Bangladesh Seeks $20 Billion Loan From Beijing As PM Sheikh Hasina Embarks On Critical Three-Day Visit To China

By: Salah Uddin Shoaib Choudhury

Prime Minister Sheikh Hasina of Bangladesh is scheduled for a crucial three-day state visit to China from July 8 to 10, at the invitation of Premier Li Qiang. This visit is expected to be a significant milestone in enhancing the bilateral relationship between the two nations, which have enjoyed a long-standing friendship and strategic partnership. Beijing views this trip as a potential “game changer” that could elevate cooperation and collaboration to unprecedented levels.

Historical Context

The relationship between China and Bangladesh has evolved significantly over the years. During President Xi Jinping’s 2016 visit to Bangladesh, he expressed China’s desire to upgrade its relationship with Bangladesh from a “strategic partnership” to a “comprehensive strategic cooperation partnership.” A Memorandum of Understanding (MoU) was signed in the presence of President Xi and Prime Minister Hasina regarding Bangladesh’s participation in the Belt and Road Initiative (BRI). Additionally, decisions were made about China’s debt and financing several mega projects in Bangladesh.

Current Developments

Over the past eight years, China’s role as a key development partner has grown, with current bilateral trade between the two countries standing at US$23 billion. According to the Ministry of Foreign Affairs, Bangladesh will seek additional loans amounting to US$20 billion during this visit. US$15 billion will be allocated for infrastructural development projects, and the remaining US$5 billion will be disbursed in Chinese yuan to facilitate payments for imports from China.

In light of global economic shifts, Bangladesh is also expressing a willingness to switch to alternative currencies instead of relying solely on US dollars. The Ukraine war and Western sanctions have posed several obstacles for dollar-based economies and transaction systems, causing significant challenges for countries like Bangladesh. By exploring transactions in Chinese yuan and other currencies, Bangladesh aims to mitigate these economic hurdles and enhance its financial stability and independence.

Diplomatic Engagements

The Embassy of the People’s Republic of China in Bangladesh stated in a social media post that Foreign Ministry Spokesperson Mao Ning announced Prime Minister Sheikh Hasina’s visit from July 8 to 10. Following this announcement, Hubei Media Group inquired about the program and China’s expectations for the visit, as well as the current state of China-Bangladesh relations.

Mao Ning responded: “This will be Prime Minister Sheikh Hasina’s first visit to China since her new term began and five years after her last visit to China. During the visit, President Xi Jinping will meet with Prime Minister Sheikh Hasina. Premier Li Qiang will hold a welcoming ceremony and have talks with her. The two prime ministers will attend the signing ceremony of cooperation documents. Leaders of the two countries will have an in-depth exchange of views on how to deepen traditional friendship, expand mutually beneficial cooperation, and discuss regional and international issues of mutual interest. Prime Minister Hasina will also attend the Summit on Trade, Business, and Investment Opportunities between China and Bangladesh.

“China and Bangladesh are good neighbors, good friends, and good partners. We have similar visions for development and well-aligned development strategies. Since the establishment of diplomatic relations 49 years ago, the two countries have treated each other with respect and equality, engaged in mutually beneficial cooperation, supported each other on issues concerning our respective core interests, and jointly advanced modernization. We have set a good example of friendship and cooperation between developing countries. In recent years, with the strategic guidance and commitment of leaders of our two countries, the two sides have deepened the China-Bangladesh strategic cooperative partnership and had fruitful and practical cooperation in various fields. China stands ready to work with Bangladesh through this visit to carry forward the spirit of the Five Principles of Peaceful Coexistence, deepen political mutual trust, further synergize development strategies, advance high-quality Belt and Road cooperation, speed up the implementation of the Global Development Initiative, the Global Security Initiative, and the Global Civilization Initiative, and elevate our bilateral relations to a new level.”

Future Projects

Bangladesh’s Ministry of Foreign Affairs stated that Dhaka will seek support from Beijing for the Southern Integrated Development Initiative (SIDI), which centers on the Payra Port in the southern district of Patuakhali. This project will be an integrated development plan for the southern region of the country, involving projects on transport and communication, ICT, power and energy, logistics, and a special economic zone.

The Finance Ministry added that SIDI will see the establishment of an electric vehicle plant, a hi-tech park, and a logistics hub at a strategic location. In addition, Bangladesh will also seek loans from China for the implementation of the Dhaka Mass Rapid Transit Development Project (Line 2), the Bhanga-Kuakata rail line, a bridge over the Kocha river at Pirojpur, the renovation of Dhaka Medical College Hospital, and the Maheshkhali-Matarbari and Bakhrabad 3rd parallel gas transmission pipeline.

Liu Jianchao, the international department head of the Chinese Communist Party (CCP), during his recent visit to Bangladesh, expressed interest in strengthening bilateral relationships on the political front. He stated, “We believe that government policy originates from the perspectives of political parties. This means the communication between the political parties of the two countries is very helpful to know and understand the mutual relationship between the government and the people. This communication also plays a role in adopting the right policy for each other. This communication is important.”

Diplomatic sources in Dhaka describe CPC Minister Liu Jianchao’s visit to Dhaka ahead of Prime Minister Sheikh Hasina’s Beijing tour as significant.

Summary

• Visit Dates: July 8-10
• Loan Request: $20 billion (US$15 billion for infrastructure, US$5 billion in Chinese yuan)
• Historical Context: Strengthening ties since President Xi Jinping’s 2016 visit
• Economic Strategy: Exploring alternative currencies to mitigate global economic challenges
• Key Projects: Southern Integrated Development Initiative (SIDI), Dhaka Mass Rapid Transit Development Project, Bhanga-Kuakata rail line, and more
• Diplomatic Engagements: Meetings with President Xi Jinping and Premier Li Qiang, signing of cooperation documents
• Future Prospects: Enhanced cooperation in trade, infrastructure, and regional security

This visit holds promise for both Bangladesh and China, potentially paving the way for a new era of partnership and mutual growth.