After Nepal and Sri Lanka, China now offers economic goodies to lure Dhaka

After Nepal and Sri Lanka, China is quietly trying to win over yet another neighbour of India — Bangladesh.

The communist country on July 1 extended the zero-tariff policy benefit to 97% of its imports from Bangladesh, allowing the South Asian nation to export an additional 5,161 items to China without paying any customs duty, a gesture that has warmed the hearts of the Bangladeshi government.

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Bangladesh, a Least Developed Country (LDC), was earlier exporting 3,095 commodities to China duty-free. Though China implemented the zero-duty policy for 97% of tariff-lines in case of imports from some other LDCs as early as in 2015, the facility was not extended to Bangladesh till July 1.

China’s move has come when Prime Minister Sheikh Hasina’s government in Dhaka is struggling to revive the economy battered by the Covid-19 crisis.

Beijing is also understood to be in discussion with Dhaka for granting loans to the tune of $ 6.4 billion for several infrastructure projects across Bangladesh.

China’s move has been widely welcome in Bangladesh. It is being considered as “a major diplomatic victory” in the bilateral relations between Bangladesh and China, Joyeeta Bhattacharya, a senior fellow at the Observer Research Foundation (ORF), noted in a commentary she wrote for the think-tank based in New Delhi.

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New Delhi has taken note of China’s move. Beijing also stepped up its bid to spread its geo-political influence around India, providing Covid-19 aid to Maldives and Sri Lanka and offering the Indian Ocean nations new loans to deal with the crisis, even as they are finding it difficult to come out of the debt-trap China has put them in with its Belt-and-Road Initiative (BRI).

A source told DH that China’s recent move to step up its economic relations might be a part of its larger plan to spread its geo-political influence around India, particularly in South Asia.

Beijing already made Kathmandu ratchet up Nepal-India territorial dispute. China also prodded Sri Lanka to review an agreement, which the island nation had inked last year with India and Japan for development of the East Container Terminal of the Colombo Port.

New Delhi, however, tacitly advised Dhaka to be careful about the dual trap of deficit and debt that China’s trade concessions and development support for Bangladesh might entail.

“The bond between Bangladesh and India is rooted in history. The two nations are blood brothers. Bangladesh and China on the other hand share a transactional relationship,” Bhattacharya, an expert on New Delhi’s policy on neighbourhood, told DH.

India extended three Lines of Credit totalling $ 8 billion to support development projects in Bangladesh since 2010. Bangladesh is also India’s biggest trade partner in South Asia. India’s exports to Bangladesh in 2018-19 stood at $ 9.21 billion and imports from Bangladesh during the same period were worth $ 1.04 billion.

Bangladesh exported $ 831 million worth items to China in 2018-19, while importing more than $ 12 billion worth of goods.