(Credit: Xinhua News Agency/Getty Images)

By Atif A. Choudhury

Recent trade concessions by Beijing to Dhaka have fueled significant speculation about developments in the Sino-Bangladesh relationship, with several observers suggesting that Dhaka is “pivoting” towards Beijing and away from Delhi.

Outstanding Issues in the Dhaka-Delhi Relationship
Such framing is largely fueled by the ongoing tension points in the Delhi-Dhaka relationship. Among the most critical of these bilateral issues include:

Dhaka’s more recent concerns include Delhi’s support for the Myanmar government during their 2017 military campaign against ethnic Rohingya insurgents and communities, which drove almost 750,000 Rohingya refugees into Cox’s Bazar—one of Bangladesh’s least developed and under-served districts. Additionally, Dhaka fears that Delhi will use the National Register of Citizens to “push” the poorer segments of Indian Muslim citizens without documents into Bangladesh.

Dhaka’s two most indispensable bilateral relationships
These challenges have resulted in some outlets framing recent developments of Sino-Bangladesh ties as a “pivot” away from Delhi and towards Beijing. Yet, the premise of this notion has two major flaws. First, despite the aforementioned tension points in the Dhaka-Delhi relationship, Bangladesh remains dependent on Delhi for its energy needs and water security. Additionally, the massive military imbalance in favor of India, along with obvious geographic realities, means it is incumbent on Dhaka to avoid being with hostile terms with Delhi in order to guarantee Bangladesh’s security. Thus, it is unlikely that Dhaka—including any successive governments—would ever be able or inclined to truly “pivot” away from Delhi to Beijing or any other power. This reality is reflected by the fact that despite media reports claiming Prime Minister Sheikh Hasina refused to meet with the Indian High Commissioner, Dhaka went out of its way to state that they did not receive such a request, and that PM Hasina has not directly met with any other diplomats due to COVID-19 protocols.

Second, a “pivot” is not truly applicable given that Dhaka has long maintained deep ties with both Delhi and Beijing, and is very unlikely to change its “friends-to-all” approach to foreign policy. Indeed, since China recognition of Bangladesh in 1976, Dhaka’s two most vital bilateral relationships have been with both Beijing and Delhi. Despite overall FDI in Bangladesh falling by somewhere between 20.46% and 55.8% in 2019, Chinese FDI was valued at $1.16 billion that year. As of January 23, 2020, Indian FDI in Bangladesh was valued at approximately $3.11 billion. Both Indian and Chinese companies have been heavily involved in a range of infrastructure projects including seaports, airports, power stations, and bridges and remain indispensable to Dhaka’s goals of sustaining economic growth in order to further its regional ambitions. Dhaka’s ties with both Delhi and Beijing are almost surely to remain the nation’s two most indispensable bilateral relationships for the foreseeable future.

Longstanding Dhaka-Beijing Ties
Rather, Dhaka’s relationship with Beijing should be viewed in its own right. China has had one of the biggest economic and defense footprints in Bangladesh for several decades. In addition to China serving as the top source of FDI and infrastructure development in the country, Bangladesh is the second-largest importer of Chinese military equipment after Pakistan. Indeed from 2008-2018, Chinese military exports to Bangladesh represented 71.8 percent of Bangladesh’s military acquisitions. A tension point is the unbalanced trade relationship between China and Bangladesh. Indeed, like Bangladesh’s trade balance with both India and Pakistan, there is a significant trade deficit between Bangladesh and China. In 2018-2019, China-Bangladesh trade was valued at $18 billion, with the bulk consisting of Chinese exports to Bangladesh. Yet in recognition of Dhaka’s longstanding concerns about this deficit, China has recently agreed to include Bangladesh with a list of 40 other “least developed countries” in of a tariff exemption for 97% of Bangladeshi exports. This will result in approximately 8,200 products having duty-free access to the Chinese market, although whether it will substantially reduce the trade deficit remains to be seen.

Contextualizing Dhaka-Beijing Developments with Beijing’s South Asia and BRI Strategy
Beijing’s overtures to Dhaka seem to be a part of Beijing’s broader strategy of strengthening ties with India’s neighbors, especially in the backdrop of significant ongoing tensions between China and India in the Ladakh-Aksin Chai border region. Indeed, both sides reinforcing their troops along the line of actual control, with the restrictions against the use of firearms by Indian troops reportedly lifted. On the geopolitical front, Beijing has recently been ramping up its engagement with both Afghanistan and Nepal. On July 27, Chinese Foreign Minister Wang Yi hosted a quadrilateral meeting with the foreign ministers of Pakistan, Afghanistan, and Nepal on COVID-19 response and boosting economic recovery.

Additionally, Bangladesh remains one of the most critical participants in China’s Belt and Road Initiative. Dhaka is well-aware of its strategic importance to Beijing given its position in the Bay of Bengal, as well as Beijing’s concerted efforts to maintain ties with BRI countries (particularly in Asia, Africa, and Latin America) as the COVID-19 pandemic continues unabated in virtually all of these countries. Indeed in the African continent alone, there have been 945,104 confirmed cases and 19,975 confirmed deaths. Thus, Bangladesh’s push for greater trade concessions can be contextualized by many Belt and Road Initiative countries’ push for such concessions, such as increased medical, humanitarian and development aid and debt restructuring. As the COVID-19 crisis continues to hammer these countries’ health systems and economies, it also gives these nations perhaps the best bargaining position they’ve had with Beijing. What additional concessions Bangladesh and other BRI countries can secure from Beijing in trade, investment, development, and defense remains to be seen. Both Delhi and Washington will continue to monitor the latest phase of China’s South Asia and BRI strategies with keen interest.