Bangladesh's Muhammad Yunus in China: What’s at stake for India in South Asia’s power play?

Muhammad Yunus - File Image

Bangladesh’s Chief Advisor Muhammad Yunus is embarking on a four-day visit to China, where he will be holding talks with Chinese Premier Xi Jinping in a bid to reorient bilateral ties after the fall of Sheikh Hasina government in August last year.

Yunus will begin his China visit by taking part in Boao Forum for Asia, the annual meeting of Beijing’s strategic think-tank, in which leaders and officials besides corporate heads from different countries take part. Later, he will travel to Beijing and hold talks with Xi on March 28.

Interestingly, Yunus' visit to Beijing comes ahead of his request for a meeting with Prime Minister Narendra Modi at the upcoming BIMSTEC meeting at Bangkok to be held from April 2 to 4. It is yet to be confirmed by India.

Symbol of changing tides?

Yunus' visit to China, described by the Chinese Ambassador as "the most important visit by a Bangladeshi leader in 50 years," signifies a potential shift in Bangladesh's foreign policy trajectory. Traditionally, Bangladesh has maintained a balanced approach, cultivating strong ties with both India and China.

Notably, ever since the Hasina government collapsed, Beijing has hosted several delegations, including Bangladesh’s Adviser for Foreign Affairs of the Interim government Touhid Hossain and hardline Islamic parties such as the hardline Jamaat-e-Islami and opposition Bangladesh National Party (BNP).

According to the Bangladesh Sangbad Sangstha (BSS), the state run news agency, during Hossain's visit in January this year, China had agreed to extend Bangladesh’s loan repayment period, ensure duty-free, quota-free market access for Bangladeshi products, and designate hospitals in Kunming for Bangladeshi patients’ treatment, bolstering bilateral ties.

Beijing also agreed to consider Dhaka’s request to reduce the interest rate of Chinese loans to Bangladesh.

Dhaka will encourage Chinese companies to relocate their factories to Bangladesh, especially the sunset companies as China faces global trade barriers, the Daily Star reported, quoting Alam as saying. If these companies manufacture in Bangladesh, they can export without restrictions, he said.

China is Bangladesh's largest trading partner, with the volume being USD 25 billion a year. However, Bangladesh's exports to China amount to less than USD one billion, though China provides Bangladesh with zero-tariff market access, the report said.

The two countries are planning to sign at least eight MoUs including on trade, culture, upgrading Mongla port and water management.

China has significantly increased its economic and political influence in South Asia. The Belt and Road Initiative (BRI) has seen substantial Chinese investment in Bangladesh, including infrastructure projects and economic corridors.

India keeps a close watch

New Delhi will watch his visit besides Washington as Dhaka wants Chinese industries to shift to Bangladesh to take advantage of lower tariffs it enjoys in key markets.

• Bangladesh has traditionally been within India's sphere of influence. A deepening Bangladesh-China relationship could alter the strategic balance in South Asia, potentially reducing India's influence in its neighboring country.

• China's potential investments in Bangladesh, particularly under the BRI, may lead to increased Chinese presence in critical infrastructure projects. This could have economic implications for India, especially if Chinese projects undermine Indian economic interests or lead to competitive disadvantages.

• Enhanced military and strategic ties between Bangladesh and China could pose security challenges for India. The possibility of increased Chinese military presence or influence in Bangladesh is a concern for India's defense establishment.

• Yunus's outreach to China, especially if perceived as a pivot away from India, may necessitate a recalibration of India's diplomatic approach towards Bangladesh to maintain cordial and cooperative relations.