China is set to sign off on loans worth over $24 billion to Bangladesh during President Xi Jinping’s visit on Friday, Dhaka’s biggest foreign credit line to date that will help it build power plants, a seaport and railways.
Xi’s trip, the first by a Chinese president in 30 years, is aimed at boosting China’s involvement in infrastructure projects at a time when India is pushing investments of its own in Bangladesh, a country New Delhi considers its area of influence.
China plans to finance around 25 projects, including a 1,320 megawatt (MW) power plant, and is also keen to build a deep sea port.
“Xi’s visit will set a new milestone. Record amount of loan agreements will be signed during the visit, roughly $24bn,” he said.
Among the proposed projects are highways and information technology development, he said. “Our infrastructure needs are big, so we need huge loans.”
China’s TBEA signed a power grid deal worth $1.6bn with Dhaka Power, following a pact that Jiangsu Etern’s consortium signed on Thursday to strengthen Bangladesh’s power grid network valued at $1.1bn.
Beijing is especially keen to revive a plan to build a deep sea port in Sonadia which has been on hold for years, officials said.
Zhao Gancheng, director of South Asia Studies at Shanghai Institute for International Studies, said both India and China supported development in Bangladesh, and that it did not have to be one or the other.
China is currently Bangladesh’s biggest trade partner with annual turnover of around $10bn which is heavily in favour of Beijing.
Bangladesh has backed Xi’s “One Belt, One Road” initiative to boost trade and transport links across Asia and into Europe, seeing it as an opportunity to lift growth.
India has reservations about the plan, amid worries that it is an attempt to build a vast zone of Chinese influence.
Beijing had proposed an economic corridor linking Bangladesh, Myanmar, China and northern India, but New Delhi did not seem keen on the idea, Zhao said.
Xi visited Dhaka en route to a BRICS summit of the world’s leading emerging economies in Goa, India.