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Analiza Pathak
Born in Guwahati, raised in Mussoorie and Delhi, She grew up reading magazines more than textbooks. She is an experienced writer/editor and has shifted focus to various aspects of communication. Her a ... Read More
Amid tensions between India and Bangladesh over issues like the repatriation of former Prime Minister Sheikh Hasina and border fencing, neighboring country China has been extending significant support to Bangladesh. The relationship between the two countries has been growing closer, with China showing strong backing for Bangladesh. Recently, Bangladesh’s Foreign Minister Touhid Hossain visited Beijing, where he met with his Chinese counterpart, Wang Yi. During this meeting, China provided significant relief by agreeing to extend the repayment period for Bangladesh’s loans.
Additionally, China approved a reduction in interest rates, offering substantial relief to the economically struggling government of Mohammad Yunus in Bangladesh. According to the agreements reached, President Xi Jinping’s government extended the loan repayment period from 20 years to 30 years. Furthermore, the Chinese government promised to lower the interest rate on the loans.
In a statement from Bangladesh, it was mentioned that Foreign Minister Touhid Hossain had requested China to reduce the loan interest rates from 2-3 per cent to 1 per cent, waive the commitment fee, and extend the repayment period from 20 to 30 years. Considering Bangladesh’s past track record, China accepted the request and assured a reduction in interest rates.
During the meeting, the Chinese Foreign Minister assured his Bangladeshi counterpart that China would continue to support Bangladesh’s economic and social development. This gesture by China is seen as a strategic move to expand its diplomatic influence. Under the Belt and Road Initiative (BRI), China has verbally agreed to reduce interest rates on loans and extend repayment periods, while also assuring Bangladesh that their requests will be evaluated.
Bangladesh had taken loans from China for development projects under the PBC and GCL agreements. Initially, the repayment period for these loans was set at 20 years, with a grace period of five years. The loans under the GCL agreement carried an interest rate of 2 per cent, while those under the PBC agreement had a higher rate of 3 per cent.
According to the Economic Relations Division, Bangladesh currently owes China a substantial debt of USD 5.57 billion, which accounts for 9 per cent of Bangladesh’s total external debt. China ranks as the fourth-largest lender to Bangladesh. This move aligns with China’s broader strategy to deepen its economic and political ties with East Asian nations, particularly at a time when its relationship with India remains strained.
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