In early September, Chinese Ambassador to Bangladesh Yao Wen met with Shafiqur Rahman, the chief of the Bangladeshi political party Jamaat-e-Islami (JI), at the party’s central office in Dhaka. According to various reports, Yao termed the JI a “well-organized” and “disciplined” party. JI had been banned by deposed former Prime Minister Sheikh Hasina in August, a decision that the interim government recently overturned.
Yao’s visit was significant because it marked the first time that a foreign diplomat had been to the JI office since 2010. In that context, the meeting was a sign that Beijing is keen to adapt to a rapidly evolving political situation in Bangladesh by maintaining lines of communication across the whole political spectrum. This approach will allow China to pivot swiftly when needed, ensuring that its economic and strategic interests are protected regardless of who comes to power in the months ahead.
By contrast, India is increasingly at risk of getting locked out and losing influence in Bangladesh as a consequence of its perceived association with Hasina. Following Hasina’s departure from Bangladesh and the formation of an interim government headed by the Nobel laureate economist Muhammad Yunus, New Delhi has chosen to wait and watch. But this approach may carry the risk of ceding leverage to China, especially if Beijing continues to engage more proactively with Bangladesh’s emerging political powers.
A Tenuous New Landscape
Bangladesh’s political landscape has long been shaped by several key players, including the Awami League party led by Hasina, JI, and the Bangladesh Nationalist Party (BNP) — a center-right party led by Hasina’s rival, former Prime Minister Khaleda Zia. JI is an Islamist political party that has historically been an ally of the BNP and has formed successful coalitions with it during past elections. But owing to the Awami League’s dominance over the last several years, the BNP and JI found themselves increasingly sidelined. In the final days of her administration this year, following deadly student protests, Hasina had banned JI, blaming it for the violence.
Following Hasina’s fall, Bangladeshi politics has been unsettled once more. The newly formed interim government led by Yunus has lifted the ban on JI, potentially allowing it to resume political activities. Meanwhile, although the BNP is not formally a part of the interim government, it has called for speedy elections.
These new developments have impacted the neighborhood’s two main powers – China and India – in very different ways. China had developed a close partnership with Hasina, elevating bilateral ties under her government to a comprehensive strategic cooperative partnership in July this year. But in the wake of her departure, it has also pivoted quickly. Shortly after the Hasina government fell, Beijing welcomed the formation of the interim government and sent its diplomats to attend Yunus’ swearing-in ceremony.
On the other hand, given that New Delhi accorded Hasina refuge after she fled the protests in Bangladesh, India has faced more resistance from the interim government so far. In a recent interview, Yunus raised concerns about Hasina’s presence in India and said that the former prime minister ought to be extradited to Bangladesh for a legal trial. Yunus also further complained: “The narrative [in India] is that everybody is Islamist, the Bangladesh Nationalist Party is Islamist, and everyone else is Islamist and will make this country into Afghanistan. And Bangladesh is in safe hands with Sheikh Hasina at the helm only.” The situation for New Delhi, therefore, is one of a trust deficit with the new leaders of Bangladesh as it competes for leverage with China.
China’s Diversified Influence
Over the past decade, China has made significant investment in Bangladesh across various sectors. Between 2016 and 2022, Chinese firms invested a total of $26 billion in Bangladesh. By the end of 2023, China’s investment stock in Bangladesh had increased to nearly $1.4 billion, according to the Chinese embassy in Dhaka. Around 700 Chinese-funded companies are said to have created as many as 550,000 jobs in the country.
China’s economic leverage over Bangladesh spans multiple sectors. Over 70 percent of Bangladesh’s imported raw materials for human-made fiber clothing come from China. In all, Bangladesh imports more than $21 billion worth of goods from China annually.
In addition, Bangladesh is also a top purchaser of Chinese weapons. According to the Stockholm International Peace Research Institute (SIPRI), China accounted for over 73 percent of Bangladesh’s foreign military imports between 2010 and 2020. Bangladesh also owes China as much as $6 billion in foreign debt.
As prime minister, Hasina had recognized China’s significance in these domains and sought to maintain cordial ties with Beijing despite her close relations with New Delhi. But this effort was tested on multiple levels. Most recently, in July this year, faced by the debt burden owed to China, Hasina had sought a further $5 billion loan from Beijing to pay off some of those dues. But Hasina was disillusioned when Beijing refused to cooperate and she responded by cutting short her trip to China at the time. Nonetheless, Bangladesh had little option but to continue building economic ties with Beijing.
Separately, China also diversified its influence by engaging with political players from across the Bangladeshi ideological spectrum. In 2016, during a visit to Dhaka, Chinese President Xi Jinping met with Khaleda Zia, the chairperson of the BNP. During that meeting, Xi acknowledged that the BNP has “firmly maintained a friendly policy towards China for years,” according to the official Chinese readout. He also expressed China’s willingness to strengthen inter-party contacts and exchanges with the BNP and other major political parties in Bangladesh.
In this manner, China has strategically built influence across various sectors of Bangladeshi society, including political parties, military leaders, the business community, and students, positioning itself advantageously to counter Indian influence in Dhaka.
India Must Engage With All Players
For its part, India also took several steps to improve its standing in Bangladesh under the Hasina government. In the 2010s, New Delhi extended three lines of credit to Dhaka amounting to $8 billion for infrastructure development, making Bangladesh India’s largest development partner. Bangladesh is also India’s biggest trade partner in South Asia, with bilateral trade crossing $14 billion in 2023-24. Cooperation further extends across the power and energy sectors, through education and student exchanges, and working together on border security, defense, and connectivity.
Yet, in stark contrast to China’s influence, New Delhi has suffered from lacking much leverage or engagement with the rest of Bangladesh’s political spectrum. In the run-up to the most recent elections that culminated early this year, the BNP and other opposition parties had organized an “India Out” campaign, which, among other things, reportedly led to a drop in demand for Indian goods in the country. Observers in New Delhi also believe that JI has often run its own campaigns against India and propagated strident rhetoric favoring Pakistan. Under the circumstances, New Delhi may now have to worry that China’s relatively healthier relationship with the BNP and its recent outreach to JI could undermine India’s interests and the strong bilateral ties that New Delhi had cultivated under Hasina.
Despite its misgivings toward the BNP and JI, India has little option today other than to engage with these political forces. India benefited immensely over the last several years from its friendship with Hasina and the Awami League. But with new political forces rising in the aftermath of Hasina’s ouster, India will risk getting locked out and losing influence in Bangladesh if it continues to be perceived as an ally only to Hasina. The same goes for engagement with the interim government. Although reports suggest that Indian officials are upset with Yunus for his comments on India’s decision to offer refuge to Hasina, New Delhi has much to lose and little to gain from refusing to engage proactively with the interim government.
This piece originally appeared in Stimson Center’s South Asian Voices and has been re-published with permission.