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China to ink loan agreements for $24 bn during Xi’s visit to Bangladesh

world Updated: Oct 14, 2016 21:26 IST
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Chinese President Xi Jinping waves to Cambodian students and officials before departing from Phnom Penh international airport on Friday. (AFP)

Chinese President Xi Jinping on Friday began a visit to Bangladesh during which the two countries are to sign loan agreements worth about $24 billion for Chinese investment in infrastructure and energy, Dhaka’s largest foreign credit line to date.

Xi, the first Chinese president to visit Bangladesh in three decades, was received by President Abdul Hamid at Dhaka airport. Chinese assistant foreign minister Kong Xuanyou said Bangladesh is an important partner for China in South Asia, and the visit will be a “milestone” in their relationship.

The Chinese president’s trip 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.

Japan, helped by India, has also got involved in Bangladesh, offering finance at low interest rates to build a port and power complex, sharpening competition for influence in the country of 160 million people located on the Bay of Bengal.

China plans to finance around 25 projects, including a 1,320 MW power plant, and is keen to build a deep sea port, Bangladesh junior finance minister MA Mannan said.

“Xi’s visit will set a new milestone. (A) record amount of loan agreements will be signed during the visit, roughly $24 billion,” he told Reuters. ($1 = 78.40 taka)

Last year, Indian Prime Minister Narendra Modi announced a $2 billion credit line during a visit to Dhaka, but China looks set to go well beyond that.

Among the proposed projects are highways and information technology development, Mannan said. “Our infrastructure needs are big, so we need huge loans.”

China’s Jiangsu Etern Co Ltd signed a deal worth $1.1 billion to strengthen the power grid network in Bangladesh, the company said on Thursday.

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.

In an article written for Bangladeshi papers on Friday, Xi praised Bangladesh and its people. “Endowed with rich natural resources, this land is home to a hard-working and talented nation and a time-honoured and splendid culture,” Xi said, according to a transcript carried by China’s official Xinhua news agency.

Xi is visiting Bangladesh on his way to a BRICS summit of the world’s leading emerging economies in Goa, India. His trip comes at a time when Modi is leading efforts to boost ties with neighbouring countries, from Sri Lanka to Nepal, by offering them a share of India’s fast-growing economy.

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.

“I really don’t think there is a zero sum game going on in Bangladesh between China and India. Bangladesh welcomes both Chinese and Indian investment...” said Zhao.

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.

“Bangladesh has an enormous need for investment, and I don’t think it’s going to become a site for strategic competition, a game between the great powers or a pawn,” he said.

China and Bangladesh have good economic ties. Chinese contractors have been building bridges and highways in Bangladesh, and Dhaka buys most of its military equipment from Beijing.