Managing Chinese influence in S Asia

Since 2020, China has allowed 97 per cent of Bangladeshi goods duty-free access to its domestic market. Simultaneously, it is helping the country to diversify its export base and move its industry up the value chain. This becomes all the more significant when you consider that China is not among Bangladesh's top ten export partners.

Bangladesh is not alone. Over the last decade, moves like these have indicated a deepening engagement between China and countries in South Asia such as Maldives, Nepal, and Sri Lanka. In fact, China's economic and political footprint has expanded so quickly that many countries, even those with relatively strong state and civil society institutions, have struggled to grapple with the implications. This reflects China's involving itself in domestic political developments in these countries, actively pursuing building people to people relations, and even stepping in to influence how it is portrayed in the media in these countries.

Carnegie Endowment for International Peace, an international think-tank, has launched a project titled "China's Impact on Strategic Regions" to understand the effect of such engagement and is based on sharing of experiences across national boundaries by dozens of influencers with deep local knowledge. The study found that Chinese engagement leaves a deep impact on the institutions, civil societies, and elites of partner countries. The effect is higher in aspects of state and society that are already under duress.

A critical understanding of the drivers of this engagement -- the various forms it has taken, and its impact on South Asian countries -- has been largely missing from the discourse, which is punctuated by broad-based assumptions such as allegations of debt trap diplomacy. In reality, however, in a multidimensional region like South Asia, each of these relationships - in Bangladesh, Maldives, Nepal, and Sri Lanka are unique. 

In Bangladesh, while procurement of military hardware and development assistance were the initial drivers of the relationship, China has used many other avenues to expand its influence. A major driver has been the business to business relationship, with the two countries regularly holding matchmaking exercises through trade bodies like the Bangladesh-China Chamber of Commerce and Industry. 

However, this has also meant that for every instance of successful partnership as in the case of the Padma Multipurpose Bridge, there is an instance of a Chinese firm being accused of bribery; or for every instance of Chinese companies assisting to improve infrastructure in schools, there is concern over labour rights in projects handled by Chinese contractors.

Significantly, we found that contrary to popular discourse, partner countries such as Bangladesh wield considerable agency, learning from their experiences and that of others in the region. This is reflected in weighing all available options before accepting Chinese proposals -- as in the case of projects such as the Joydebpur-Ishwardi rail-line expansion, or the Akhaura-Sylhet dual gauge project -- to ensure that project costs are not unreasonably high.

For all their uniqueness, as developing states, the common and overwhelming motivation for the countries under study is the quest to partner with countries that can help develop their economy, improve their infrastructure, and help the citizens meet their ambitions of a higher standard of living. They will engage the United States, China, or anyone else that can best assist them in realising these goals.

In this scenario, the challenge for the United States and its partners is to develop a policy that consistently and productively engages South Asian countries on their developmental needs. It follows that such engagement should be based on its own merits, delinked from how the countries choose to engage with China.

The decision at the Quad summit in March 2021 to focus on vaccines, emerging technologies, and climate is a productive step in this direction, as is the Build Back Better World initiative, announced at the June 2021 meeting of G7 leaders. Together with the Blue Dot Network, it has the potential to offer the kind of engagement these states seek.

As countries in South Asia graduate to lower middle-income status, they are likely to require assistance in dealing with a new reality where they are ineligible for much of concessional financing. The United States could use its influence in Western multilateral organisations to ease the transition and help these states develop the capacity to access alternative avenues for assistance.

Beyond state institutions, there is scope for partnership with other organisations. Media outlets and civil society organisations in all four countries have been focusing on questions of good governance - from their regimes' human rights records to opacity in Chinese contracting practices. Building their capacity, over time, will lead more stakeholders in these countries to see the dangers of opaque deals and ignoring environmental and other concerns.

Deep Pal is a visiting fellow in the Asia Program at Carnegie Endowment for International Peace.

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Saheb Singh Chadha is a research assistant and project coordinator in the organisation.

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