PRC Seeking to Boost Ties with Bangladesh After Hasina’s Demise

Executive Summary:

• The fall of Sheikh Hasina, Prime Minister of Bangladesh, in August has presented an opportunity for Beijing to strengthen ties with the more pro-China Bangladesh Nationalist Party (BNP) and Jamaat-e-Islami Bangladesh (JIB). The People’s Republic of China (PRC) aims to solidify its influence in Bangladesh, particularly as it competes with India for regional dominance.
• After Hasina was ousted following the “Monsoon Revolution” protests, the PRC swiftly engaged with Bangladesh’s new potential political leadership, positioning itself to capitalize on deeper bilateral relations regardless of political changes in Dhaka.
• The PRC has historic ties to Bangladesh’s defense establishment and has provided 72 percent of its military equipment. The modernization of Bangladesh’s military under the “Forces Goal 2030” offers the potential for increased arms imports between the two countries.
• The PRC remains the largest trading partner of South Asia’s second-largest economy and plays a crucial role in the country’s infrastructure projects. It also promotes the use of Renminbi in bilateral trade.

On August 5, 2024, Prime Minister Sheikh Hasina of Bangladesh was forced to step down after student protests became what is now referred to as the “Monsoon Revolution.” These demonstrations began shortly after Hasina visited the People’s Republic of China (PRC) in early July (MFA, July 10). Since her demise, PRC ambassador to Bangladesh Yao Wen (姚溫) has been quick to launch a diplomatic campaign among the country’s political elites (Global Times, September 3). Yao, the PRC’s top envoy in Dhaka, has met with the Chief Advisor (CA), Dr. Muhammad Yunus, and at least two advisers of the interim government. He expressed Beijing’s total commitment to working with Dhaka’s new political leadership and enhancing the recently upgraded “Comprehensive Strategic Cooperative Partnership (全面的战略合作伙伴关系)” (The Business Standard, August 25; UNB, August 25) He has also held discussions with top political figures such as Mirza Fakhrul, secretary general of the Bangladesh Nationalist Party (BNP), and Dr. Shafiqur Rahman, emir of Jamaat-e-Islami Bangladesh (JIB)—two of the largest political parties that competed with Hasina’s Awami League (AL). The BNP’s foreign policy stance is historically pro-PRC (Dhaka Tribune, March 28).

In his discussion with Yao, the BNP’s Fakhrul remarked that the PRC has “made it clear that they do not believe in hegemony. They had previously promised to always stand by the people of Bangladesh, considering its geopolitical situation, and they have now reiterated this” (Dhaka Tribune, August 21). JIB also sees Beijing as an ally due to its anti-India sentiment and Yao has praised it as a “well-organized party (组织良好的派对).” Rahman thanked the PRC for engaging in Bangladesh’s social and economic development. After the meeting, Yao Wen expressed Beijing’s desire to work with all the political parties to deepen ties (JIB, September 2; Global Times, September 3; News18, September 3).

Beijing’s proactiveness in pursuing these actors and reaffirming its commitment to Dhaka irrespective of changes in power signals that it aims to take advantage of the opportunities presented by Hasina’s political demise to enhance strategic bilateral ties (UNB, August 25). The PRC hopes it can improve relations with Bangladesh beyond where they stood during Hasina’s administration. While Hasina was keen to deepen ties with the PRC, she was always careful not to upset India, preferring to maintain a strategic balance between the two geopolitical rivals (The Indian Express, July 12). The prospects of pro-PRC parties such as the BNP and JIB coming to power in the next election has spurred the PRC to take advantage of this strategic opportunity (Nikkei Asia, August 8).

PRC’s Reaction to the Events Unfolding the Demise of Sheikh Hasina

Sheikh Hasina was on an official state visit to the PRC when the anti-discrimination protest, which later turned into a popular revolution, was gaining momentum against her policies. Beijing was cautious in commenting on the protests, with Yao asserting a policy of non-interference in Bangladesh’s domestic politics but officially wishing for the restoration of peace and stability inside the country (The Daily Star, July 18). Despite Hasina’s pro-India stance, Beijing was committed to maintaining warm ties with Hasina (The Daily Star, October 6, 2020). This year, the PRC congratulated Hasina on winning a controversial 4th term in power (CGTN, January 11). Foreign Minister Wang Yi (王毅) also congratulated his former counterpart Hasan Mahmud, writing, “The PRC and Bangladesh have firmly supported each other on issues that bear on each other’s core interests. PRC-Bangladesh relations have made significant progress (中孟在涉及彼此核心利益的问题上坚定支持对方。中孟关系取得重大进展) (Embassy of China in Bangladesh, January 16).

