When the government of Sri Lanka transferred operations of Hambantota port to a Chinese majority-held joint venture for 99 years, this event heightened concerns about China’s presence in the smaller countries of South Asia. Some commentators have suggested that Sri Lanka, as well as other South Asian nations that have funded major infrastructure projects through China’s Belt and Road Initiative, are victims of “China’s debt-trap diplomacy.” This report finds that the reality is much more complicated.

Summary

  • The smaller South Asian (SSA) countries maintain different levels of interaction with China, ranging from Bhutan, which has no formal diplomatic relations with China, to Bangladesh and Sri Lanka, which have the strongest military and economic ties, respectively.
  • On balance, SSA countries have benefited from China’s growing economic and military engagement with them and the region. Chinese projects have helped increase connectivity within these countries as well as with external trading networks.
  • Despite China’s arms sales to these countries, the dominant role exerted by India in South Asia and difficulties in the India-China relationship have ensured that military ties of SSA countries with China remain limited.
  • SSA countries are increasingly aware of the potentially negative impacts and unintended consequences of Chinese financing of development projects, and they are weighing the economic benefits of such projects against the potential strategic costs of future Chinese involvement.
  • US concerns about how Chinese loans to SSA countries are affecting regional security dynamics should prompt Washington to help alleviate the challenging structural conditions these countries face in the prevailing development finance order.
  • SSA countries will have continuing relevance for US interests across the Indo-Pacific region, including their reliance on China for development finance, India’s standing in the region, domestic politics and internal conflict dynamics, and regional security.

About the Report

This report examines the changing relationships of Bangladesh, Bhutan, Maldives, Nepal, and Sri Lanka with China and the implications for US security interests in South Asia. Supported by the Asia Center at the US Institute of Peace, this study was based on data sources from the five countries as well as fieldwork in Dhaka, Bangladesh; Kathmandu, Nepal; and Colombo and Hambantota, Sri Lanka.

About the Author

Nilanthi Samaranayake is the director of the Strategy and Policy Analysis Program at CNA, a nonprofit research organization in Arlington, Virginia. She has published several articles focusing on the smaller countries of South Asia and their relations with major powers. The views expressed are solely those of the author and not of any organization with which she is affiliated.

Related Publications

Conflict Dynamics between Bangladeshi Host Communities and Rohingya Refugees

Conflict Dynamics between Bangladeshi Host Communities and Rohingya Refugees

Wednesday, April 12, 2023

By: Geoffrey Macdonald;  Isabella Mekker;  Lauren Mooney

In August 2017, several hundred thousand Rohingya fled violence and persecution in Myanmar, seeking refuge in Cox’s Bazar in neighboring Bangladesh. In the years since, the Bangladeshi government has provided a safe haven for the refugees. Yet there are signs of increasing discontent in the Bangladeshi host community over insecurity, economic costs, and other negative effects of the refugee camps. As this report explains, addressing this potentially combustible situation will be vital to ensuring a sustainable humanitarian effort in Cox’s Bazar.

Type: Special Report

Conflict Analysis & Prevention

It’s Time for South Asia to Talk Climate

It’s Time for South Asia to Talk Climate

Monday, October 17, 2022

By: Ahsan Butt

That India and Pakistan are engaged in backchannel track 2 diplomacy is the worst kept secret in South Asia. It does not take a vivid imagination to guess what dominates the agenda at these talks: Kashmir, terrorism, trade, perhaps crisis behavior under the shadow of nuclear weapons. Welcome as such conversations are, they are almost assuredly lacking focus on the biggest crisis facing the region’s inhabitants: climate change.

Type: Analysis and Commentary

Environment

The Persistent Challenge of Extremism in Bangladesh

The Persistent Challenge of Extremism in Bangladesh

Thursday, June 23, 2022

By: Mubashar Hasan;  Geoffrey Macdonald

On July 1, 2016, Bangladeshi militants carried out an attack, targeting mostly foreigners and non-Muslims, at the Holey Artisan Bakery in Dhaka. The Bangladeshi government responded to the attack with a concerted and controversial counterterrorism campaign. Although the number of terrorist incidents has been in steady decline since 2016, Islamist groups continue to operate, recruit, and carry out small-scale attacks while aspiring to perpetrate greater violence. This report examines the dynamics, drivers, and manifestations of extremism in Bangladesh and discusses measures to weaken its appeal.

Type: Special Report

Violent Extremism

Bangladesh’s Balancing Act Amid the U.S. Indo-Pacific Strategy

Bangladesh’s Balancing Act Amid the U.S. Indo-Pacific Strategy

Friday, April 1, 2022

By: Anu Anwar;  Geoffrey Macdonald;  Daniel Markey, Ph.D.;  Jumaina Siddiqui

As the Biden administration implements its new Indo-Pacific strategy, Bangladesh’s relationships with neighboring India and China are drawing renewed interest from U.S. policymakers. U.S. Undersecretary for Political Affairs Victoria Nuland visited Dhaka in late March and signed a draft defense cooperation agreement; last year, Special President Envoy for Climate John Kerry also went to Dhaka in advance of the Leaders’ Summit on Climate. At the same time, Washington retains concerns over democratic backsliding, human rights abuses and constraints on free and open electoral competition in the country. Experts Anu Anwar, Geoffrey Macdonald, Daniel Markey and Jumaina Siddiqui assess the factors shaping Bangladesh’s relations with its neighbors and the United States.

Type: Analysis and Commentary

EconomicsEnvironmentGlobal Policy

View All Publications