Dragon’s Descent: Potential Surge Of Chinese Investments In Southern Bangladesh – Analysis


By Sohini Bose

In a meeting held on 4 April between the Prime Minister of Bangladesh Sheikh Hasina and the Chinese Ambassador to Bangladesh, Yao Wen, Hasina requested Beijing to invest in the development of the southern part of Bangladesh. The region, she said, had long been neglected although it is one of the most vulnerable parts of the country as there are large rivers and the impact of climate change is significant.

No government except the Awami League has taken any effective step for the development of this area,” she said, adding that the Padma Bridge, one of her government’s flagship connectivity projects that was completed in 2022, has established direct road communication with this region.

In response, China has requested specific development proposals from the Bangladesh government. However, while external investments can indeed help PM Hasina to address the environmental vulnerabilities and harness the economic potential of southern Bangladesh, the increased involvement of China will create ripples in the geopolitics of the Bay of Bengal.

Balancing economics and ecology

Bangladesh’s southern half composed of Khulna, Barisal, and Chattogram, is the mouth of the Bengal Delta. Two of the country’s main rivers, the Padma and Jamuna merge with the river Meghna in lower Bangladesh before draining into the Bay of Bengal, creating the largest river delta in the world. Going around all the deltaic islands, tidal channels, and estuaries, the entire length of the Bangladesh coastline is estimated to be nearly 1,320 km. However, the topography of this coastline makes it prone to floods, tidal surges, and river bank erosion.

Moreover, Bangladesh’s location at the peak of the turbulent Bay, makes its coastline vulnerable to storm surges and cyclones, the frequency of which is increasing due to climate change. The threats of sea-level rise and saltwater intrusion are also major problems as nearly 80 percent of Bangladesh is at a height of 5 meters above sea level and a 1-meter rise in sea level can displace millions of people. The Sundarbans mangrove, the most important ecosystem of the country will also be lost with a one-meter rise in sea level. Already, some islands such as Kutubdia and Sandwip, which dot the Bangladesh coastline have lost area due to erosion and sea-level rise.

The physical vulnerability of southern Bangladesh affects the country’s economy, as 20 percent of its territory forms the coastline and 30 percent is arable land. Agriculture is the main occupation in the country and accounts for almost 11.50 percent of Bangladesh’s GDP. The delta is also conducive to Hilsa fishing, as these marine fish migrate into the river channels during the spawning season. Besides agriculture, fishing is the other primary occupation in the country contributing 3.50 percent to the national GDP, of which Hilsa fishing alone makes up 1 percent

Naturally, with ample opportunities for both occupations, 29 percent of the country’s population lives along the coastline. This increases the disaster risk of the region, as a substantial section of the population are affected by natural calamities and the impacts of climate change, leading to large-scale displacement and compromised livelihoods. There is thus a crucial need for building disaster-resilient infrastructure and better connectivity linkages to harness the economic potential of this region, which explains PM Hasina’s call for foreign investments, in line with the government’s plans to develop the delta.

Developing the delta 

In 2018, the Government of Bangladesh published the Bangladesh Delta Plan (BDP) 2100; a comprehensive development strategy outlining holistic and cross-sectoral action needed to improve productivity and minimise disaster risks. Implementing this plan is necessary,  otherwise there would be declining agricultural production, increased unemployment, and migration, adding to the pressure of urbanisation and eventually causing a decline in the country’s GDP. This will in turn hinder Bangladesh’s plans to lose its Least Developed Country status by 2026, to end absolute poverty and graduate into a higher middle-income status by 2031, and eradicate poverty on the way to becoming a developed country by 2041.

However, the BDP with its investment estimated to be US$38 billion until 2030, requires public and private funding from various sources for its implementation. Bangladesh relies substantially on foreign assistance for its development. China as the country’s second-largest provider of foreign aid, is naturally a prospective source. However, China’s increased involvement in southern Bangladesh will bring it closer to the Bay of Bengal, fuelling India’s concerns.

