China Tightens Grip on Bangladesh: Debt-Trap Diplomacy at Play in Teesta Project and Exclusive Industrial Zone

China’s influence in Bangladesh has deepened with two major developments: Dhaka’s invitation to Beijing for participation in the Teesta River project and the backing of an exclusive Chinese industrial zone. The Teesta project, long a point of contention between India and Bangladesh, now sees China’s involvement, raising geopolitical concerns. The proposed industrial zone strengthens China’s economic foothold in South Asia under the Belt and Road Initiative (BRI). These moves reflect Beijing’s broader strategy of using investments to expand its influence, raising fears of debt dependency and strategic concessions, as seen in other nations entangled in China’s debt-trap diplomacy.

China’s growing influence in South Asia has taken another leap forward with Bangladesh welcoming major Chinese investments in key infrastructure projects. Recent reports highlight two significant developments:

1. China-backed Exclusive Industrial Zone in Bangladesh
   During a high-level meeting, Chinese President Xi Jinping backed the creation of an exclusive Chinese industrial zone in Bangladesh, further strengthening economic cooperation under the Belt and Road Initiative (BRI). This move aligns with Beijing’s long-term strategy of embedding itself in key South Asian economies.
2. Teesta River Project: Bangladesh Turns to China
   In a strategic shift, Bangladesh has invited China to participate in the much-debated Teesta River project, a development that could have significant geopolitical ramifications. The Teesta River, a crucial water resource, has been a point of contention between India and Bangladesh. By involving China, Dhaka signals its intent to diversify investment sources, potentially at the cost of its long-standing relationship with New Delhi.

These developments are part of a broader pattern where China extends large-scale financial assistance to developing countries, often leading to debt dependency and strategic concessions.

The Belt and Road Initiative: Infrastructure or Influence?

China’s Belt and Road Initiative, launched in 2013, is arguably the most ambitious infrastructure programme in modern history. Spanning over 140 countries, the BRI has facilitated investments in ports, highways, railways, and energy projects across Asia, Africa, and Latin America.

While touted as a mutually beneficial programme, the BRI has been criticised for placing recipient countries in unsustainable debt cycles, giving China leverage over strategic assets. Critics argue that China’s approach is not merely about infrastructure development but about expanding its geopolitical and economic influence at the cost of host nations’ sovereignty.

Debt-Trap Diplomacy: How China Gains Strategic Control

China’s economic assistance often comes in the form of high-interest loans with opaque terms. Many of these projects, while promising economic growth, result in financial distress for host nations, forcing them to make strategic concessions to China.

Case Studies of Debt-Trap Diplomacy

1. Sri Lanka – The Hambantota Port Takeover
   Sri Lanka’s Hambantota Port is the most infamous example of China’s debt-trap diplomacy. Sri Lanka borrowed nearly $1.3 billion from China to construct the port under the BRI. However, due to financial mismanagement and unrealistic revenue expectations, Sri Lanka struggled to repay the debt. In 2017, the Sri Lankan government leased the port to China for 99 years, effectively handing over control of a strategically significant asset located near vital global shipping lanes.
2. Pakistan – The China-Pakistan Economic Corridor (CPEC)
   Pakistan has emerged as one of the largest recipients of Chinese loans under the BRI, particularly through the China-Pakistan Economic Corridor (CPEC). While marketed as a game-changer for Pakistan’s economy, CPEC has significantly increased Pakistan’s external debt burden. Several infrastructure projects, including Gwadar Port, are now under de facto Chinese control, raising concerns about Pakistan’s economic sovereignty.
3. Djibouti – China’s Military Foothold in Africa
   China’s infrastructure investments in Djibouti have positioned the small African nation into a debt crisis. Djibouti hosts China’s first overseas military base, raising alarms about Beijing’s intentions in the strategically significant Horn of Africa.
4. Maldives – The Cost of Chinese Infrastructure Loans
   Under former President Abdulla Yameen, the Maldives borrowed heavily from China to fund infrastructure projects. The debt burden is now so high that the Maldives struggles to meet its financial obligations, leading to increasing Chinese influence over its domestic policies.

India’s Concerns and Strategic Responses

China’s increasing presence in South Asia is a direct challenge to India’s traditional sphere of influence. From the Himalayan borders to the Indian Ocean, Beijing has sought to expand its geopolitical footprint, often at India’s expense.

