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Prime Minister Sheikh Hasina is set to make a state visit to China after nearly a decade. The premier is scheduled to depart on July 8. The following day, she will hold an official talk with Chinese Premier Li Qiang in Beijing.
A significant aspect of this visit will be securing Bangladesh’s $7 billion loan from China, which amounts to approximately 54 billion yuan in Chinese currency. Moreover, issues like financial assistance for the budget deficit, funding for new projects and economic cooperation will be prominently discussed at the meeting, as confirmed by sources from the relevant ministries.
Additionally, similar to the decision to conduct transactions with India in rupees, there may be discussions on conducting transactions with China in yuan. Final decisions on these matters may be reached during this important summit.
Breakdown of the loan
Sources indicate that out of the total loan, China will provide $5 billion for trade assistance and $2 billion for budget support in its own currency to Bangladesh. A memorandum of understanding will be signed between the two countries regarding this.
Sources indicate that China will provide Bangladesh with a loan totalling $5 billion under the framework of trade assistance, and an additional $2 billion in budgetary support in local currency. A memorandum of understanding (MoU) regarding this matter is expected to be signed between the two countries.
Former Bangladesh ambassador to China Munshi Faiz Ahmad told The Business Post that due to the current economic crisis, the Bangladesh government is actively seeking loans from various countries, including India. Efforts are also underway to secure loans from China. Additionally, the government has taken some measures in fiscal management, though they may not be sufficient.
China has already sent a draft MoU aimed at expanding bilateral trade. Sources reveal that the Ministry of Commerce has reviewed the 12-paragraph MoU from China and provided positive feedback. The ministry expects the MoU to be signed during the premier’s upcoming visit.
Md Firoj Uddin Ahmed, deputy secretary of the FTA Wing at the commerce ministry, said that China is keen to increase business and investment in Bangladesh; therefore, the draft MoU received from China has been thoroughly reviewed.
In addition, preparations are underway for signing 10 more MoUs during the premier’s visit. China and Bangladesh are predominantly keen to collaborate further in the sectors of infrastructure, agriculture, investment, production, and trade.
Trade statistics
China accounts for 25 per cent of Bangladesh's total imports, although exports to China constitute only 1.22 per cent of Bangladesh’s total exports. Bilateral trade between the two countries amounted to $6.77 billion in the fiscal year 2012-13. Nearly a decade later, in the fiscal year 2021-22, bilateral trade has increased threefold to $20.3 billion.
Stakeholders say that China is the largest trading partner of Bangladesh. They argue that as Bangladesh's economy grows, trade with China will also expand. They claim that currently, there is no alternative to China for Bangladesh's business and trade development.
Pre-visit meeting
Sources from the Ministry of Commerce reported that a meeting was held on Tuesday with representatives from 13 ministries and 5 organisations, including the Ministry of Finance and the Ministry of Foreign Affairs, to discuss Prime Minister Sheikh Hasina’s upcoming visit to China.
At the meeting, preparations were made to finalise 10 instruments, including seven MoUs between the two countries. These include initiatives like China's Global Development Initiative (GDI), trade assistance, investment security, digital economy, sustainable economy, the announcement of a review of free trade agreements, and multiple friendship bridge construction and refinement.
At a hotel in Dhaka on Monday, Foreign Minister Dr Hasan Mahmud told the media, “China plays a significant role in many areas of our development process. We expect substantial progress during the prime minister’s upcoming visit.”
Rohingya, Teesta discussions
Sources from the ministries also indicate that Bangladesh will seek China's cooperation on the repatriation of Rohingyas who fled from Myanmar. Additionally, the Teesta river sharing agreement between Bangladesh and India is expected to be discussed in the meeting as well. China has shown particular interest in this project, although India has also expressed interest.
On the topic of the Teesta water-sharing dispute, Munshi Faiz Ahmad said, “It is not just about the Teesta water-sharing issue. There is competition between India and China on all matters. China does not mind these competitions; they believe both countries can work together. However, India thinks they should handle everything. India was initially approached for the Teesta project, but they showed no interest. When China became interested, India stepped forward. India believes that China uses project implementation as a way to monitor them, but China does not use these projects for surveillance.”
Regarding the Rohingya issue, the former ambassador said, “It is difficult to predict progress on the Rohingya issue in this meeting. They [China] say they will assist and will probably reiterate this in the meeting.”
“I attended a meeting on Tuesday with Liu Jianchao, the minister of the International Department of the Chinese Communist Party, where he also said that they would assist. However, it is unclear to what extent they will help. China will need to show some level of success; otherwise, it will be seen as a diplomatic failure, which they will certainly want to avoid,” Munshi Faiz believes.
PM Hasina’s scheduled meetings
In September 2016, Chinese President Xi Jinping visited Dhaka. During that visit, decisions were made to implement 27 projects. Among them, 15 projects have been completed, work is ongoing for six projects, and for the remaining six projects, there is consideration to initiate new projects instead.
Prime Minister Sheikh Hasina will meet with her Chinese counterpart on July 9. On July 10, the premier will hold a meeting with Chinese President Xi Jinping. During this trip, she also plans to meet with Li Zhanshu, former chairman of the Standing Committee of the National People's Congress, for courtesy calls.
