Chinese investment in Bangladesh has sometimes violent implications

Nearly a month after a violent clash between local and Chinese workers shut down construction of the Payra thermal power plant in southern Bangladesh, work has not yet fully resumed and concern is growing over whether its commissioning will be further delayed.

The government’s bigger concern, however, is preventing recurrence of such violent incidents in the future, as they tend to scare away foreign investors, mostly from China, who have poured in billions of dollars, thereby putting a damper on the country’s current development momentum, reports Asian Times.

A Sino-Bangladeshi consortium is building the 1,320 megawatt Payra coal-fired plant project in Patuakhali, a district some 329 kilometers south of Dhaka, at a total cost of $1.6 billion, and China is providing 85 percent of the funds, according to the state-run Bangladesh Power Development Board.

“We’ve to be very careful in handling these matters and we simply can’t be seen as hostile to our friends and development partners,” Munshi Faiz Ahmed, a former ambassador to China who currently chairs the Bangladesh Institute of International and Strategic Studies, a semi-official think tank, told Asia Times.

Outside forces

He sees it as in the best interest of Bangladesh to ensure security and safety of foreign nationals, especially Chinese, whose projected investment of more than $50 billion in the next decade and beyond in power, transport and communications is critical for the country’s economic development.

At the same time, he said, Dhaka must not lose sight of vested interest groups that are inimical to Chinese presence because they lost to Chinese bidders in mega projects. He declined to specify which foreign companies or agents provocateurs he believed seek to cause trouble. But his concern was echoed in a government report submitted a week after the incident, which said it was fueled by “outside forces.”

Violent protests against other Chinese-financed power plant construction projects have erupted in the past. So far, the authorities appear to have contained the fallout from the latest violence on June 18, which left one Chinese and one Bangladeshi worker dead and injured about a dozen others. With tensions subsiding noticeably, construction resumed, but only partially, from July 6.

Quick deployment of over 600 policemen and paramilitary forces on the construction site and arrests of more than a dozen suspected troublemakers may have restored a sense of security among the 2700 Chinese workers, but the incident exposed simmering tension and perhaps distrust between the local and expatriate workers.

“We’re trying to address the issue as swiftly and effectively as possible,” M Khorshed Alam, managing director of the Bangladesh China Power Company Limited (BCCL), which owns the joint venture project, told reporters.

In order to facilitate better communication between the two sides, he said, more than a dozen interpreters would be appointed as quickly as is feasible. Better communication, he added, would help improve understanding and at the same time thwart any future attempts by the “outside forces” to sow any discord and mistrust between the two sides.

Massive Chinese Investment

In recent years, China has come in a big way and it is expected to invest more than $50 billion in the next 10 to 15 years in Bangladesh in such sectors as energy and power, transport and communications, Commerce Minister Tipu Munshi said.

“China has been a trusted partner of Bangladesh for a long time,” he told a business gathering organized by HSBC in Dhaka recently. Bangladesh has set out on “the highway of development,” with China as a “key partner in this journey.”

Chinese investment here saw a dramatic rise when President Xi Jinping announced a $24 billion loan program during his visit to Bangladesh in 2016.

According to Gateway House, a Mumbai-based think tank, China has so far committed $31 billion to Bangladesh for funding projects in roads, railways, power plants and water treatment facilities.

Ahsan Mansur, executive director of the Policy Research Institute in Dhaka, calculates that once private sector investments are also factored in, the figure rises to $42 billion.

That makes Bangladesh the second-biggest recipient of Chinese money in south Asia behind Pakistan, which has received a pledge of $60 billion.

The massive Chinese investment is part of China’s Belt and Road Initiative, launched by President Xi Jinping in 2013, which focuses on connecting about 150 countries across Asia, Africa, Middle East and Europe by building infrastructure projects of ports, pipelines and roads, aimed at accelerating development in many of the world’s poorest countries.

Skeptics say the plan is aimed at regional dominance and control of trade.

Avoiding debt trap

The huge Chinese investment is also raising concern in some quarters here about problems including the kind of debt trap some recipients of Chinese money including Pakistan, Sri Lanka, Nepal and the Maldives have fallen into.

Bangladesh “never will” ask China  for more loans as it looks for ways to finance its future development, Minister of State for Foreign Affairs Mohammed Shahriar Alam said.

He told South China Morning Post in April that any amount of debt can be “dangerous” for countries not achieving high economic growth, adding that “Bangladesh has gained the economic power” to service its own loans linked to Beijing’s “Belt and Road Initiative.”

That assertion by the minister may have reassured some skeptics about the consequences of too much reliance on China but Bangladesh has other concerns to address, especially its relations with India which doesn’t want to see too much Chinese involvement in its backyard.

This is a delicate balancing act that Bangladesh appears to be playing well – keeping both sides happy. In recent years, New Delhi has publicly voiced its displeasure with having lost big contracts to China, but it has apparently accepted the reality that it cannot match the Chinese wherewithal and technological superiority.

In addition, Prime Minister Sheikh Hasina reportedly convinced Narendra Modi, her Indian counterpart, during her visit to New Delhi last year that there was no reason for India to worry as Bangladesh deeply valued its time-tested friend and natural ally.

“Whatever megaprojects Bangladesh undertakes, it’s always in the best interest of our people,” she told Indian journalists. “It’s not only India or China but we’re eager to obtain assistance from any friendly country because we want development and our people would be the main beneficiary of those projects.”

For now, although doubts remain over the on-schedule completion of the worker-strife-slowed Payra plant, which was envisioned as starting production in December this year, the near-certain delay doesn’t seem to be a big headache for the authorities.

That’s because Bangladesh is now producing surplus electricity of about 20,000 MW a day, a significant jump from just over 4000 MW ten years ago. The mega power plants, mostly funded by China, are being set up to produce 34000 MW by 2030 in order to meet projected future needs.