Charles Davis
Bangladesh appears to be yet another example of China’s economic coups. Leveraging debt may allow China to expand its naval presence into the Bay of Bengal and add another strategic port to China’s Blue Water Naval goals. It is also likely to elevate tensions with India.
Bangladesh’s Growing Reliance on China
In August 2022, Mustafa Kamal, then the finance minister for Bangladesh, warned developing countries about the risk of China’s Belt and Road Initiative (BRI) loans. He expressed deep concern over poor lending practices and overwhelming indebtedness. At the time of his interview, Bangladesh owed China USD 4 billion, which equated to roughly 6 percent of its foreign dept. Bangladesh’s dept to China has surged to USD 7 billion, nearly doubling in three years.
In January 2024, Bangladesh replaced Kamal with Abul Hassan Mahmood Ali. Abul Hassan has a long, and developed, relationship with China. Abul Hassan served as the Chief of Mission at the Embassy of Bangladesh in Beijing from 1983 to 1986 and led the way to China’s investment in the Barapukuria coal mine project. Bangladesh’s interim government, led by Muhammad Yunus, has signaled a deepening alignment with Beijing.
Yunus met with President Xi Jinping on March 28, 2025 in an effort to reinforce its relationship with Communist China and likely to solidify an additional USD 5 billion soft loan from China, which would raise the dept to USD 12 billion.
Yunus is hopeful China will increase investments in Bangladesh to revive its economy, which is in disrepair due to both political and economic crises. He encouraged collaboration in infrastructure, renewable energy, and trade, highlighting Bangladesh’s potential as a manufacturing hub. Most importantly, he reminded Xi that his country’s strategic position provided opportunities for China to expand its influence and solidify presence in an area that is strategically important to the United States.
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