Hasina’s July visit was significant. Among the announcements were 21 instruments, including three renewed Memoranda of Understanding (MoUs), seven more projects to elevate the relationship from a “strategic partnership of cooperation” to a “comprehensive strategic cooperative partnership” (Global Times, July 10; Dhaka Tribune, July 10). Dhaka reiterated its commitment to maintaining the “One-China Policy” (CGTN, July 10). In a meeting with Hasina, PRC President Xi Jinping proclaimed, “China-Bangladesh ties are a shining example of relations among Global South nations (中孟关系是全球南方国家关系的光辉典范)” (CGTN, July 11).

New Delhi was skeptical about this visit and Indian media attempted to downplay its importance (Business Standard, July 13; The Print, July 14). Such claims quickly lost ground, however. Hasina argued that her trip was a significant part of Bangladesh’s diplomatic activities and announced that Beijing had committed to granting Dhaka $2 billion in assistance across a mixture of grants as well as interest-free, concessional, and commercial loans (The Daily Star, July 4; People’s Daily Online, July 15).

Despite sharing warm relations with the Hasina regime, the PRC kept channels of communication open with other major political parties in Bangladesh. This has given Beijing a strategic advantage in working with those in power in Dhaka (Dhaka Tribune, August 25). Bangladesh’s Foreign Adviser to the Interim Government, Touhid Hossain, has apparently vindicated this approach, expressing his optimism that Dhaka-Beijing relations will remain strong (New Age, August 14). He noted that public perceptions of the PRC are positive and reaffirmed the government’s desire to work together closely (Xinhua, August 15).

Prospects for Stronger Defense Ties

The PRC has strong defense relations with the Bangladesh Armed Forces (BAF). These date back to 2002, when the two countries signed a defense cooperation pact. The PRC sends more arms and military equipment to Bangladesh than to any other country besides Pakistan, providing 72 percent of its inventory (The Standard, June 10; The Print, April 7, 2023). The BAF has received critical military equipment from Beijing, including Ming-class submarines, F-7BGI interceptors, MBT-2000s, VT-5 light tanks, HQ-7 short-range surface-to-air missiles (SAMs) (SP Land Forces, May 27; The Daily Star, September 28, 2023). The scale of this trade can be attributed to several factors, including low prices, lack of democratic oversight over the acquisitions, and a legacy of the BAF officer corps being familiar with weapons exported from the PRC (ORF, July 18, August 21, 2023).

An ongoing program to modernize the BAF in light of Bangladesh’s new geopolitical realities may lead to a sharp rise in arms imports from the PRC. This is part of a broader transition in the BAF to achieve the “Forces Goal 2030” launched by Hasina, an ambitious plan to transform the BAF into a 21st century fighting force (BSS, July 7). Implementation of this plan has been slow, however. For example, the Bangladesh Air Force still lacks modern multirole combat aircraft (MRCA) and long-range SAMs (Dhaka Tribune, February 7, 2018, July 4, 2023). Submarines purchased for the Bangladesh Navy are also obsolete and the Bangladesh Army requires modern attack helicopters and additional light tank regiments in order to be able to protect the country’s territorial integrity. Bangladesh’s airspace was recently violated by Myanmar, while India’s Defense Minister Rajnath Singh called on his troops to be prepared for war in a speech referencing the unrest in Bangladesh (Prothom Alo, February 4, September 7). The BAF thus is seeking a supplier who can rapidly deliver modern systems at competitive prices. Despite calls to diversify and procure weapons from the West, the BAF may continue to source from the PRC (Asia Times, August 30).

The officer corps of the BAF and People’s Liberation Army (PLA) enjoy a long-standing relationship. Beijing has also deepened this through technical support and joint exercises. In 2023, for example, the Bangladesh Navy established its first-ever submarine base in Pekua in southeastern Bangladesh, constructed under direct supervision from the PRC, which also provided technical expertise (SCMP, May 12). In May, the BAF and PLA also held their first joint military drills, “Golden Friendship-2024 (金色友谊 – 2024)” (China Military, April 25).

Beijing’s Influence on Dhaka’s Foreign Policy

India sought to curb Beijing’s influence during Hasina’s reign. In 2017, New Delhi proposed a defense pact with Dhaka, and has pushed Bangladesh to deepen military cooperation between their states since then by providing weapons through Lines of Credit (LoC) (The Business Standard, September 7, 2022). A small strategic victory came when Hasina granted a land transit corridor to India’s North Eastern Region (NER) that enhanced rail connectivity and transshipment (The Daily Star, July 4). This alternative connection to the NER would be valuable to India if the PRC were to block the Siliguri Corridor during a military standoff. Under the new interim government, these agreements may be revised or even shelved as they are unpopular and seen as a violation of Bangladesh’s sovereignty (Prothom Alo, March 24; The Daily Star, September 1). Stymying New Delhi’s ambitions would constitute a strategic victory for Beijing.

