Chinese debt trap: US warns Bangladesh as situation in Sri Lanka worsens

The fear is rightly voiced in the warning issued by the US to Bangladesh over the Chinese debt trap issue.

The United States has warned Bangladesh regarding increasing business with China, saying that countries like Sri Lanka which got involved "unwisely" with China are now "suffering" from the Chinese debt trap, reports The Business Standard.

The US at the dialogue renewed its advice to Bangladesh to move away from China, and assured support by the Indo-Pacific Strategy.

Referring to Bangladesh's abstention from voting on a UN resolution on the Russia-Ukraine conflict, the US made a plea to Bangladesh to come up with a situational decision and assess the full potential of the Indo-Pacific Strategy (IPS), terming Chinese behaviour in the region as "coercive to human rights and democracy", the newspaper reported.

The US delegation told Dhaka that Washington would very soon release an "Economic Framework" of the strategy.

Earlier at the three-day Munich Conference held on 18-20 February this year, the United States and India advised Bangladesh to move away from China and turn to Quad – a group of four countries: the United States, Australia, India, and Japan, reports The Business Standard.

China has even warned Bangladesh last year that Bangladesh's joining Quad would worsen Bangladesh-China relations.

Foreign Minister AK Abdul Momen was quoted as saying by the newspaper that China has come forward with "a basket of money" for the development of Bangladesh.

"They have come up with aggressive as well as cost-effective proposals. Does the United States want to come up with more attractive funding proposals for infrastructure development in countries like Bangladesh?" the Minister said.

Referring to the US, the foreign minister said, "We need more funding from our development partners, but unfortunately, they bring a lot of complications and it becomes difficult for us to accept their proposals."

China has stepped up its investment in Bangladesh as an attempt to strengthen bilateral ties.

File image of Bangladesh PM Sheikh Hasina and Chinese President Xi Jinping by Xinhua (news.cn) from Chinese Foreign Ministry (FMPRC)'s official website

Bangladesh’s total exports to China reached $38.959 million in February 2021, according to CEIC data.  

Such developing ties may be a matter of concern for India as both China and India are seen as rising powers in South Asia, reports The Sunday Guardian.

According to the Observer Research Foundation, Bangladesh received a net FDI of US $1.159 billion from China in FY-19, making it the top receiver in South Asia.

Until now, Bangladesh is considered to be the second-largest recipient of Chinese loans under the Belt and Road Initiatives (BRI) after Pakistan.  

China has also stepped up its investments in infrastructure, which is worth $10 billion in Bangladesh, the newspaper reported.

Sources told the newspaper Bangladesh is set to receive an investment worth $40 billion from China under a bilateral partnership.

China has even reportedly proposed to develop a nuclear plant in Bangladesh to meet the country's energy needs.

“Bangladesh is important to China due to its geopolitical location, and as a result, investment has steadily increased. For example, total business was approximately $14.69 billion in 2018-2019, whilst investment was around $12.8 billion in 2017-2018," a political observer on India-Bangladesh, Tapas Das, told The Sunday Guardian.

"However, investment was reduced to $12.5 billion in 2020-21 owing to Covid-19,” Das added.