Can India counter China’s growing influence?

| Updated: 01 October, 2024 2:03 pm IST

South Asia stands at a critical juncture, with political instability sweeping across the SAARC region. Pakistan, Sri Lanka, and the Maldives have all witnessed recent turmoil, and now Bangladesh finds itself in a precarious situation.

 

What began as a student-led protest in Bangladesh, driven by anger over unemployment and corruption, quickly escalated into a full-blown political crisis. Extremist groups hijacked the movement, spreading violence across the country. In a shocking turn, the long-standing government fell, leaving a power vacuum. Nobel laureate Dr. Muhammad Yunus, known globally for his work in microfinance, assumed leadership in an interim capacity, tasked with stabilizing a country on the brink.

 

Though his leadership brings hope, Dr. Yunus faces formidable challenges. Religious extremism is gaining momentum, and China’s growing influence in Bangladesh further complicates the political landscape. China has, over the years, made strategic investments in Bangladesh, consolidating its influence as part of the Belt and Road Initiative (BRI). Between 2016 and 2022, Chinese firms poured nearly $26 billion into Bangladesh, with $1 billion alone in 2022, a 30% rise from the previous year. By comparison, India’s investment during this period was a modest $121.46 million.

 

This disparity in financial leverage has allowed Beijing to establish a dominant position in Bangladesh. These investments are more than economic; they are part of China’s broader strategy to counter India’s influence in South Asia. With Dr Yunus now in power, the balance of power in the region could shift, depending on his stance on China.

 

This instability is not confined to Bangladesh. A similar trend is seen in Sri Lanka, where Chinese-funded infrastructure projects like the Hambantota Port left the nation saddled with debt, eventually ceding control of the port to Beijing. Bangladesh, too, faces the risk of falling into a “debt trap,” with major projects like the $3.6 billion Padma Bridge being developed under Chinese oversight. Meanwhile, Pakistan remains a key player in China’s BRI, further complicating India’s strategic calculus. The entire South-Asian region is caught in a tug-of-war between internal instability and external influence.

 

The debt burden on South Asian nations from China far outweighs that from India. From 2012 to 2022, China’s loans to SAARC countries surged from $9 billion to over $45 billion, while India’s loans grew from $2.3 billion to only $5.7 billion. This stark contrast highlights China’s economic stranglehold on the region, intensifying its geopolitical influence.

 

China’s overarching goal is to weaken India’s strategic position in its backyard. By extending its economic and political reach to Bangladesh, Sri Lanka, and the Maldives, Beijing seeks to dominate South Asia. In Bangladesh, the outcome could hinge on Dr Yunus’ ability to resist Chinese influence and steer the country back towards stability.

The geopolitical implications for India are profound. Not only is China increasing its leverage in Bangladesh, but the growing presence of religious extremism there presents a security threat to India. If Bangladesh falls further into China’s sphere of influence, India could face a twofold challenge: countering both extremism and Chinese dominance.

 

Bangladesh’s economic health is also at risk. The country’s GDP growth stood at a healthy 7.2% in 2022, but ongoing political unrest and growing dependence on China could threaten future growth. India, as the region’s 2nd largest economy, may also experience trade disruptions, particularly in the Bay of Bengal, which is vital for commerce. Bilateral trade between India and Bangladesh reached $14.5 billion in 2021-22, showing how closely tied the two economies are. Despite India’s efforts through trade agreements and infrastructure projects, they pale in comparison to China’s massive financial investments. For Bangladesh, its choice between aligning with India or China will shape the future of South Asian geopolitics.

 

Political instability is not confined to South Asia’s western borders. India’s north-eastern region has seen bouts of unrest, further complicating its domestic and regional security outlook. Ethnic clashes, such as those recently witnessed in Manipur, reveal deep-seated tensions that have festered for decades. The region’s complex ethnic composition, combined with historic grievances and economic underdevelopment, makes it a hotspot for political instability. The rise in insurgent activities and cross-border ethnic affiliations also opens the door for external actors, including China, to exploit the situation and further destabilize India’s north-eastern frontier. As New Delhi grapples with growing unrest in this region, it finds itself stretched thin in addressing both internal and external threats.

 

For South Asia to remain stable, regional powers must find ways to mitigate the influence of external actors while addressing internal threats such as extremism and political fragmentation. Dr. Yunus’ leadership in Bangladesh represents a critical turning point. His success in stabilizing the country could stave off deeper Chinese intervention and prevent further extremist influence. However, failure could lead to a power vacuum that exacerbates religious extremism and makes Bangladesh even more reliant on China.

 

India’s influence in South Asia has reached a critical moment. The question now is whether it can effectively counter China’s growing dominance and protect its strategic interests in the region.

The author is with NCAER in New Delhi. Views are personal.

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