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China extends loan repayment period for Bangladesh by 10 years

Published : Tuesday, 21 January, 2025 at 11:11 PM  Count : 332

China has agreed to extend Bangladesh’s loan repayment period from 20 to 30 years, providing significant relief for the country in managing its foreign debt. 

The decision came during a bilateral meeting between Bangladesh's Foreign Adviser Touhid Hossain and Chinese Foreign Minister Wang Yi at the Diaoyutai State Guest House in Beijing.  
At the meeting, Hossain proposed lowering the interest rate on Chinese loans from 2-3% to 1%, waiving commitment and management fees, and extending repayment terms for both preferential buyer’s credit loans and government concessional loans. 

In response, Wang Yi confirmed the extension and assured further review of the interest rate reduction request, according to a statement from Bangladesh’s foreign ministry.  

China, Bangladesh's fourth-largest lender with $7.5 billion in loans since 1975, praised the country's strong loan repayment track record. Wang highlighted Bangladesh's importance in China's neighborhood diplomacy and reaffirmed Beijing's commitment to supporting its economic growth, stability, and development initiatives.  

Hossain also met with Luo Zhaohui, chairman of the China International Development Cooperation Agency, to discuss increasing concessional loans, grants, and project numbers. Luo expressed openness to larger projects in Bangladesh, with a portion of funding offered as grants to reduce the average interest rate on Chinese loans.  

Discussions also covered metro rail financing, the Southern Infrastructure Development Initiative, and a proposal for establishing a Chinese-funded specialized hospital in Dhaka to commemorate the 50th anniversary of Bangladesh-China diplomatic relations. 

Additionally, Wang confirmed continued duty-free access for Bangladeshi products in the Chinese market for three years after Bangladesh’s graduation from the least-developed country (LDC) status in 2026.  

The two sides emphasized enhanced collaboration under the Belt and Road Initiative and agreed to celebrate their diplomatic ties with various activities. Wang invited Bangladesh to join Chinese President Xi Jinping's three global initiatives: Global Development, Security, and Civilization Initiatives, which Bangladesh pledged to review.  In response, Bangladesh conveyed their intention to examine the proposals and to remain engaged with China in deliberations on the issues.

Wang reaffirmed that China respects the sovereignty and territorial integrity of Bangladesh and reiterated continued Chinese support for the stability, reforms, democratic transition and development initiatives of Bangladesh.

Recognising Bangladesh's strategic position, the two sides emphasised continued cooperation under the Belt and Road Initiative.

China wants to see Bangladesh's economic development in pace with their own development and assured China's continued support for the projects conducive to the livelihood of the people of Bangladesh, Wang said.

The two sides expressed their willingness to work closely on proposed Chinese-funded projects namely the Dasherkandi sewage treatment plant, the upgradation and modernisation of Mongla Port and establishing digital connectivity and 4G expansion.

The Chinese side was very positive about the request for lowering the interest rate and financial support, an official of the foreign adviser's delegation told the correspondent from Beijing.

"They have not insisted on their issues of GDI and GSI, but said they want us to be with them for inclusive development," he said.

Bangladesh sought detailed information on China's plan to build a mega-hydropower dam across the Yarlung Tsangpo River in Tibet.

The Chinese side said they would not consume or withdraw any water and thus the lower riparian countries will not be affected, the official said, adding that there was no discussion on the Teesta river management project.

Both leaders discussed the Rohingya crisis and reaffirmed their shared commitment to work on a roadmap to finding a durable solution to the issue, according to the foreign ministry statement. Wang reassured China's continued engagement with Myanmar to address the situation and promote regional stability.

Hossain reiterated Bangladesh's firm commitment to the 'One China Principle' and unwavering support for UNGA Resolution 2758.

The two countries signed the implementation plan of the memorandum of understanding on the exchange of hydrological information sharing of the Yaluzangbu-Jamuna River.

Also on Tuesday, Hossain had a meeting with Liu Jianchao, the minister of the international department of the Chinese Communist Party, to discuss Chinese-funded development projects in Bangladesh.

Liu reaffirmed China's continued support for the interim government and peaceful transition to democracy through a free, fair and participatory election.

Dhaka, Beijing discuss economic partnership expansion


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