Dhaka The ‘Next Sri Lanka’? China’s Debt Diplomacy Playbook In Bangladesh | Exclusive
Following a meeting between Chief Adviser Muhammad Yunus and Chinese President Xi Jinping on Friday, intelligence inputs suggest Bangladesh may be drifting into deeper economic reliance on China — a trajectory reminiscent of Sri Lanka.
China’s strategic playbook in South Asia is unfolding in Bangladesh, with top intelligence sources telling CNN-News18 that Beijing is positioning Dhaka as the “new Sri Lanka" — deepening economic ties to increase regional influence and challenge India.
The latest signal came on Friday, 28 March, when Bangladesh’s Chief Adviser Muhammad Yunus met Chinese President Xi Jinping in Beijing. The two leaders discussed strengthening business and economic cooperation between their countries. Intelligence inputs confirm that Yunus sought Chinese assistance to relocate manufacturing industries to Bangladesh — a move aimed at expanding industrial capacity and creating jobs.
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As part of the meeting, Yunus also requested a reduction in interest rates on Chinese loans, from the current 3 per cent to between 1 and 2 per cent, and asked for the waiver of commitment fees on Chinese-funded projects. With $7.5 billion in existing loans, China is already Bangladesh’s fourth-largest lender, and Dhaka requested broader support for upcoming infrastructure and development initiatives.
According to sources, China’s largely positive response to these demands fits into its broader ‘debt diplomacy’ strategy, using financial and technical assistance to build long-term influence in underdeveloped countries. This method, they say, has been successfully deployed elsewhere — most notably in Sri Lanka.
In a tangible outcome of the visit, Bangladesh and China signed nine bilateral agreements — including one on economic and technical cooperation, and eight memorandums of understanding (MoUs) related to cultural exchanges, media collaboration, and health sector partnerships. These agreements further cement the trajectory of deepening ties.
Notably, President Xi also indicated a willingness to consider lowering interest rates — directly responding to Yunus’s request. Intelligence officials view this as a sign of Beijing’s intent to sustain its economic hold over Bangladesh.
While Bangladesh has not formally joined China’s Global Development Initiative (GDI) or the Belt and Road Initiative (BRI), its acknowledgment of the GDI — even without full participation — is being viewed as a diplomatic victory for China. This allows Beijing to score symbolic and strategic wins without Dhaka making overt commitments.
Sources interpret this approach as a balancing act by Bangladesh — attempting to ease its financial burden while still leveraging Chinese investment to fuel domestic growth.
From China’s perspective, Bangladesh’s strategic location in South Asia is critical. Relocating lower-end manufacturing to Bangladesh allows China to cut domestic costs, maintain control over global supply chains, and keep Dhaka embedded in its industrial and technological ecosystem.
The timing of the Yunus–Xi meeting — following Xi’s recent interactions with other world leaders amid heightened tensions with the West — is also being read as a deliberate signal of Beijing’s focus on consolidating influence in South Asia.
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