Thoughts on a decade of Chinese investment in Bangladesh's development

It has been almost 10 years since Bangladesh participated in the debate on the Belt and Road Initiative (BRI) from China. The nation has seen a lot of changes in its politics, economy and foreign policy in this time. However, the talk on the BRI continues. For some, it is the dawn of new opportunities for Bangladesh's infrastructure development, and for many others, it's reflection of China's geopolitical strategy in its longer-term approach. The question has become more significant than ever- whether Chinese investment has created an opportunity to develop in Bangladesh or not.

In 2016, Chinese President Xi Jinping visited Dhaka. It was through this visit that Bangladesh officially became part of the BRI. The bilateral relationship was then upgraded to a "Strategic Partnership of Cooperation" and fresh opportunities for Chinese investment in Bangladesh were announced at the time. This was hoped to be a positive development for a country that had traditionally been plagued by a lack of infrastructure.

The construction of the Padma Bridge Rail Link, the Karnaphuli Tunnel, the railway line from Chattogram to Cox's Bazar, the Payra Thermal Power Plant, the Chattogram Elevated Expressway, and Dasherkandi Sewage Treatment Plant have all emerged as a visible representation of the country's development. These projects are especially contributing to economic activity, especially in the transport and energy sectors.

Investment in infrastructure is very important for a developing country like Bangladesh. After independence there had been less investment made in railways, power, ports and roads. Of course, proposals from an economic giant such as China were very appealing. As part of the BRI, Bangladesh received the chance for quick infrastructure development and has seen tangible improvements in some areas. The country's internal connectivity has also improved, which has increased the country's potential for trade, commerce and industrialization.

But there seems to be a downside to the BRI pledges. China had pledged to provide about US$40 billion in investment to Bangladesh but only a fraction of the promised investment has been released. Numerous projects have been languishing, some have been called back in consideration for cost escalation, and others have been canceled completely.

The economic capacity was one of the reasons behind cancelling the Sonadia deep-sea port project, while the Dhaka-Chittagong high-speed rail project was suspended for the same reason. In other words, Bangladesh did not accept the Chinese proposals without any condition, rather, it had to take decision according to its political and economic situation.

One of the contentious issues over the BRI is the term "Chinese debt trap". Many analysts have raised concerns about Bangladesh's potential for going down the Sri Lanka route of Hambantota Port. They say the Chinese debt may at some time erode the economic strengths of Bangladesh and allow China to gain control of strategic assets.

But, a study on the nature of Bangladesh's debt indicates that this apprehension is not entirely justified. The biggest lenders to the Bangladesh government are the World Bank, the Asian Development Bank and Japan, while the Chinese government is a major lender, but not a top one. Furthermore, Bangladesh has never requested any debt restructuring from China and has always paid back its debts. It is , therefore, premature to label Bangladesh as being in a "debt trap" as this does not seem to be the case, at least at this point of time. But, on the other hand, the long-term economic burden of big infrastructure projects is a very important question and factors like inefficiency in the implementation of such projects may lead to future risks.

The second important issue is if the BRI will only be an economic project, or a component of China's geopolitical agenda. India has long been worried about China's increasing presence in the Bay of Bengal and the Indian Ocean region, while the U.S. is no exception. The developments in Bangladesh's seaports, connectivity networks, and infrastructure could be seen as a part of China's strategic expansion in the country. In particular, the following are some international analyses that have discussed any possible strategic applications of projects such as the Karnaphuli Tunnel and Payra Port and port developments.

In the reality of Bangladesh's foreign policy, however, it is not the case. Bangladesh has been promoting the policy of "friendship towards all, malice towards none" since independence. Though Bangladesh maintains close economic and military relationship with China, it is not a part of any military alliance. Likewise, it has been hesitant to engage in close military ties with the United States. Bangladesh is not interested in allowing any country like India, China or the US the right to use its territory in a military capacity. But in the future, the fear that BRI's infrastructure could fall into the hands of the Chinese military has not materialized. So far, it is a political reading.

Balancing is all important for Bangladesh. China's statecraft is multifaceted, involving economic cooperation as well as maintaining relations with India, Japan, Europe and Western powers. Connectivity projects such as Matarbari in Bangladesh, India connectivity projects and help from international financial institutions have helped Bangladesh avoid reliance on any one power. Rather, the nation is making an effort to take advantage of its competitive international environment for its own growth.

There are, however, great challenges ahead. Promoting the economic viability of large infrastructure projects, prevention of corruption and speeding up project implementation are immediate concerns. Concurrently, exercising caution in debt management will become crucial for Bangladesh. Even keeping a balance in the face of geopolitical rivalry will be challenging; given the growing tension between China, India, and the US in South Asia and Indo-Pacific, it is only likely that Bangladesh could receive more diplomatic pressure.

There is no doubt that the BRI has brought concrete opportunities for Bangladesh's growth but it has also brought new strategic realities. Thus, caution must be used. Bangladesh is not a country under China's sphere of influence yet. Instead, it is working hard to be a strategically independent state which can take opportunities for development. If this balance is sustained in the future, the BRI can prove to be a real means of development for Bangladesh. Otherwise, it could also become a source of new economic and political challenges.

Humayun Ahmed Shrabon is a research fellow at the Centre for Euro-Asian Studies, Portugal