China has also established itself as the largest trading partner of Bangladesh. The total volume of trade between the two countries in 2019 stood at around $18 billion. Trade between India and Bangladesh amounted to about $10 billion.
by Anita Inder Singh
Isn’t it surprising and unusual for a ‘leading’ power’s economic performance to be worse than that of its friendly smaller neighbours? And somewhat worrying or startling as well, when a small neighbour is courted by both China and the US?
Those are among India’s current concerns as it faces competition from China in its neighbourhood, especially in Bangladesh. So for how long can India be styled as the pre-eminent South Asian power in the area around its territorial waters in the Indian Ocean, especially as it fails to match the investment offers made by a hostile, economically and militarily advancing China to a friendly country next door?
News that the GDP per capita – $1,887.97 – of Bangladesh, which was created out of a civil war with Pakistan with India’s help in 1971, will edge past India’s $1,876.53, is a reason to ask the BJP government this inconvenient question. All the more so since small, neighbouring Sri Lanka’s GDP per capita – around $ 4,000 – is already twice that of India.
Moreover, all of India’s neighbours are on board China’s Belt and Road Initiative (BRI). Traditionally and geographically not an Indian Ocean power, China, now the world’s second most powerful country, is expanding its influence in India’s neighbourhood in the Indian Ocean.
Even as India offended Bangladesh over the last year by its impolite and impolitic stance on matters as varied as labelling Muslim immigrants from that country as “termites”, directing its Citizenship (Amendment) Act against real or imagined illegal immigrants from there and suddenly stopping the export of onions to a friendly neighbour, Bangladesh was being wooed by China.
Bangladesh joined the BRI in 2016. Since then China has emerged as the largest foreign investor there. Its investments amount to $26 billion, its funding commitments to about $38 billion. Total Indian investment in Bangladesh is currently around $3 billion. Evidently China has invested far more there in four years than India.
China has also established itself as the largest trading partner of Bangladesh. The total volume of trade between the two countries in 2019 stood at around $18 billion. Trade between India and Bangladesh amounted to about $10 billion.
Bangladesh has trade deficits with both India and China. But China offered zero tariff treatment to 97% of Bangladesh’s exports last July. Beijing has also shown flexibility when corruption and the “debt trap” have threatened BRI projects. In 2018 Bangladesh threw out a Chinese road project to develop the 226 km Dhaka-Sylhet road, in part because of bribery by the state owned China Harbour Engineering Company, which was awarded the contract to widen the highway.
More recently, on October 4, China’s President Xi Jinping averred that he stood “ready with Bangladesh leaders” to better align the two countries’ development strategies and jointly promote the BRI to take their strategic partnership “to new heights”. Those strategic heights could be uncomfortably high for India: Bangladesh buys more than 70% of its weapons from China.
China’s main interests in Bangladesh are not roads but access to its strategically located ports – Chittagong and Mongla – on the Bay of Bengal. Wanting to transform Bangladesh into a hub of regional trade and connectivity, Dhaka gave access first to India, and then, a few weeks later, to China in the autumn of 2019. Together with its access to deep water ports in Sri Lanka, Myanmar, Pakistan and Djibouti, the use of Chittagong and Mongla could empower China to add to its ‘string of pearls’ in the Indian Ocean.
At another level, India’s indecisiveness since 1983 has also facilitated the expansion of China’s economic clout in Bangladesh. Dependent on rivers that flow into the country from India, Dhaka tried but failed to secure a water sharing agreement with New Delhi over the Teesta river. Recently it turned to China for a loan of $1 billion for projects that will help it to manage water levels of the Teesta during the drought season. Doubtless, the loan will enhance Beijing’s influence in Dhaka.
Bangladesh sees its strategic position in the Bay of Bengal/ Indian Ocean area making it a bridge between seven littoral states and increasing its strategic importance to India, China – and America. Located at the northeastern tip of the Indian Ocean, the Bay is bounded by the coastlines of Bangladesh, India, Indonesia, Malaysia, Myanmar, Sri Lanka and Thailand.
25% of the world’s traded goods, including oil and gas, traverse its waters, providing energy hungry countries including China with a route to securing energy. Large untapped reserves of oil, gas and minerals could attract investment from India, China and Japan.
As Washington tries to activate its Indo-Pacific strategy, the Bay could become a contested area. Deputy secretary of state John Biegun will visit Dhaka during his South Asian visit in late October. He envisages Bangladesh as “a centrepiece of our work in the region”, not least because of its strong emphasis on stable, private sector led growth.
New Delhi must contend with three realities. If India wants to enhance its influence and counter China’s in the Bay of Bengal it must keep the promises it makes to Bangladesh. A stronger American presence in the Bay could ward China off. But then, the US will prioritise its own interests in the area rather than those of an India which seems unable to accelerate the progress essential to maintain a free and open Indo-Pacific.
The writer is a Founding Professor of the Centre for Peace and Conflict Resolution, New Delhi. A version of this article first appeared in Times of India
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