The developing geopolitical realities in Myanmar also provide Beijing with the means to influence Dhaka. Bangladesh shares a border with the Chin and Rakhine states of Myanmar. Both of these states are now falling into the hands of pro-PRC Ethnic Armed Organizations (EAOs), specifically the Chin National Army (CNA) and Arakan Army (AA) (DVB, July 7; The Irrawaddy, June 15). Dhaka has no formal or informal ties with these EAOs, but Beijing can help establish one (The Daily Star, July 13). Such a connection is needed because Bangladeshi insurgent groups like the Kuki-Chin National Front (KNF) are based in the Chittagong Hill Tracts (CHT) and are able to receive training in Myanmar and use the country as a safe haven (The Daily Star, April 7). The Rohingya crisis also impacts Bangladesh. As Myanmar’s junta loses ground to the AA, especially in the Rohingya-inhabited northern and central areas of Rakhine State, voluntary repatriation of Rohingya refugees in Bangladesh likely depends on the goodwill of the AA (Frontier Myanmar, January 31; The Diplomat, September 6). Beijing could initiate a line of communication between Dhaka and the AA to convince the latter to create a secure environment for said voluntary repatriation. This would increase the PRC’s strategic influence on Bangladesh and help to stabilize the country, which has its own benefits.

Growing Economic Clout and Developmental Engagement

The PRC has been Bangladesh’s largest trading partner for nearly a decade. It is also one of the largest investors in the country, in part via the One Belt One Road (OBOR) initiative, which Dhaka joined in 2016 (Global Times, July 8). This has led to the construction of key Bangladeshi megaprojects like Padma Bridge, which was built by China Railway Major Bridge Engineering Group Co (中铁大桥工程集团有限公司) (Global Times, June 26, 2022). The PRC has also helped build several power plants and has been granted land to construct Export Economic Zones (EEZs). At least 1,000 PRC firms operate in Bangladesh, creating about half a million jobs (China Daily, July 8).

Three key issues were already on the table during Hasina’s regime. First, according to the recommendation of a joint feasibility study, there was an ongoing discussion about significantly boosting bilateral trade and investment ties by establishing either a Comprehensive Economic Partnership Agreement (CEPA) or a Free Trade Agreement (FTA). A CEPA would widen and deepen cooperation on the standard issues included in a FTA, such as reducing trade and tariff barriers, but could also serve to coordinate efforts in areas like investment, intellectual property rights, regulatory compliance, government procurement, and disputes (The Business Standard, July 4). Second, there is an ongoing duel between Beijing and New Delhi to win contracts for the prized Teesta Barrage Project, which aims to build riverine infrastructure to provide irrigation, generate energy, and prevent flooding in the northern part of Bangladesh. Given the already hostile sentiment between Dhaka and New Delhi on water sharing and river management issues, Beijing might have an upper hand in securing the construction of the project. Foreign Adviser Touhid Hossain affirmed his positive outlook toward handing Beijing the Teesta Project back in May (Asia Times, May 20). Third, the PRC has doubled its effort in Bangladesh to use the Renminbi instead of the US Dollar in settling transactions and granting loans (The Financial Express, January 31). For example, Beijing affirmed the use of Renminbi for bilateral transactions citing fluctuations in the dollar exchange rate, and also persuaded Dhaka to accept $5 billion of loans in denominated in Renminbi (China Daily, July 8).

The PRC’s diplomatic proactiveness in economic and developmental sectors is already gaining traction among Dhaka’s transitional advisers. Dr. Yunus has urged Beijing to relocate solar panel factories to Bangladesh to diversify the country’s exports and assist the country in its transition to a green economy. In a recent meeting with Yao Wen, Advisor Syeda Rizwana Hassan also discussed sharing hydrological data and working together on water management (UNB, August 11; The Daily Star, August 25).

Conclusion

The PRC’s approach to Bangladesh is based on opportunistic and pragmatic principles. Beijing seeks to improve its relationships with each of the country’s key stakeholders to increase its influence on South Asia’s second-largest economy. Following the ousting of pro-India Prime Minister Sheikh Hasina, Beijing is now attempting to improve ties with Dhaka and gain the upper hand in its strategic competition with the United States and its Indo-Pacific partner. Despite sharing warm ties with Sheikh Hasina, her demise has carved out space for Beijing to enhance relations in critical areas like defense, security, geopolitics, economics, and development. Whoever emerges as the head of the new government, Beijing is likely to have already courted them to extend its presence and influence in the country.