1. Bangladesh and the Teesta Project – A Challenge to India?

India and Bangladesh have long discussed an agreement to fairly share the waters of the Teesta River, but political and regional complexities have stalled progress. By inviting China into the project, Bangladesh signals its willingness to explore alternatives, which could reduce India’s influence in Dhaka’s strategic decisions.

2. India’s Infrastructure Alternatives to the BRI

Recognising the risks associated with the BRI, India has been actively promoting alternative infrastructure initiatives, including:

• The India-Middle East-Europe Economic Corridor (IMEC): Announced at the G20 summit, this project aims to provide an alternative trade route connecting South Asia, the Middle East, and Europe, countering China’s growing influence.
• The Asia-Africa Growth Corridor (AAGC): A joint initiative with Japan, aimed at fostering sustainable development across the Indo-Pacific.
• Development Partnerships in South Asia: India has been investing in key infrastructure projects in Nepal, Bhutan, Bangladesh, and Sri Lanka to counterbalance Chinese investments.

3. The Indo-Pacific and India’s Geopolitical Role

China’s increasing control over strategic maritime trade routes has alarmed India and its allies. As part of the Quad alliance (India, the US, Japan, and Australia), India has been working to counterbalance China’s assertive policies in the Indo-Pacific.

• Naval Strategy: India has strengthened its naval presence in the Indian Ocean, conducting joint exercises with the US, Japan, and Australia to deter Chinese expansion.
• Chabahar Port Development: India has invested in Iran’s Chabahar Port as a direct counter to China’s Gwadar Port in Pakistan.

China’s Influence in the Indo-Pacific: A Growing Concern

China’s aggressive expansion strategy is not limited to South Asia. The broader Indo-Pacific region is witnessing increased Chinese influence, raising alarms in key global capitals.

1. China’s Pacific Island Diplomacy

• China has been signing security and infrastructure agreements with Pacific Island nations, particularly the Solomon Islands, expanding its influence in a region traditionally aligned with Australia and the US.
• The potential establishment of Chinese military bases in the Pacific threatens regional security dynamics.

2. The Philippines and South China Sea Disputes

• The Philippines, a crucial Indo-Pacific nation, has increasingly confronted China over illegal territorial claims in the South China Sea.
• Recent confrontations between Chinese and Filipino vessels highlight Beijing’s willingness to use coercive tactics to expand its control over maritime resources.

3. Taiwan – The Ultimate Flashpoint

• China’s assertion that Taiwan is an “inalienable part” of China, as reiterated by Bangladesh in recent diplomatic statements, aligns with Beijing’s broader policy of isolating Taiwan internationally.
• Increased Chinese military drills around Taiwan indicate Beijing’s long-term strategy of using economic and military pressure to force unification.

Global Pushback Against China’s Predatory Diplomacy

While many developing nations initially welcomed Chinese investments, the long-term consequences have led to a global reevaluation of Beijing’s intentions.

1. Panama Withdraws from BRI
   In a significant move, Panama recently exited its agreement with China’s BRI, a decision welcomed by US officials as a step towards rebalancing global economic influence.
2. The West’s Alternative Initiatives
   The G7-led Partnership for Global Infrastructure and Investment (PGII) aims to offer sustainable alternatives to China’s BRI, ensuring that developing nations are not trapped in unsustainable debt.
3. US-India-Japan-Australia Coordination
   The Quad alliance is actively working to counter China’s debt-trap strategies by offering transparent and sustainable financing for infrastructure projects across the Indo-Pacific.

The Future of China’s Foreign Policy and Global Resistance

China’s foreign policy, particularly its infrastructure-driven diplomacy, has created a complex geopolitical landscape. While investments under the BRI promise economic growth, they often result in increased debt burdens, loss of sovereignty, and strategic concessions to Beijing.

For India, China’s expanding influence in Bangladesh, the Indo-Pacific, and beyond is a direct challenge that requires a robust counter-strategy. Through infrastructure partnerships, regional alliances, and strategic investments, India must continue to counterbalance Beijing’s presence in its immediate neighbourhood.

For the world, the lesson from Hambantota, Gwadar, and other debt-ridden projects is clear: infrastructure investments should not come at the cost of economic independence and national sovereignty. As more nations recognise the risks associated with Chinese debt-trap diplomacy, the coming years will determine whether China’s expansionist ambitions can be effectively challenged or whether smaller nations will continue to fall under Beijing’s growing sphere of influence.