Bangladesh formally joined the BRI in October 2016 when President of China Xi Jinping made an official visit to Bangladesh. BRI (Belt & Road Initiative) celebrates ten years of its founding anniversary this year, the milestone coincides with seven years of Bangladesh’s involvement with this defining initiative of the twenty-first century.
Following the signing of the MOUs during his visit, President Xi stated “We agreed to elevate China-Bangladesh ties from a comprehensive partnership to a strategic partnership”. On her part, the Prime Minister of Bangladesh Sheikh Hasina mentioned “Bangladesh is willing to actively work with China within the framework of the BRI, and support building an Economic Corridor linking the BCIM so as to push forward development in various fields such as investments, agriculture, transport infrastructure and connectivity”. Looking back, over the past seven years considerable progress has been made to take the partnership forward in line with the aforesaid statements by the two leaders.
The five pillars of BRI are: Facilitating Connectivity, Unimpeded Trade, Financial Cooperation, People to People Connectivity and Policy Coordination. As may be recalled, deals worth about USD 40.0 billion were signed at the time of President Xi’s visit, with investment projects of both Government to Government and joint ventures types. The various projects that have already been implemented and are planned to be implemented, fall under many of the aforesaid pillars of cooperation. These projects are being implemented in Bangladesh with financial, technical and implementational support from China.
Many Chinese construction companies are involved. The projects include transport and infrastructure,development and modernisation of information and communication technology (ICT), strengthening of power system network and enhancement of public utilities such as Dasherkandi Sewage Treatment Plant which is the largest in South Asia as also many others.
These infrastructures are critically important for Bangladesh’s sustainable economic development and well-being of its people. For example, the 170 km rail line over the Padma multi-purpose bridge which connects the capital Dhaka with 20 southern districts of Bangladesh is a vitally important transport connectivity project that will help bring Bangladesh under a unified rail and multimodal connectivity network; the distance between Dhaka and the end point (Barishal) will be reduced significantly.
Peoples travel time will come down significantly, cargo movement will be facilitated and marketing and distribution of products will be speedier. The rail line will be a key component of multi-model connectivity not only for Bangladesh but also will link Bangladesh with the Trans-Asian Transport network.
Built with Chinese finance (60 percent, with rest coming from Bangladesh government) and by Chinese companies, the rail link, in conjunction with the recently built bridge over the river Padma (built with Bangladesh’s own finance), is expected to be operation in 2024. The rail line will play an important role in realizing the potentials of the planned special economic zones to be built in southern part of Bangladesh.
Chinese experts, engineers and workers are helping Bangladesh to build many of these infrastructures. Chinese Exim Bank, the Asian Infrastructure Investment Bank and New Development Bank are helping Bangladesh to access the much needed credit.
Yet another project being implemented is the tunnel under the river Karnaphuli in the south, the first of its kind in South Asia. The tunnel will connect the Korean Export Processing Zone, Dhaka-Chattogram-Cox’s Bazar Highway, and the Chattogram airport and will also be part of the Asian Highway. The tunnel will facilitate connectivity with Bangladesh’s first deep sea port being built in Matarbari in the south. The Dhaka-Ashulia Elevated Expressway is yet another important transport link being built with Chinese support which will significantly ease the prevailing traffic congestion in the Dhaka city.
The power system and Power Grid Network projects being built with Chinese support will help Bangladesh to ensure energy security, while the support for Telecom and ICT Network projects will enable Bangladesh to access the benefits of the twenty-first century ICT as also the fourth industrial revolution (4IR).
The nine mega-projects under construction in Bangladesh at present, with about USD 10.0 billion credit support from China, will help attract domestic and foreign investment to Bangladesh, generate employment, strengthen competitiveness and help earn foreign exchange through export. It is important that these projects are built in a cost-effective way and put into operation in a timely manner so that the Bangladesh economy could reap maximum benefits from these investment and the expected rates of economic and financial returns areassured.
When completed, these projects will play an important role in Bangladesh’s development through triangulation of transport-logistics connectivity, investment connectivity and trade connectivity.
While the highly promising BCIM-Economic Corridor Project is for now halted, there is a potential opportunity for Bangladesh to take advantage of the transport networks being built with help from China in Myanmar, and by India in Bangladesh (with support of the three lines of credit offered by India).
All these together will strengthen Bangladesh’s multimodal connectivity which is expected to help the Country to translate its comparative advantages into competitive advantage. These will play an important role in view of Bangladesh's strategy to deepen regional and sub-regional cooperation in Southern Asia.
Over the recent past years, Sino-Bangladesh bilateral relationship has also branched out into many new areas. Many Bangladeshi students are studying in Chinese institutions for higher studies, thanks to scholarships provided by the Chinese government. Various exchanges between the two countries involving policymakers, business people, investors and academics of the two countries have seen notable rise in recent years.
China continues to remain by far the largest source of import for Bangladesh (about USD 25.6 billion). However, Bangladesh’s export to China has remained dismally low, at less than USD 1.0 billion in spite of the duty-free, quota-free preferential treatment accorded by China for almost all exports from Bangladesh.
Going forward, Bangladesh will need to strengthen its supply-side capacities to take advantage of the more than USD 2720.0 billion worth of annual import market of China. It is crucially important to ensure that Bangladesh is able to generate the expected income from the Chinese projects to meet the debt servicing liabilities, in time and with ease.
This will be possible if, thanks to the Chinese projects in Bangladesh, investment is stimulated, economic activities are boosted, income earning opportunities are created and government’s revenue earning projections are realized. In this regard, attracting Chinese investment to Bangladesh, which is able to take advantage of the infrastructures being built with Chinese support, can play an important role.
If the supply-side capacities created by the Chinese investment enable Bangladesh to access the Chinese market with competitive strength thanks to preferential market access offered by China, this will help bring down the existing bilateral trade gap the large size of which is a concern for Bangladesh.
As BRI crosses the milestone of its first decade, one hopes that Bangladesh-China bilateral relationship will deepen over the the next decade, to the benefit of our two economies and our two people.
Bangladesh at present stands at a crossroads. Diversified bilateral cooperation with China can potentially be a key driver if Bangladesh is to reap the benefits of its geographical location as an important gateway to the Bay of Bengal, by deepening regional cooperation with countries in its neighbourhood. Bilateral relationship with China could be a game changer and play a defining role in this connection.
[Professor Mustafizur Rahman is a Distinguished Fellow at the Centre for Policy Dialogue (CPD)]