China's President Xi Jinping will be signing a $24 billion loan to Bangladesh on Friday before heading to Goa, India, for the Brics Summit. It is the biggest foreign credit line that Bangladesh has received until now.
Jinping's visit to Bangladesh is a first by a Chinese president in 30 years. The credit line will help Bangladesh build a 1,320 megawatt (MW) power plant, a deep sea port and a power complex. In total, China intends to finance around 25 projects, 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.
The credit line is much larger than what India had extended to Bangladesh. Last year, India gave a $2 billion credit line to the neighbouring country, which India considers an ally. Japan, on India's persuasion, had offered loans at low interest rates to build a port and power complex in the country of 160 million people.
"Our infrastructure needs are big, so we need huge loans," Mannan said.
The proposed 25 projects also include developing highways and information technology in the country. A China-based company Jiangsu Etern Co Ltd, signed a $1.1 billion deal with Bangladesh to develop the power grid network in the South Asian country, which is also looking to be a part of China's "One Belt, One Road" initiative. The initiative is meant to improve trade ties by linking Asia to Europe. Pakistan's controversial economic corridor is also a part of the initiative.
"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 Gancheng, director of South Asia Studies at Shanghai Institute for International Studies.
"Beijing had also 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."
The loans by China might be seen as a way to exert control in South Asia by the Asian country. Meanwhile, India has been rallying support from the neighbouring countries and has attempted to improve relations with Sri Lanka, Nepal and Bangladesh.
India looks at China with suspicion as it supports Pakistan and foiled its bid at membership in the nuclear suppliers group.