The China Factor and India’s Security Threat – OpEd – Eurasia Review

Bangladesh is expected to become India’s fourth largest export destination in FY 2022 and currently ranks fifth. This indicates that Bangladesh has increased its purchasing power capacity. Bangladesh’s economic expansion pushed it in this direction. Bangladesh has overtaken India in major social phenomena and is poised to overtake Indian economy in the near future. India’s fear that Bangladesh’s economic expansion will endanger its security is quite understandable.

Since its independence, Bangladesh has made great progress. Battered by initial pessimism, refugees, destroyed infrastructure and abandoned factories, it found itself without foreign exchange reserves. Natural calamities and famine had pushed the economy to the brink of collapse, as evidenced by economic growth of 14% in 1975. Bangladesh’s prosperity is due to the presence of a single central nation, a unique language and culture, acceptance of diversity, allowing privatization and encouraging foreign investment.

The former “Banana Republic”, dependent on jute products, had pushed the primary sector below the bottom of the list. Bangladesh now produces one in two t-shirts. Upstream links, such as manufacturers of buttons and zippers of garment accessories, are growing at the same rate as RMG industries. National industries, agriculture, tanneries, pharmaceuticals, glass, plastics, cement and steel sectors are all supported by the government, resulting in economic boom in the clusters.

Pandemic Shock Absorber:

Bangladesh, like every other country, has been plagued by the epidemic and has been forced to institute lockdown, which has momentarily halted economic progress that depends on the “3Rs”: RMG, Rice and Remittance.

With the initial shock, the RMG sector had flipped. As ports were temporarily closed and delivery times were not met, export orders were cancelled. But, surprisingly, the industry had rebounded in just a few months. Since the March 2020 shutdown, the months of July and August have seen more exports than the previous two years.

Bangladesh’s agriculture industry has coped with the pandemic-induced shock remarkably well. Apart from some flooding, the agricultural industry has fared admirably, cushioning any large-scale job losses.

Bangladesh has large foreign exchange reserves as well as a steady flow of remittances throughout the period, which provided some economic cushioning. During the epidemic, remittances increased significantly and the government facilitated the process by offering incentives. It worked as the main shock absorber. Moreover, a stable macroeconomics and a static exchange rate have been proven to sustain Bangladesh’s double-digit growth for a decade.

What awaits Bangladesh:

Except for occasional setbacks, Bangladesh’s economy is booming. Bangladesh’s economy is booming despite the outbreak, while others are suffering. Its economy will remain open to international investment. To attract such investments, Bangladesh has created hundreds of Special Economic Zones, which house all manufacturing and export facilities and allow international investors to exchange their currencies safely. Korea, Japan, China and India have all invested in these special economic zones.

Bangladesh is likely to experience a transition shock when it graduates from LDC status. It will lose between 8% and 10% of its gross export earnings. However, with domestic reforms such as increased labor productivity, improved tax collection, lower tax-to-GDP ratio, and increased collection of domestic resources, the transition can be eased.

The China factor:

Bangladesh has benefited from the trade war between the United States and China, as well as the ongoing standoff between India and China. Bangladesh’s physical proximity to China, as well as the strong economic potential of the two countries, suggests that China will become an even more important trade and development partner for Bangladesh in the years to come. China wants Bangladesh to join the Belt and Road Initiative, which benefits the Chinese economy. Another reason for China’s interest in Bangladesh is to limit Indian influence in the region, which it has largely succeeded in doing. All of India’s neighbors (Myanmar, Nepal, Sri Lanka and Pakistan) have become targets for Chinese investment. Bangladesh’s geostrategic importance will provide China with a wide reach over the Bay of Bengal, allowing it to keep a close eye on the Indian subcontinent if China can only persuade Bangladesh to fall into its debt trap. So far, Bangladesh has been a savvy trader. India, on the other hand, was concerned about the likelihood of Bangladesh joining Chinese hands.

Will India participate in economic growth?

Due to their different economies and agility, India and China are unable to compete financially. China will have finished building a bridge or a number of highways by the time India finalizes a contract. India must focus on historic relations and collaboration while resolving first generation issues such as the Teesta River issue and the border killings. Bangladeshis often perceive India as a bully and feel that Bangladesh has never received its fair share because they are unable to understand the numbers. India must pay its past debts and move forward to become Bangladesh’s economic and security partner.

The collaborative venture between Bangladesh and DRDO’s Dhanush Artillery Gun could develop ships, radars and missiles. It will serve the needs of Bangladesh’s armed forces (which are 86% controlled by Chinese companies), safeguard India’s strategic interests and promote the flagship of the Indian government “Aatma-nirbhar Bharat”. The capacity of India and Bangladesh to share marine domain awareness can also be improved.

The economic progress of Bangladesh has a favorable impact on the economy of India as it is one of the major export destinations of the country. Bangladesh is perhaps India’s only neighbor that can support India both strategically and economically, and vice versa. Bangladesh, on the other hand, piques the interest of India’s opponents. But India must remember that in geopolitics, friends and foes can change, but neighbors cannot be changed.

*Benedict B. George holds a Ph.D. Fellow at the University of Texas, holds a master’s degree in strategic studies. His area of ​​interest is Asian foreign policy.

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