Hasina’s ouster: America’s plot, China’s gain?

Sheikh Hasina, now India’s guest, has accused the United States of being the ‘foreign hand’ behind her ouster in what’s ostensibly a ‘student revolution’. She has enough reason to believe so, given the US pressure on her over the years, and especially over its alleged plans to acquire Bangladesh’s St Martin’s Island (SMI), and an even more intriguing plan to carve out an East Timor-like ‘Christian’ nation out of parts of Bangladesh and Myanmar. That Mohammad Yunus, seen as being close to America since at least the Clintons, has taken charge in Dhaka in an interim administration, is seen as further proof of US handiwork. But it’s China, ironically, that might gain big in Bangladesh, given the latter’s $6 billion Chinese debt, which provides Beijing enormous leverage over any government in Dhaka.

On August 9, China’s foreign ministry welcomed the formation of the interim government with Chief Adviser Yunus and 16 other advisers. China’s diplomats were invited for the swearing-in ceremony, but Chinese observers expect that the interim government may not last. They prefer Khaleda Zia, at once seen to be pro-US as well as pro-China, to take the helm quickly.

Hasina visited China as Prime Minister as recently as July, expecting Beijing to provide $5 billion in aid to help with payments toward the $6 billion debt Dhaka already owes China. After days of discussions, China promised $137 million, which too was withheld when Bangladesh descended into chaos. Beijing will use the debt repayment issue as leverage with the interim government now.

No matter which way Bangladesh seeks out – whether it seeks an extension for repayment or seeks to declare a debt default -- it has to negotiate with Beijing. Therefore, even if the interim government is composed of multiple political factions in Bangladesh, they have to unite and actively maintain relations with China. This situation is akin to what Sri Lanka faced, when it owed 52 per cent of its total national debt of $47 billion to China and crashed in May 2022. Then President Rajapaksa had taken flight, now it was Hasina’s turn – a subtle way of effecting regime change?

Bangladesh’s dependence on China increased under Hasina’s 15-year rule. China has been Bangladesh’s largest trading partner for over a decade, with the trade balance overwhelmingly in China’s favour. For instance, Bangladesh lost more than $25 billion in trade to China last year, even as over 700 Chinese companies invested nearly $26 billion in Bangladesh between 2016 and 2022.

On July 10, during Hasina’s visit to Beijing, the two countries signed 21 agreements and announced another seven projects, with two major projects for Huawei Technologies to develop a next-gen digital financial platform and a capital markets digital transformation project. China was also to be involved in a new textile plant at Mongla and an industrial zone. Not only on economic issues but also in the strategic telecommunications and finance areas, Bangladesh’s dependence on China has been increasing.

Another area where China’s stranglehold on Dhaka has extended is in the textile sector that had put Bangladesh on the global map. Today, over 70% of Bangladesh’s imported raw materials for human-made fibre clothing comes from China. Beijing could exert considerable pressure on Dhaka in this sector, too.

A “comprehensive strategic cooperative partnership” between China and Bangladesh has also resulted in Dhaka becoming the second-largest importer of Chinese arms (about 17%) -- after Pakistan. In fact, over 73% of Dhaka’s recent arms buys, worth some $3 billion, have been from China.

Bangladesh’s strategic location in the Bay of Bengal could provide China access to the Indian Ocean, a crucial maritime trade route. This is also one way for Beijing to keep an eye on the Quad’s Malabar exercises in the region. No wonder Beijing transferred two submarines to Bangladesh, to be docked at ‘BNS Sheikh Hasina’ in Cox’s Bazaar.

As in the “India Out” campaign in Maldives, it is reported that China had a hand in Bangladesh’s “India Out” campaign, too, orchestrated by pro-China parties in Bangladesh. Specifically, Jamaat-e-Islami’s student wing Islami Chhatra Shibir (ICS), which played a major role in fomenting protests at four universities, allegedly received Chinese funds through Pakistan. Many of the more than 12,000 Bangladeshi students registered at Chinese educational institutions returned to their country to participate in the protests.

China is in an advantageous position in Dhaka, having assiduously built influence among political parties, miliary leaders, business communities, students and others, to counter Indian and US influence. Its bid to expand its economic and geopolitical influence in Bangladesh has got a boost now, with a new opportunity to dominate in India’s neighbourhood.