In the years following the 2014 elections, the Awami League government focused on several key areas to promote the nation's development with the assistance of foreign development partners. Major infrastructure projects were launched to improve communication, connectivity, energy, and exports. After 10 years, people have started enjoying the benefits of the developed infrastructure. However, the economic and infrastructural development trend initiated by the Awami League government gradually faded due to inconsistent bilateral relations and a lack of understanding of foreign partners' policies before and after the 2024 general election.
The opposition party, BNP, lobbied Western countries to hold general elections under a caretaker government, which was abolished through the 15th amendment of the constitution. Since the beginning of 2023, the United States, United Kingdom, and other EU countries have pressured Prime Minister Sheikh Hasina to ensure free, fair, and participatory elections. The former U.S. Ambassador, Peter Haas, led this Western bloc. Additionally, Bangladesh was invited to join the Quadrilateral Security Dialogue (QUAD), a point emphasized by U.S. Under Secretary for Civilian Security, Democracy, and Human Rights, Uzra Zeya, during her pre-election visit. The ruling party took a cautious stance, considering QUAD's opposition to China, one of Bangladesh’s largest development partners. Meanwhile, the Chinese Ambassador to Bangladesh clearly stated China's position of non-interference in Bangladesh's internal issues but kept continuous support to the ruling party. The Organization of Islamic Countries (OIC) and the Russian Federation also maintained a similar stance.
For the Bangladesh Awami League, India represented a key partner for strong political support to counter the United States before the general election. In return, India secured its interests by obtaining authorization from Bangladesh to use of Chattogram and Mongla ports for cargo transit and transshipment to India's northeastern states. The ruling party also effectively managed the India boycott movement that had developed in Bangladesh before the election.
Prime Minister Sheikh Hasina's consecutive visits to India in June this year, various national and international media have observed that while the 10 MoUs and 13 declarations between India and Bangladesh signify strong bilateral cooperation, but they did not result in any significant financial support for Bangladesh, which remains a pressing need at this time. The opposition criticized the ruling party, accusing it of compromising national interests by providing railway transit and transshipment facilities to India. Besides, Bangladesh also joined the Indo-Pacific Oceans Initiative (IPOI) as per the announcement which also bears the same interest as QUAD.
After the general election, the Chinese Ambassador was among the first to congratulate Prime Minister Sheikh Hasina on her victory. As one of Bangladesh's momentous development partners, China had expected that Prime Minister Sheikh Hasina would visit China before visiting India but unfortunately it was not happened. Additionally, after her state visit to India, Bangladesh's engagement in the Indo-Pacific Oceans Initiative (IPOI), and the reconsideration of Chinese-supported projects such as the Teesta River Restoration and Management Project and Mongla Port modernization, have led China to thoughtfully reassess its foreign policytowards Bangladesh.
Before the Prime Minister's state visit to China, the Economic Relations Division (ERD) sent a list of 12 projects on June 13, 2024. Prior to this, a delegation of ERD officials visited China to discuss new and existing grant projects. The primary focus of this visit was on a new infrastructure development project and a $5 billion soft loan that the Bangladesh government requested from China to boost foreign currency reserves and pay import bills. The ERD held an inter-ministerial meeting, following a recommendation from the Ministry of Commerce, to understand the advantages and disadvantages of the loan. Before the visit, it appeared that Bangladesh was overconfident and optimistic about receiving the USD 5billion in yuan from China without fully understanding Chinese policies and financial systems.
According to recent experiences from Pakistan and Hungary, China does not provide concessional loans as budget support. Instead, a Chinese commercial bank and the bank of the beneficiary country negotiate to determine the terms and conditions of the commercial loan. In 2024, Hungary borrowed 1 billion euros from the China Development Bank, the Export-Import Bank of China, and the Hungarian branch of the Bank of China. This amount was fully drawn on April 19 and must be repaid within three years. Similarly, in March 2023, the Industrial and Commercial Bank of China Limited approved a rollover of a $1.3-billion loan for Pakistan, which will help replenish its depleting foreign exchange reserves. Therefore, without understanding the policy, and previous cases, and without involving the commercial channel of both countries, such an offer was unreasonable for Bangladesh and embarrassing for China.
The state visit of Prime Minister Sheikh Hasina to China did not meet expectations. Aside from a few grant projects and a Memorandum of Understanding (MoU) on a G to G PPP framework, the outcomes of 20 MoUs and 7 declarations will not immediately alleviate Bangladesh's economic crisis. Additionally, China is likely displeased with Bangladesh for stalling a Chinese-supported project due to invisible reasons, joining the Indo-Pacific Oceans Initiative (IPOI) and the Colombo Conclave, and remaining silent on Beijing's proposals to join the Global Development Initiative (GDI), the Global Security Initiative (GSI), and the Global Civilization Initiative (GCI).
The recent quota reform movement has placed the government in a difficult position, even though this valid issue could have been addressed earlier through discussion. However, it appears that responsible officials around the Prime Minister did not effectively communicate the gravity of the situation, leading to the government’s overconfidence in handling it. The outcomes of the visit to China are also believed to be affected for the same reason. Consequently, the investment environment in Bangladesh has been significantly hampered, and fitch has downgraded the country’s sovereign credit rating. Additionally, Bangladesh’s deficiency to maintain balanced diplomacy between China and India will likely have a serious impact on foreign direct investment from China.
China is increasingly becoming a focal point in discussions among Muslim countries. An agreement between Saudi Arabia and Iran to enhance bilateral relations has involved Chinese mediation, while Palestinian groups signed a "national unity" agreement in Beijing to manage Gaza following the end of Israel’s attack on the region which reshaped the image of China among the Muslim community around the world. Therefore, complexing bilateral relations with China will not bear any fruitful economic advantage for Bangladesh.
To restore and strengthen the bilateral relationship between China and Bangladesh, both nations must collaborate closely to understand each other's policies. Chinese-funded development projects should be approved by the Bangladeshi government without any external influences. Project selection should be prioritized by Bangladesh's full autonomy and ensure policy support from China. Budget discussions should initiate through commercial channels, reflecting recent examples like Hungary. The G2G PPP framework should be leveraged to attract Chinese FDI for new projects. Additionally, the full-scale operation of the Chinese economic zone should be expedited. Bangladesh should uphold the foreign policy of Bangabandhu Sheikh Mujibur Rahman: "Friendship to all, malice towards none."
Nasim Mahmmud
Executive Director of Centre for East Asia Foundation, Bangladesh
