Tarique Rahman, who became Bangladesh’s prime minister in February, was in Beijing last week meeting with Chinese President Xi Jinping. Bangladesh has historically been so close to India that it could almost be considered a satellite of New Delhi, but in the wake of 2024’s uprising that ended the 15-year rule of Sheikh Hasina, Dhaka has pursued strategic autonomy with vigor. Beijing and Dhaka signed 13 memorandums of understanding during Rahman’s trip (covering trade, investment, infrastructure, agriculture, science, technology and public health), and a dozen Chinese companies proposed investments totaling approximately $9.2 billion. The investments concentrate on infrastructure, logistics, manufacturing and energy and appear to be aimed at boosting China’s influence in the South Asian country.

It’s a somewhat alarming development for New Delhi, which must weigh the costs of lost leverage and the risks of a stronger Chinese presence in and around the Bay of Bengal. However, besides India, China’s expansion is likely to encounter friction in multiple directions: the United States, which opposes China’s growing presence throughout the Indo-Pacific; Myanmar, whose instability will hinder Chinese connectivity plans; Beijing’s own budget, which is groaning under the strain of a vast overseas investment portfolio and a decelerating economy; and to a great extent Bangladesh itself, which is more concerned with building its own sovereignty than it is interested in becoming a Chinese vassal state.

Chinese Investments

From Dhaka’s perspective, perhaps the most notable outcome of Rahman’s visit to China was the renewed political momentum behind the Teesta River Comprehensive Management and Restoration Project. Bangladesh struggles every monsoon season with chronic flooding, followed by water shortages in the dry season. The Teesta River initiative, long-discussed but never implemented, aims to end this cycle between extremes through dredging, embankments, reservoirs and modernized irrigation systems. For more than 15 years, Bangladesh and India have been unable to reach a comprehensive Teesta water-sharing agreement due largely to political opposition within India’s West Bengal state. The Chinese-funded project, however, concerns work located entirely within Bangladeshi territory, negating the need for consensus with Indian local officials.

This is about more than water rights or infrastructure. If Beijing can deliver, the project would reinforce its reputation as a development partner capable of delivering politically important infrastructure, while also supporting its broader Belt and Road connectivity ambitions across South Asia.

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Relatedly, a Chinese state-owned firm, China Civil Engineering Construction Corp., offered a $650 million investment to, among other things, develop the Mongla Port Economic Zone. Chinese investment in Mongla Port and associated economic zones strengthens Beijing’s commercial presence along the Bay of Bengal, and it also revives discussions surrounding the proposed Bangladesh-Myanmar-China Economic Corridor (the successor of the Bangladesh, China, India and Myanmar Economic Corridor, a 2015 multi-modal proposal by China, from which New Delhi decided to withdraw due to strategic rivalries and territorial disputes with Beijing).

Superficially, these are economic initiatives, but they inevitably raise concerns in New Delhi because they increase Beijing’s influence close to India’s eastern coastline and near strategically sensitive areas such as the Siliguri Corridor. Chinese commercial investments do not automatically translate into military access, but India remains wary given China’s pattern of overseas port investments, not to mention concerns about future intelligence or logistical capabilities in the Indian Ocean region. The message for New Delhi is clear: It can no longer take its regional influence for granted and must instead begin actively competing for partnerships.

Other Factors

Even though Beijing’s initiatives represent a strategic setback for New Delhi, geography continues to provide India with solid advantages that China cannot replicate. India shares more than 4,000 kilometers (2,500 miles) of border with Bangladesh and maintains deep historical, cultural and linguistic ties, as well as extensive bilateral trade, transportation links and decades of security cooperation. During crises involving border management, migration, natural disasters or supply chain disruptions, Bangladesh cannot simply bypass its immediate neighbor. Consequently, while China may become Bangladesh’s main source of investment and infrastructure financing, India is likely to remain its most indispensable geographic and economic partner. Recognizing this reality, New Delhi will likely not oppose Beijing’s investment but will accelerate its own connectivity initiatives, expand cross-border energy cooperation and potentially also try to revive negotiations surrounding the long-delayed Teesta water-sharing agreement.

India can likely expect support from the United States, which shares New Delhi’s concerns regarding Beijing’s growing presence across the Indo-Pacific. Washington recently strengthened its strategic engagement with Dhaka as part of its Indo-Pacific strategy, and it is deepening cooperation with New Delhi in areas such as maritime security, defense interoperability and regional diplomacy. However, India and the U.S. do not exactly see eye to eye: Washington wants a network of partners and allies it can rely on to stabilize the Indo-Pacific, while New Delhi shuns formal alliances in favor of freedom of movement and regional primacy within South Asia. Washington is also pursuing an economic rapprochement with Beijing that, if push came to shove, would take precedence over India and its regional concerns.

Another key factor that will shape the future of regional connectivity is Myanmar. The country’s ongoing civil war represents perhaps the greatest source of uncertainty affecting Chinese, Indian and Bangladeshi strategic planning. Many of China’s regional infrastructure ambitions, including the proposed Bangladesh-Myanmar-China Economic Corridor, depend on secure transportation routes through Myanmar. However, persistent conflict between the military junta and numerous ethnic armed organizations has produced fragmented territorial control, attacks on infrastructure, shifting local alliances and widespread instability. Although China maintains substantial influence over Myanmar’s military leadership, it does not fully control developments on the ground. Continued instability thus threatens to delay or undermine projects that depend on reliable transit across Myanmar. The conflict also complicates India’s own eastern connectivity strategy, contributing to refugee flows and humanitarian pressures across the region.

Finally, China faces the limits of expanding its overseas investment portfolio. Beijing is financing major infrastructure and development projects across Pakistan, Sri Lanka, Bangladesh, Myanmar, Cambodia, Laos, Central Asia and numerous African states. Maintaining these commitments requires substantial financial resources, diplomatic engagement, political risk management and security for Chinese personnel and infrastructure. Should China’s domestic economic growth continue to slow, Beijing may need to prioritize some of its overseas investments over others, especially as it will more than likely work on rooting out domestic structural issues and moving toward a much-desired economic rebound.

Things That Money Can’t Buy

China’s growing economic presence will not necessarily translate into geopolitical dominance over Bangladesh, but the fast expansion of Chinese economic and potentially defense cooperation increases the risk of long-term structural dependence if diversification of partners is neglected. The discussion around deeper defense cooperation, including possible Chinese fighter aircraft acquisitions, together with growing Chinese involvement in key ports and industrial zones, demonstrates that bilateral ties are gradually extending beyond economics into areas with wider geopolitical implications.

Still, Bangladesh increasingly seeks to maximize economic opportunities while preserving strategic autonomy. Rather than aligning exclusively with any single great power, Dhaka is simultaneously accepting Beijing’s investment, maintaining strong trade relations with Washington, preserving extensive economic and security cooperation with New Delhi and participating in multiple regional institutions, all the while avoiding formal alliance commitments. This balancing strategy enables Bangladesh to extract benefits from competing powers without having to sacrifice its political independence.

Thus, China’s greatest limitation might be its assumption that economic influence will certainly lead to long-term political alignment. Beijing can finance major infrastructure projects and become Bangladesh’s largest investor, but this does not guarantee enduring political loyalty. Future governments or changing regional circumstances could lead Dhaka to rebalance its external relationships if doing so serves its national interests better. One thing’s for certain: As competition across the Bay of Bengal intensifies, Bangladesh is evolving from a peripheral actor into a strategic player whose choices will increasingly influence the future security and economic sphere of South Asia.