China sees Bangladesh & Myanmar as key links between Yunnan and the Indian Ocean, but Dhaka has wisely avoided Chinese loans for infrastructure.

China will provide grant assistance of approximately US$72.6 million to Bangladesh under an agreement on economic and technical cooperation between the two countries, it is reported. The grant will be used to pay for disaster management, the construction of bridges and an exhibition centre and what is described as “welfare projects.”

The agreement was signed in the Capital Dhaka on Sunday, January 20 by Economic Relations Division (ERD) Secretary Manowar Ahmed for the Bangladesh side and Zhang Zuo, the Chinese Ambassador to Bangladesh.

During the meeting, Manowar Ahmed remarked that Bangladesh’s economic ties with China are of great significance;

“as China is now the largest trading partner of Bangladesh.”

Also Read: China moves on with BRI Projects in Bangladesh.

China supported Pakistan during the 1971 Bangladesh war of independence, but Beijing did not establish diplomatic relations with Bangladesh until 1975.

Since then, relations have improved considerably and Chinese President Xi Jinping’s announcements about his Belt and Road Initiative in 2013 paved the way for a new era in Dhaka Beijing relations.

China sees Bangladesh and its neighbour Myanmar as important links between Yunnan and other landlocked provinces and the Indian Ocean.

But drawing on lessons learned from Nepal, Sri Lanka and the Maldives, Bangladesh has so far avoided falling into any substantial Chinese debt trap by choosing to finance major infrastructural projects with its own resources_ rather than relying on loans from Beijing.

At the same time, Bangladesh is trying to balance relations with its traditional ally India by strengthening economic ties with China.