DHAKA (REUTERS) - Chinese President Xi Jinping, stepping up a competition with India for regional influence, said on Friday (Oct 14) ties with Bangladesh would be enhanced to a strategic partnership as the two countries signed 27 agreements worth billions of dollars.
Mr Xi, making a first trip by a Chinese president to Bangladesh in 30 years, boosted involvement in Bangladeshi infrastructure at a time when Japan has also increased investment in the country located on the Bay of Bengal.
"We agreed to elevate the relations between China and Bangladesh from a closer comprehensive partnership of cooperation to a strategic partnership of cooperation," Mr Xi said after talks with Prime Minister Sheikh Hasina.
India has long considered Bangladesh as part of its area of influence and under Prime Minister Narendra Modi has boosted economic links with it as well as with other neighbours including Nepal and Sri Lanka.
Last year, Mr Modi announced a $2 billion credit line during a visit to Dhaka, but China is set to go well beyond that.
Ahead of Mr Xi's visit, Bangladesh junior finance minister M.A. Mannan said the deals the two countries planned to sign would involve Chinese funding of about US$24 billion (S$33.3 billion), Dhaka's biggest foreign credit line yet.
Among the agreements sealed on Friday was a 1,320MW power plant that China will build, officials said. China's TBEA signed a power grid deal worth US$1.6 billion with Dhaka Power, following a pact that Jiangsu Etern's consortium signed on Thursday (Oct 13) to strengthen Bangladesh's power grid network valued at US$1.1 billion.
"We reached a consensus to work together in trade and investment and other key areas such as infrastructure, agriculture, energy and power, information technology and transportation," Ms Hasina said.
Mr Xi visited Dhaka en route to a Brics summit of the world's leading emerging economies in Goa, India.
Dr Zhao Gancheng, director of South Asia Studies at the Shanghai Institute for International Studies, said there was room for both India and China to support development in Bangladesh. "I really don't think there is a zero sum game going on... Bangladesh welcomes both Chinese and Indian investment," said Dr Zhao.
China is currently Bangladesh's biggest trade partner with annual turnover of around US$10 billion, which is heavily in favour of Beijing.
"Xi's visit will set a new milestone," minister Mannan told Reuters. "Our infrastructure needs are big, so we need huge loans."
Bangladesh has backed Mr Xi's "One Belt, One Road" initiative to boost trade and transport links across Asia and into Europe, seeing it as an opportunity to lift growth. India has reservations about the plan, amid worries that it is an attempt to build a vast zone of Chinese influence.