China Has Quickly Established Itself as the Largest Investor in Bangladesh

China Has Quickly Established Itself as the Largest Investor in Bangladesh

The growing south Asian economy has found itself a generous partner to invest in the sectors where it needs the most investment. Chinese investments in Bangladesh have surpassed all other external investments across Bangladesh. These investments have brought Bangladesh closer to the economic giant than ever before. Last year, the Dhaka stock exchange sold a 25% stake to a Chinese consortium instead of selling it to Indian’s national stock exchange, which was the other bidder. The Chinese investment in Bangladesh has grown at a rapid pace. So much so that it has overshadowed and sidelined its traditional strategic and economic partner India within a span of two years.

Bangladesh is a rapidly growing economy but with serious infrastructural and energy woes that are hampering its economic progress. That and China’s grand plans of tying the region together with a string of infrastructural projects have brought the two together, and China has become the largest investor in the South Asian country in no time.

In the current fiscal year alone, over $600 million of Chinese investment has flown into Bangladesh so far. The major chunk of the investment has gone to the energy sector and mega infrastructural projects.

There was a total investment of $506 million that flew in from China within the fiscal year 2017-18. This made up 20% of the total FDI that Bangladesh received that year. There are over 400 Chinese businesses that are currently operating within Bangladesh. Half of these are large Chinese corporations, while the others are small and medium businesses.

The major portion of the recent investments has gone into the power sector. China has financed a coal-based power project in Chittagong and another in Patuakhali. A third power project has been agreed upon; a 1300 MW coal-based power plant which will be built in the Cox’s Bazar. The government has estimated that by 2022, coal-based electricity will make up 50 % of its energy mix.

Currently, it stands at 2% of its total energy supply. Bangladesh stands to greatly benefit from this increase in energy supplies which will fuel its rapidly progressing manufacturing sector.

Besides the Chinese investments into the energy sector, there are $10 billion being invested in the infrastructural development programs across the South Asian country. These include exhibition centers, special economic zones, SEZs, and roads, and bridges.

All in all, the Chinese investments in Bangladesh make up another node in its ambitious BRI project.