The visit by Bangladeshi PM Sheikh Hasina comes as Japan and China jostle to replace the US’ economic role in Bangladesh after US FDI dropped significantly last year

A visit by Bangladeshi Prime Minister Sheikh Hasina to Japan concludes today.

Hasina’s visit included a meeting with the Japanese Emperor, as well as a summit with Japanese Prime Minister Fumio Kishida, where they discussed ways to increase Japanese foreign direct investment (FDI) into Bangladesh and upgraded their bilateral ties into a “strategic partnership.”

Japan and China are competing to replace the US’ economic role in Bangladesh after US FDI dropped 56% last year. In March, Chinese officials in Bangladesh claimed that China had become the country’s largest trade partner and investment source in 2022, citing a gross FDI inflow of $940 billion and a 58% increase in bilateral trade since 2021. In response, in early April, Kishida proposed the creation of an industrial hub in Bangladesh, and approved $1.27 billion in funding for Bangladesh to expand its trade capacity and improve its transportation infrastructure.

Hasina’s meeting with Kishida will likely increase private Japanese FDI into Bangladesh in the coming year, while Japanese-backed infrastructure projects may progress faster due to the Japanese government’s extra funding. The establishment of a “strategic partnership” between the two countries will likely fuel cooperation in economic sectors other than FDI such as defense in the coming years. The deepening relationship between Japan and Bangladesh will likely anger China, and may cause a pull-back of Chinese investment in the country in the coming decade if the relationship deepens further.