Bangladesh Prime Minister Sheikh Hasina visited China and Japan during the second quarter of this year. These visits were fruitful as both countries pledged financial support and investment in Bangladesh. Japanese PM visited Dhaka early this month. How is Dhaka balancing between China and Japan? Will it have to choose between the two?

The Prime Minister is keen to build infrastructure and development projects in Bangladesh so as to make the country a middle income country by 2021.    The policy “Look to the East” has ushered in a new phase of Bangladesh foreign policy under the current government. In May, the Prime Minister returned after a four day visit to Japan and the trip yielded the "single largest commitment" for Bangladesh's development according to State Minister for Foreign Affairs. Japan has extended support to Bangladesh’s effort for economic and social development since its independence. During the Bangladesh Prime Minister’s visit Japan has already promised a loan of $1.18 billion in the next fiscal for five projects, mostly in the energy and city development sectors.

China and Bangladesh

At the same time, China’s financial support for Bangladesh during the last three years surged significantly. China has gone to the global scene as an investor which is often called “cheque -book diplomacy”. Total foreign investment financial outflows are over US$70 trillion. Also, in the developed economies, Chinese investors saw high costs, restrictive labour practices and unclear messages on investment by the state owned Chinese enterprises.  Hence, China is attracted to investment in Bangladesh in areas which would generate good returns.

Padma Multi-purpose bridge, Bangladesh’s largest-ever infrastructure project, is to be built by China Major Bridge Engineering Company (CMBEC).  The CMBEC will get the $1.55 billion job against a revised estimated cost of $1.77 billion. Other projects include a rail bridge over the Jamuna river, a high-speed “chord” train line between Dhaka and Comill and the construction of a 4.8km long dual-gauge double-track rail bridge — parallel to the Bangabandhu Jamuna Bridge. 

 

The more investment Bangladesh receives from China, the quicker it would achieve its goal in becoming a middle income country by 2021.  Both countries have substantial to gain from adapting and developing this investment relationship.  The governments and the people interact closely in the case of investment and the relationship is deep and lasting. 

 

Chinese loans are not friendly to Bangladesh because loans are to be repaid from 10 to 13 years with grace period of 3 years only. However, the government of Bangladesh reportedly is seeking repayment of Chinese loan for 20 years with a grace period of 5 years for 14 infrastructure projects.

  

Japan and Bangladesh

Shinzo Abe visited Bangladesh on with two primary objectives: to withdraw its candidate from the regional seat of Asia Pacific region (he was successful) and secondly understand the Chinese footprint in Bangladesh.

 

At the end of talks between the two Prime Ministers of Bangladesh and Japan , a joint communiqué was issued. He pledged about $6 billion for his pet project-Bay of Bengal Industrial Growth Belt (BIG-B) which has three components- construction of deep sea port near Chittagong which will be a supply base of primary energy and construction of superhighways in the country.

 

Bangladesh wants Japanese financial support for the projects which reportedly included Padma rail link at Dhaka-Jajira-Bhanga-Narail-Jessore, construction of inland container depot at Dhirasram and building Dhaka east-west elevated expressway and Ganges Barrage scheme.  

In the communiqué, to attract investments from Japanese companies, Prime Minister Abe placed some conditions such as location, competitive incentives, improvement of infrastructure and labor -supply are critical factors among others  

Balancing China and Japan

Japan’s deep history of rivalry and conflict with China is well known. The country once prided itself as the second largest economy has been now over taken by China. Abe after coming to power in December 2012 has been deeply committed to economic growth through his “Abenomics” policy. 

 

Bangladesh is of strategic importance not only to South Asian region but to the larger geo-political dynamics of Asia as a whole. Bangladesh is a physical conduit between South and South East Asia and its access to the Indian Ocean through the Bay of Bengal is strategically and commercial important.  All these factors make it necessary for China and Japan to maintain friendly and cooperative relations with Bangladesh. 

It is wrong to suggest that Bangladesh has to choose between China and Japan. Bangladesh can have friendly with both. It is desirable that Bangladesh would not align itself to one country as a way to antagonise another and the relations must be rightly balanced between the two nations, which are often found to be difficult.