Chinese Investments Surge in Bangladesh Amid Mounting Debt Risks

Chinese investors are leading a surge in new industrial capital within Bangladesh's Export Processing Zones (EPZs) for fiscal year 2025-26. Chinese-owned and joint-venture firms pledged $498.86 million across 23 land lease agreements, accounting for nearly two-thirds of the $717.71 million in proposed investments secured by the Bangladesh Export Processing Zones Authority (Bepza).

Moving beyond traditional garment manufacturing, Chinese companies are diversifying into high-value sectors such as drones, semiconductors, electronics, and medical devices. This transition gained momentum following Prime Minister Tarique Rahman’s recent visit to China, yielding $9.21 billion in broader investment proposals. Key developments include a $220 million commitment by Handa Industries and the upcoming Chinese Economic and Industrial Zone in Chattogram's Anwara, which has already attracted $500 million from over 30 firms.

However, this investment boom coincides with mounting financial pressures. An International Monetary Fund (IMF) mission is currently assessing Bangladesh's external debt vulnerabilities. The country is entering a “medium-risk” phase as concessional financing declines and reliance on expensive, floating-rate market loans—now comprising 30% of the external debt portfolio—increases. The nation faces a steep repayment schedule, needing to service nearly $26 billion in external debt by FY30. Furthermore, foreign budget support has fallen sharply from $3.44 billion to $1.56 billion.

As Bangladesh navigates these macroeconomic headwinds, converting foreign investment commitments into operational projects will be critical for sustaining the country's export-oriented industrial growth.