REJAUL KARIM BYRON and JAGARAN CHAKMA

When Xi Jinping landed in Dhaka in October 2016, it was the first visit by a Chinese president in three decades, and Beijing marked it with pledges worth around $20 billion in loans and assistance over the following four years.

At the time, it was the largest commitment any single country had made to Bangladesh, and it came as China looked to deepen its presence in South Asia while India did the same. Nearly ten years later, about half of that money has entered Bangladesh’s foreign aid pipeline.

Under the initial agreement signed during Xi’s visit, China was expected to finance 27 projects. But as of June last year, Bangladesh and China had signed loan agreements for 13 projects worth $8.89 billion.

Of that amount, about $5.53 billion has been disbursed, according to finance ministry data. Dhaka has already begun repaying loans for 10 of those projects, with repayments reaching $483 million by June 2025.

While economists say signing a memorandum of understanding does not guarantee project implementation, finance ministry officials blamed the fund slowdown on the Covid pandemic, lengthy approval procedures in both countries and Beijing’s increasingly cautious approach to lending amid a foreign exchange crisis in Bangladesh.

Of the total $8.89 billion in signed loans, China provided financing in both US dollars and Chinese yuan (RMB). According to official data, RMB 15.16 billion, equivalent to $2.24 billion, was denominated in yuan, while the remaining $6.65 billion was provided in US dollars.

Against this backdrop, Dhaka is expected to seek Beijing’s financing for three major projects during Prime Minister Tarique Rahman’s upcoming visit to China.

APPROVAL DELAYS SLOW PROJECT ROLLOUT

Of the 13 projects with Chinese funding, nine were approved before the Covid-19 pandemic in 2020. Since then, progress on new project approvals has slowed considerably.

A finance ministry official said China became more cautious about extending new loans after the pandemic, pointing to a severe foreign exchange crunch in Bangladesh and rising economic pressures.

Another official involved in negotiations with Beijing, speaking on condition of anonymity, said bureaucratic hurdles on both sides, especially in China, have significantly slowed approval and disbursement.

In Bangladesh, projects require clearance from multiple committees before approval, a process that can take considerable time.

“And the process is even longer in China,” said a finance ministry official while talking to The Daily Star on condition of anonymity.

According to the official, if Chinese authorities disagree with or seek clarification on any part of the project documents, the files are often returned to Bangladesh for revision, forcing the process to start again.

Officials also pointed to capacity constraints at China’s Exim Bank, where only a limited number of officials handle overseas lending, contributing to slower fund releases.

Lobbying by competing Chinese companies seeking contracts for development projects has also caused delays, the officials said.

SEVEN PROJECTS COMPLETED, SIX UNDER WAY

Of the 13 projects, seven have been completed while six are ongoing.

Completed projects include the Padma Bridge Rail Link project, the Karnaphuli River Tunnel project, Phase III of the Info-Sarkar project, the Modernisation of Telecommunication Network for Digital Connectivity project, the Establishment of Tier-IV National Data Centre project, the Procurement of Six New Vessels project, and the Dasherkandi Sewerage Treatment Plant project.

Six other projects remain under implementation.