On March 26, 2025, Muhammad Yunus, the chief adviser of the interim government of Bangladesh, visited China and signed an agreement on economic and technological cooperation along with eight memoranda of understanding. These MoUs cover diverse sectors, including cultural exchanges, media collaboration, sports, and health.
Since a student-led mass uprising overthrew the authoritarian regime of Sheikh Hasina and her Awami League, Bangladesh has been undergoing significant reforms to reshape its identity and governance structure. In this context, the country’s traditional approach to international relations – including Bangladesh-China relations – is being redefined.
Like many authoritarian governments, the Awami League regime leveraged China’s flexible loan terms and arms trade, avoiding the restrictions associated with loans from the World Bank or IMF. This allowed the Awami League to sustain power under China’s non-interference policy, despite Beijing’s growing discontent with Dhaka’s failure to properly navigate Sino-Indian rivalry after Bangladesh’s last election.
Given the unprecedented political shift in Bangladesh and the failure of India’s regional settlement strategy, China now finds it crucial to revisit its relations with Bangladesh as part of its broader South Asian strategy. Meanwhile, Bangladesh, in a transitional phase of political uncertainty and economic vulnerability, requires robust growth in investment, economic cooperation, and trade – all areas where China is an attractive partner.
China’s Renewed Strategic Focus on Bangladesh
During Yunus’ visit, five key areas of cooperation were formally announced, including investment negotiations, the establishment of specialized economic zones, the modernization of Mongla Port, the construction of a robotic physiotherapy and rehabilitation center, and a grant for a cardiac surgery vehicle.
President Xi Jinping reaffirmed China’s unequivocal support for the chief adviser and the reform agenda of Bangladesh’s interim government. Both sides expressed their mutual commitment to enhancing the China-Bangladesh Comprehensive Strategic Cooperative Partnership. A major highlight of the visit was China’s commitment to extending zero-tariff facilities to Bangladeshi goods until 2028, two years beyond Bangladesh’s anticipated graduation from least developed country (LDC) status. China also proposed initiating negotiations for a free trade agreement and an investment agreement, paving the way for increased Chinese investments in Bangladesh.
Bangladesh secured commitments totaling $2.1 billion in investments, loans, and grants from China, with nearly 30 Chinese companies pledging investments amounting to $1 billion in an exclusive Chinese Industrial Economic Zone. Additional financial support included $400 million earmarked for modernizing Mongla Port, $350 million for the development of the China Industrial Economic Zone, and another $150 million in technical assistance, with the remaining funds provided as grants and other forms of lending.
Bangladesh’s Balancing Act in Engaging with China
While strengthening economic ties with China, Bangladesh’s interim government has played a careful balancing role by avoiding the Teesta River project amid growing public expectations. The previous regime refused to implement the Teesta River project under Chinese cooperation in an effort to appease India. With Bangladesh caught in a Sino-India Cold War over water resource management, the new government is treading cautiously.
Yunus requested a 50-year master plan from China for river and water management, emphasizing long-term cooperation without escalating tensions with India. This strategy allows Bangladesh to maintain a working relationship with China while managing its sensitive water-sharing issues with India.
China has additionally assured Bangladesh of its support in assisting displaced individuals from Rakhine State, highlighting its willingness to mediate the Rohingya repatriation process with Myanmar. Yunus has been making persistent efforts to draw global attention back to the Rohingya crisis amid dwindling international aid to support the massive refugee population currently living in Bangladesh. Through diplomatic negotiations, Bangladesh can leverage Beijing’s influence over Myanmar to push for secure and sustainable repatriation while reinforcing regional stability.
China’s People-centric Engagement With Bangladesh
In 2023, India’s medical tourism sector generated approximately $9 billion in revenue, significantly benefiting its economy. However, after the Awami League government fell, India decided to reduce visas for Bangladeshi nationals by 80 percent and the number of Bangladeshi patients seeking treatment in India declined sharply. This led to a nearly 50 percent drop in the total number of foreign patients in Indian hospitals, causing a major shift in regional medical tourism dynamics. Now China is emerging as an alternative destination for healthcare for Bangladeshis.
Recognizing this opportunity, China welcomed Bangladesh’s proposal to establish the Bangladesh-China Friendship Hospital, a 1,000-bed tertiary facility in Purbachal, Dhaka. This initiative, marking the 50th anniversary of diplomatic relations between the two nations, positions China as a viable alternative healthcare provider for Bangladeshis. While the hospital’s construction will take several years, China has taken immediate steps by dedicating four Kunming hospitals for Bangladeshi patients and planning direct flights from Chittagong to Kunming to facilitate medical travel.
Traditionally, China has been regarded as a manufacturing destination for Bangladesh, but this development signifies its entry into Bangladesh’s service sector. By addressing the growing demand for healthcare, China is aligning itself with the expectations of the Bangladeshi people, filling the gap left by India’s restrictive visa policies and anti-Muslim stance.
Bangladesh’s Strategic Foreign Policy in the Bay of Bengal
During his visit to China, Yunus participated in a high-level roundtable discussion on sustainable infrastructure and energy, emphasizing Bangladesh’s strategic role in the Bay of Bengal region. He highlighted the Bay of Bengal’s potential as a manufacturing hub, a key connector between South Asia and Southeast Asia, and a crucial player in regional geopolitics. The chief adviser positioned the Bay of Bengal as China’s economic extension, attracting global attention to its role in business, trade, and production.
As global and regional powers intensify their focus on the Indo-Pacific, Bangladesh finds itself at the center of a shifting geopolitical landscape. The interim government is likely to navigate its foreign policy by emphasizing trade and economic development while avoiding security-related deals. This approach helps Bangladesh maintain a balance in the China-U.S. rivalry in the Indo-Pacific. Unlike India, which has expressed concerns over Bangladesh’s interim government, the United States has shown no opposition to its geopolitical maneuvers. However, the growing trust deficit between Bangladesh and India in the post-Awami League period signals a significant setback for India’s regional influence.
That said, China’s strategic engagement with Bangladesh has become more pronounced following the July mass uprising, with Beijing seizing opportunities to expand economic cooperation, investment, and people-centric initiatives. The Yunus-led government, while embracing Chinese economic support, is carefully balancing relations by avoiding security entanglements and navigating sensitive issues like the Teesta River project. Meanwhile, China’s strategic use of the health and tourism sectors reflects its intent to deepen engagement with the Bangladeshi people, capitalizing on India’s policy missteps. As Bangladesh redefines its foreign policy, its ability to balance regional and global interests will determine the future trajectory of Bangladesh-China relations in a rapidly evolving geopolitical landscape.