Beijing in the Bay of Bengal 

As the second most populous country in the world and also the world’s second-largest economy, energy security is vital for China’s continued growth and development. This has made it necessary for Beijing to maintain and increase its presence in the Indian Ocean Region, particularly in the Bay of Bengal, with its rich repository of hydrocarbons and shipping routes traversing that are vital for energy trade.

The East-West Shipping route which passes along 8 nautical miles below the southernmost point of the Andaman and Nicobar Islands in the Bay before flowing into the nearby Strait of Malacca, is the primary conduit for the energy trade, carrying oil imports from the Middle East to the countries of Southeast, East and Fareast Asia. As of 2021, more than 70 percent of China’s energy trade passes and 60 percent of its entire trade flows move through the Malacca chokepoint, making it the most important shipping route for the Chinese economy. Naturally, in a future faced with energy insecurity, ensuring the security of this Strait has become cardinal for Beijing.

However, as the country does not have any inherent legal claims to maintain a presence in the Bay, it is trying to hold its sway, by strengthening ties with the Bay littoral countries. But as Beijing faces a trust deficit with New Delhi, Myanmar grapples with political instability and the Sri Lankan economy remains weak, Bangladesh remains China’s best bet to secure a foothold in this region. Not only is the country located in a unique geostrategic position at the peak of the Bay overlooking the shipping routes but is also driven by a developmental agenda open to foreign investments. Accordingly, China has invested heavily in Bangladesh’s maritime connectivity infrastructure, as well as in improving its naval defence.

The China Railway Major Bridge Engineering Group was behind the construction of the Padma Bridge, connecting Dhaka with southwest Bangladesh. Beijing is also involved in developing Bangladesh’s Chattogram seaport, which carries out more than 90 percent of the country’s overseas trade and is the busiest port in the Bay of Bengal region. China is also involved in developing the Mongla seaport with a government-concessional loan of US$400 million. As Chinese garment makers are seeking to shift their production bases to Bangladesh due to the rising cost of production in China, and the demands of brands for non-Chinese suppliersMongla is becoming important to China. This is because it is closer to Dhaka where the booming Ready-Made-Garment (RMG) industry has its offices and is hence more conveniently located for the garment trade.

Civilian initiatives aside, China has also built Bangladesh’s first submarine base the BNS Sheikh Hasina off the coast of Cox’s Bazaar in the Chittagong Division, potentially positioning Chinese submarines uncomfortably close to India’s Andaman and Nicobar Command. This adds a layer of complexities to the unfolding geopolitical dynamics of power rivalry in the Bay. China’s growing presence in the Bay of Bengal is indeed a cause of concern for India as it considers this maritime space as one of its primary areas of interest. It is acutely dependent on the Bay for its economic and security interests and foreign policy aspirations.

The prospect of China’s increased investments in southern Bangladesh, therefore adds to its apprehensions as China inches closer to India’s naval assets, and maritime interests in the Bay. Moreover, Bangladesh is one of India’s most coveted partners sharing multiple common resources, crucial to providing a sea link to its land-locked Northeastern territories and realising its Act East and Neighbourhood First policies. Sino-Indian competition has already marked several developmental projects in Bangladesh such as the Chattogram and the Mongla ports. However, China’s increased investments in the country have the potential to wean it away from India, as has happened in Maldives.

In such a situation, while the Hasina government is maintaining a balance between New Delhi and Beijing, India itself must also intensify efforts to bolster its relationship with Bangladesh. Addressing longstanding unresolved issues between the two nations such as the Teesta water-sharing issue is imperative. India can also help Bangladesh in realising the BDP as the two countries share the Bengal Delta and therefore are in a position to undertake collaborative initiatives to address shared concerns through ecosystem management. New Delhi’s acclaim in disaster management and Bangladesh’s adeptness at disaster preparedness and its consciousness towards climate change can further elevate this partnership.

  • About the author: Sohini Bose is an Associate Fellow at the Observer Research Foundation
  • Source: This article was published by the Observer Research Foundation

Observer Research Foundation

ORF was established on 5 September 1990 as a private, not for profit, ’think tank’ to influence public policy formulation. The Foundation brought together, for the first time, leading Indian economists and policymakers to present An Agenda for Economic Reforms in India. The idea was to help develop a consensus in favour of economic reforms.

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