China Unrivalled in Investing Across the World

During his visit to Japan last month, Bangladesh Prime Minister Tarique Rahman drew diplomatic attention by showing respect in his own way without bowing before the country’s national flag. During the official reception in Tokyo, Japanese Prime Minister Sanae Takaichi gestured towards the national flag, but Mr. Tarique Rahman placed his right hand over his chest and slightly bowed his head in greeting.

The incident received significant coverage in Chinese state-run media China Daily and Hong Kong-based Phoenix TV. China Daily, in particular, portrayed Mr. Tarique Rahman’s gesture positively, describing it as an expression of self-respect and diplomatic independence. Its analysis criticised the expectation that foreign heads of state should bow before Japan’s national flag. At the same time, it placed the incident in a broader political and historical context, referring to the history of World War II and Japan’s nationalist politics rather than treating it as a mere diplomatic formality.

According to reports in Chinese media, leaders such as German Chancellor Friedrich Merz, Italian Prime Minister Giorgia Meloni, French President Emmanuel Macron, Canadian Prime Minister Mark Carney and former British Prime Minister Keir Starmer had bowed before Japan’s flag. In contrast, US President Donald Trump walked straight past it, while Indonesian President Prabowo Subianto, like Mr. Tarique Rahman, did not follow the customary gesture. The Bangladeshi Prime Minister’s stance has drawn particular attention from Chinese media. However, alongside China’s positive portrayal of the incident, it is also necessary to consider Japan’s growing role in regional geopolitics and the competition for influence in the Bay of Bengal region.

In reality, both Japan and China are important partners of Bangladesh. However, an analysis of their respective roles in Bangladesh’s economic structure, industrial production, trade, infrastructure and defence cooperation reveals significant differences. Japan has long been one of Bangladesh’s major development partners and an important source of infrastructure financing. China, on the other hand, is not only Bangladesh’s largest trading partner but is also directly involved in supplying industrial raw materials, machinery, infrastructure construction and military equipment. In other words, while development cooperation and potential investment form major pillars of Bangladesh’s relationship with Japan, its ties with China are deeply integrated into the country’s existing production and supply chains. Moreover, China has emerged as an unrivalled force in the global competition for investment.

During Mr. Tarique Rahman’s visit to Japan, a target was announced to attract approximately one trillion yen, or $6.3 billion, in private investment in Bangladesh over the next five years. This undoubtedly represents a significant opportunity for Bangladesh. However, the amount is not a confirmed investment commitment; rather, it is a target for attracting private-sector investment over the next five years. Although around 350 Japanese companies currently operate in Bangladesh, Japan’s foreign direct investment in the country remains below $500 million. The announced target is therefore substantially higher than the existing level of investment. Its implementation will depend on Bangladesh’s business environment, policy consistency, administrative efficiency and infrastructure capacity.

Dr Fahmida Khatun, Distinguished Fellow at the Centre for Policy Dialogue (CPD), said Japan’s advanced technology in automobiles, heavy industries and clean energy could create significant opportunities for Bangladesh. However, policy consistency, administrative efficiency and an uninterrupted power supply must be ensured to translate these opportunities into actual investment. Dr M Masrur Reaz, Chairman of Policy Exchange Bangladesh, also viewed the investment initiative positively. According to him, if the investment materialises, it will have a positive impact on employment, technology transfer and macroeconomic stability. Professor Shahab Enam Khan of the Department of International Relations at Jahangirnagar University believes that Bangladesh can benefit from Japanese investment and employment opportunities, but weaknesses in domestic management must first be addressed.

On the other hand, China’s role in Bangladesh’s trade is far more direct. China has been Bangladesh’s largest trading partner for 16 consecutive years. Around 30.6 per cent of the country’s total imports come from China. The country is one of the major sources of yarn, fabrics, raw materials, industrial machinery and various production inputs for Bangladesh’s readymade garment industry. The supply chain of the garment sector, the country’s leading export-earning industry, is deeply connected with China. Therefore, while Bangladesh has the prospect of attracting new investment from Japan, its existing trade relationship with China carries immediate and fundamental importance for keeping industrial production running.

China also plays a significant role in infrastructure development. It has provided financing and technical assistance for the construction of the Padma Bridge, the Padma Bridge Rail Link, the Karnaphuli River Tunnel and several power plants. Its involvement in important initiatives such as the modernisation of Mongla Port, the establishment of economic zones and the Teesta Master Plan is also strategically significant for Bangladesh. In contrast, Japan’s development cooperation is primarily centred on long-term loans, technical assistance and planned infrastructure projects. Since project feasibility studies, approvals and implementation under Japan International Cooperation Agency (JICA) financing often involve lengthy procedures, meeting urgent infrastructure needs can sometimes be challenging.

China’s role is also particularly significant in defence cooperation with Bangladesh. China has long been a major partner in the modernisation of the Bangladesh Armed Forces. It has played an important role in supplying military equipment, including fighter aircraft, submarines, tanks and warships. In contrast, Japan’s defence cooperation with Bangladesh remains relatively limited. As a result, Bangladesh’s relationship with China has a distinct strategic dimension in terms of national defence capabilities and military modernisation. The importance of this cooperation has further increased amid growing competition among major powers in the Bay of Bengal and the Indian Ocean regions.

Former Chinese Ambassador to Bangladesh Yao Wen has also highlighted the importance of economic relations, security and stability between the two countries. During a meeting with Home Minister Salahuddin Ahmed on February 25, he said China was interested in increasing investment in Bangladesh following the establishment of a politically stable government. Noting that around 10,000 Chinese nationals were working on various projects in Bangladesh, he said development and security were closely interconnected. He also emphasised the need to ensure law and order and security to attract foreign investment.

The remarks of Chen Huaiyu, Chairman of China Exim Bank, also carry an important message for Bangladesh. Highlighting the need to improve the business environment to attract Chinese investment, he cited Vietnam as an example. According to him, Bangladesh must improve its business environment to attract investors from China. Prime Minister Mr. Tarique Rahman has also acknowledged this reality. Assuring Chinese investors, he has spoken of removing bureaucratic complications and ensuring long-term policy consistency. He has also outlined the government’s special 180-day action plan towards this end.

BIDA Executive Chairman Ashik Chowdhury has said Chinese companies are monitoring the stability of Bangladesh’s currency and progress in simplifying the investment process. Former Foreign Affairs Adviser Md Touhid Hossain has also highlighted the multifaceted nature of Bangladesh’s relationship with China. According to him, relations between the two countries are no longer confined to trade and investment; they have evolved into a deep strategic partnership.

Meanwhile, several economic experts have argued that Bangladesh cannot afford to overlook its relationship with Japan. The country’s low-interest loans, technology, industrial investment and economic partnership can make important contributions to Bangladesh’s long-term development. In particular, the Bangladesh-Japan Economic Partnership Agreement and the potential of the special economic zone in Araihazar could add a new dimension to industrialisation if properly utilised. However, the realisation of Japan’s announced investment target will depend on reforms in Bangladesh and improvements in its investment climate.

Several geopolitical analysts believe Bangladesh needs to maintain relations with both Japan and China. However, the nature of their importance differs. Japan is an important source of development financing, technology and future investment for Bangladesh, while China is already deeply integrated into the country’s trade, industrial production, infrastructure and defence systems. Therefore, while maintaining diplomatic balance, Bangladesh has practical reasons to attach particular importance to its relationship with China in safeguarding its national interests. Tokyo’s investment pledges could open new avenues of opportunity for Bangladesh, but Beijing’s role in the country’s current economic and strategic framework is far broader and more immediately significant.