion will be allocated for infrastructural development projects, and the remaining US$5 billion will be disbursed in Chinese yuan to facilitate payments for imports from China.
The significance of this visit cannot be overstated, as it comes at a time when global economic shifts are prompting countries to reassess their financial strategies. Bangladesh’s willingness to switch to alternative currencies instead of relying solely on US dollars is a key aspect of this visit. The Ukraine war and Western sanctions have posed several obstacles for dollar-based economies and transaction systems, causing significant challenges for countries like Bangladesh. By exploring transactions in Chinese yuan and other currencies, Bangladesh aims to mitigate these economic hurdles and enhance its financial stability and independence.
The Embassy of the People’s Republic of China in Bangladesh stated in a social media post that Foreign Ministry Spokesperson Mao Ning announced Prime Minister Sheikh Hasina’s visit from July 8 to 10. Following this announcement, Hubei Media Group inquired about the program and China’s expectations for the visit, as well as the current state of China-Bangladesh relations.
Mao Ning responded: “This will be Prime Minister Sheikh Hasina’s first visit to China since her new term began and five years after her last visit to China. During the visit, President Xi Jinping will meet with Prime Minister Sheikh Hasina. Premier Li Qiang will hold a welcoming ceremony and have talks with her. The two prime ministers will attend the signing ceremony of cooperation documents. Leaders of the two countries will have an in-depth exchange of views on how to deepen traditional friendship, expand mutually beneficial cooperation, and discuss regional and international issues of mutual interest. Prime Minister Hasina will also attend the Summit on Trade, Business, and Investment Opportunities between China and Bangladesh.
Bangladesh’s Ministry of Foreign Affairs stated that Dhaka will seek support from Beijing for the Southern Integrated Development Initiative (SIDI), which centers on the Payra Port in the southern district of Patuakhali. This project will be an integrated development plan for the southern region of the country, involving projects on transport and communication, ICT, power and energy, logistics, and a special economic zone.
The Finance Ministry added that SIDI will see the establishment of an electric vehicle plant, a hi-tech park, and a logistics hub at a strategic location. In addition, Bangladesh will also seek loans from China for the implementation of the Dhaka Mass Rapid Transit Development Project (Line 2), the Bhanga-Kuakata rail line, a bridge over the Kocha river at Pirojpur, the renovation of Dhaka Medical College Hospital, and the Maheshkhali-Matarbari and Bakhrabad 3rd parallel gas transmission pipeline.
Liu Jianchao, the international department head of the Chinese Communist Party (CCP), during his recent visit to Bangladesh, expressed interest in strengthening bilateral relationships on the political front. He stated, “We believe that government policy originates from the perspectives of political parties. This means the communication between the political parties of the two countries is very helpful to know and understand the mutual relationship between the government and the people. This communication also plays a role in adopting the right policy for each other. This communication is important”. Diplomatic sources in Dhaka describe CPC Minister Liu Jianchao’s visit to Dhaka ahead of Prime Minister Sheikh Hasina’s Beijing tour as significant.
Implications of the Loan and Strategic Partnership
Bangladesh’s request for a $20 billion loan from China is a strategic move to bolster its infrastructure and economic stability. The allocation of $15 billion for infrastructural development projects highlights the country’s focus on enhancing its transportation, energy, and ICT sectors. This investment is expected to spur economic growth by improving connectivity and fostering industrial development.
The decision to disburse $5 billion in Chinese yuan for imports from China aligns with Bangladesh’s strategy to diversify its currency reserves and reduce dependence on the US dollar. This shift is a response to global economic uncertainties and the challenges posed by dollar-based transactions, particularly in the context of the Ukraine war and Western sanctions.
The visit underscores the deepening strategic partnership between Bangladesh and China. By seeking support for the Southern Integrated Development Initiative (SIDI) and other key projects, Bangladesh is positioning itself as a critical player in the region’s economic landscape. The development of Payra Port and associated infrastructure projects will enhance Bangladesh’s connectivity with global trade routes, aligning with China’s Belt and Road Initiative (BRI).
China’s willingness to invest in Bangladesh’s development projects reflects its broader geopolitical strategy to strengthen ties with South Asian countries. This partnership is mutually beneficial, as it allows China to expand its influence in the region while providing Bangladesh with the necessary resources for its development agenda.
The visit also has significant political and diplomatic implications. The engagement between the political parties of both countries, as emphasized by Liu Jianchao, is crucial for fostering mutual understanding and cooperation. This political alignment is likely to translate into more robust governmental policies that support the strategic partnership.
Prime Minister Sheikh Hasina’s visit to China, her first since her new term began, signals a reaffirmation of the strong bilateral ties between the two nations. The planned meetings with President Xi Jinping and Premier Li Qiang will provide an opportunity to discuss and finalize agreements that will shape the future of Bangladesh-China relations.
Future Prospects and Challenges
The discussions on trade, business, and investment opportunities between China and Bangladesh during the summit will be critical for enhancing bilateral economic relations. Both countries have a shared interest in expanding trade volumes and exploring new areas of investment. The current bilateral trade stands at $23 billion, and there is potential for significant growth.
Regional security will be a key topic of discussion during the visit. Both China and Bangladesh share concerns about stability in the region, particularly in light of recent geopolitical developments. The leaders are expected to discuss collaborative efforts to address security challenges and promote peace and stability in the region.
While the $20 billion loan from China presents numerous opportunities for Bangladesh, it also comes with challenges. Managing the economic dependency on Chinese loans and ensuring sustainable debt levels will be crucial for Bangladesh’s long-term financial health. The terms and conditions of the loans, as well as the implementation of the projects, will need careful monitoring to avoid potential pitfalls.
As Prime Minister Sheikh Hasina prepares for her upcoming visit to China, the potential for strengthened ties and enhanced cooperation between the two nations is evident. With discussions set to cover a range of critical issues, including infrastructure development, trade, and regional security, this visit holds promise for both Bangladesh and China.
The foundations laid during this trip could pave the way for a new era of partnership and mutual growth, reinforcing the bonds of friendship and collaboration between these two strategic allies. As they approach the golden jubilee of their diplomatic relations, the outcomes of this visit will be instrumental in shaping the future trajectory of Bangladesh-China relations.
