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Between big brothers China and India

  • Published at 08:02 am June 22nd, 2018
  • Last updated at 02:43 pm June 23rd, 2018
Where does Bangladesh fit in? REUTERS

How does Bangladesh stand to gain from India and China’s rivalry?

“India should not be worried about Bangladesh’s close ties with China; the cooperation is meant only for development,” reassured Bangladesh Prime Minister Sheikh Hasina while speaking to a visiting delegation of Indian journalists recently.

Statements of this kind from Bangladesh’s leader point to a new reality for the country, where balancing two of Asia’s rising powers is slowly becoming the diplomatic mainstay. As the strategic rivalry between India and China intensifies, Bangladesh increasingly finds itself embroiled in a great game along the Indian Ocean region.

Bangladesh’s importance in the strategic calculations of India and China stems not only from its pivotal geographical location on the Indian Ocean -- Bangladesh is one of the fastest-growing economies in the region and the most populous Least Developed Country, and it recently became eligible to graduate to developing country status by 2024.

Development -- both physical (large-scale infrastructure and military capabilities) and social (human resources and services) -- is likely to remain a central national priority for Bangladesh in the coming decades. Therefore, Bangladesh is keen to leverage exposure from the great China-India connectivity rivalry.  

China’s foray into South Asia -- generally considered to be India’s diplomatic backyard -- is relatively new. Apart from long-lasting ties with Pakistan, China’s economic engagement with South Asian countries only began in the last two decades. In this short period of time, China has emerged as a top trade partner in the region.

In 2005 China overtook India as Bangladesh’s principal source of imports, most notably in defense trade (SIPRI Yearbook 2017). Bangladesh is now the second-largest importer of Chinese arms in the world after Pakistan.

During Chinese President Xi’s visit to Bangladesh in 2016, his country offered a gargantuan $24.45 billion to Dhaka in bilateral assistance for infrastructure projects. This amount, along with an earlier $13.6bn investment in joint ventures, brings Chinese investment in Bangladesh to a total of $38bn, the largest sum ever pledged to Bangladesh by a single country.

But, out of the three promised Belt and Road Initiative (BRI) mega-projects in Bangladesh, only one -- the $1.65bn Payra coal power plant -- is under construction. The Dhaka-Jessore rail line is still in the planning phase while the Karnaphuli underwater tunnel has just started.

Despite slow disbursements, these overtures were lucrative enough to encourage Bangladesh to formally voice support for Xi’s flagship BRI. More recently, China purchased a 25% stake in the Dhaka Stock Exchange, outbidding the Indian offer and expanding the sphere of power rivalry from hard infrastructure to financial assets.

All this is bad news for India, which has formally opposed BRI already. The fear of Chinese encirclement -- both in the Indian Ocean through the “string of pearls” ports and overland through the BRI economic corridors in Pakistan and Myanmar -- has prompted India to establish its own connectivity initiatives such as the Kaladan project with Myanmar and the North-South Transport Corridor with Russia.

As the India-China rivalry ramps up, Bangladesh is gradually becoming a key battleground, featuring prominently in the Modi government’s counter-China policies like “Act East” and “Neighbourhood First.”

Hence, Bangladesh cozying up to China is understandably causing jitters in India, which has enjoyed exceptionally good relations with Bangladesh since Prime Minister Sheikh Hasina’s Awami League (AL) government came to power in 2009.

Hasina’s pro-India foreign policy was initially fruitful for both countries, strengthening security cooperation, and resolving long-standing bilateral glitches such as maritime and land boundary disputes.

But India’s domestic political opposition stymied Bangladesh’s long-anticipated Teesta water sharing treaty. As a result, there is now a strong sense within the Bangladeshi intelligentsia that the relationship with India is non-reciprocal.

This feeling further intensified during the 2017 Rohingya refugee crisis, when India deliberately supported the Myanmar government’s controversial approach towards the persecution of the Rohingya and failed to provide any meaningful diplomatic assistance to Bangladesh, which received more than 700,000 refugees.

In the end, China came to Bangladesh’s partial rescue by brokering a rather weak repatriation deal with Myanmar. The agreement has not yet been properly implemented, of course. But this diplomatic intervention demonstrates China’s ambition to undermine India’s position as a regional influencer.

For Bangladesh, India’s weakened position in the region could bring unexpected boons. Hasina has successfully snubbed any domestic critics accusing her of giving into India’s infringements on Bangladesh -- a popular anxiety that runs deep through Bangladeshi society.

By representing China as one of several infrastructure development partners along with Japan and South Korea, and simultaneously maintaining India as a silent international backer, the Hasina government is tactfully leveraging Bangladesh’s position in the face of a China-India strategic rivalry.

Bangladesh is deeply aware that both India and China will be primarily self-serving in their investments in the country. One way of getting the most out of the India-China competition is to remain elusive with respect to showing preference between the two giants.

Maintaining healthy working relations with both India and China is crucial for an economically and infrastructurally weak Bangladesh.

In the future, if the India-China strategic rivalry intensifies, it will have significant consequences for Bangladesh. For now, though, Bangladesh is likely to continue its balancing act.

Ishrat Hossain is a doctoral candidate in International Relations at the University of Oxford.

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