The Changing Equation in the Bay of Bengal
# Prem Sagar Poudel
A new geo-economic structure is taking shape at the intersection of South and Southeast Asia. Energy and transport networks linking China’s Yunnan Province to the Bay of Bengal through Myanmar, port and industrial projects in Bangladesh, and trans-Himalayan connectivity plans with Nepal have the potential to reshape the region’s traditional trade map.
Interpreting these projects solely as part of a Chinese strategy to encircle India would reflect only one side of the reality. India’s security, economic and strategic concerns are genuine. However, if the projects are developed transparently, openly and on a commercial basis, they could benefit the entire South and Southeast Asian region, including India’s northeastern states.
The China–Myanmar Economic Corridor is a central pillar of this transformation. It is intended to connect China’s Yunnan Province with Muse, Mandalay and the western coastal port of Kyaukphyu in Myanmar. Oil and natural gas pipelines from Kyaukphyu to Yunnan are already operational. Efforts are now under way to gradually integrate the port with roads, railways, electricity networks and industrial infrastructure.
In June 2026, China and Myanmar reaffirmed their commitment to advancing the economic corridor, the Kyaukphyu deep-sea port, the Muse–Mandalay railway and cooperation in energy, agriculture, mining, the digital economy and artificial intelligence. China also expressed support for advancing Myanmar’s internal peace and reconciliation through political dialogue and contributing to stability in the border areas.
The Kyaukphyu route gives China alternative access to the Bay of Bengal. It cannot, however, eliminate China’s dependence on the Strait of Malacca. Compared with the scale of China’s maritime trade, the capacity of pipelines and overland routes remains limited. Their main significance lies in diversifying energy routes, supporting the development of Yunnan and creating an additional supply corridor during periods of crisis.
The success of the corridor is directly tied to Myanmar’s internal conditions. Large infrastructure projects will remain difficult to implement unless armed conflict, weak administrative control, local dissatisfaction, land acquisition disputes, environmental concerns and questions over revenue distribution are addressed. The expanding influence of the Arakan Army in Rakhine State has created further uncertainty surrounding the security and implementation of the Kyaukphyu project.
Although China supports political dialogue, the corridor’s long-term legitimacy will depend on local consent and tangible benefits for affected communities. Respect for sovereignty must be balanced with equal concern for civilian security. The flow of military materials, financial mechanisms or technologies that may be used against civilians could raise questions about the policy of peaceful development. China’s long-term influence in Myanmar will be determined not by its relationship with any single centre of power, but by its contribution to peace, reconstruction and the welfare of all communities.
China’s cooperation with Bangladesh is also expanding from infrastructure construction towards industrial partnership. During high-level engagements in 2026, agreements were reached concerning an economic zone linked to Mongla Port and the development of a Chinese economic and industrial zone at Anwara in Chattogram. Bangladesh also announced plans to establish a dedicated facilitation mechanism for Chinese investment, an investment office in China and a Chinese-language digital investment portal.
The objective is not merely to expand port capacity. If ports are connected with roads, railways, warehouses, manufacturing centres and export systems, Bangladesh could become an important regional production and supply-chain hub. Combining Chinese capital and technology with Bangladesh’s workforce could create employment, strengthen industrial skills and expand export capacity.
Political continuity, however, cannot be taken for granted. Although the interim administration formed after the political changes of 2024 and the subsequently elected government continued cooperation with China, future governments may review agreements on the basis of debt, environmental concerns, national security or local benefits. Long-term projects should therefore not depend on a single political party or government. Parliamentary scrutiny and the participation of local authorities, businesses, civil society and affected communities are essential if projects are to survive political transitions.
The Rohingya crisis is another complex aspect of Myanmar–Bangladesh–China relations. Bangladesh has hosted more than one million Rohingya refugees. Although China has facilitated dialogue between Dhaka and Naypyidaw, safe, voluntary and sustainable repatriation has not yet taken place. The effectiveness of Chinese diplomacy will be tested by whether it can help secure citizenship, safety, freedom of movement, property rights and dignified living conditions for the Rohingya. Mediation must give priority to human rights and security rather than merely the number of people returned.
Another sensitive issue surrounding Chinese projects is the terms and transparency of financing. Sri Lanka’s Hambantota Port is frequently presented as an example of a Chinese “debt trap.” However, Sri Lanka’s wider debt crisis also involved international sovereign bonds, domestic economic weaknesses, tax policies, foreign exchange shortages and obligations to other creditors.
Hambantota should therefore be understood less as proof of a predetermined Chinese strategy and more as a warning about the sovereign risks created by poor project selection, unrealistic revenue projections and imbalanced debt management. Information concerning project costs, interest rates, repayment periods, expected revenues, sovereign guarantees and asset management in the event of failure should be publicly available. China’s policy of shared consultation and mutual benefit must also be reflected in practice.
Nepal is not formally part of the China–Myanmar–Bangladesh corridor. It nevertheless represents a separate trans-Himalayan axis in China’s South Asian connectivity policy. The Nepal–China Belt and Road cooperation framework lists the Tokha–Chhahare tunnel, the Hilsa–Simikot road, the Kimathanka–Khandbari road, the Nepali section of the China–Nepal cross-border railway and the Rasuwagadhi–Chilime transmission line among possible projects.
These projects have not been automatically approved or placed under construction. Each requires a feasibility study, financing arrangement and implementation agreement. Nepal’s northern connectivity should not be viewed solely as an alternative to India. India remains Nepal’s principal transit route, a major trading partner and its most important electricity market. Connectivity with China could provide Nepal with alternative access and greater supply security. Nepal’s interest lies not in intensifying rivalry between its two neighbours, but in commercially linking northern and southern infrastructure.
India’s concerns cannot be separated from the security environment that followed the 2020 Galwan Valley confrontation. The resulting deficit of trust has made it difficult for India to view Chinese projects in Myanmar, Bangladesh and Nepal purely through an economic lens. Even if the ports of Kyaukphyu, Mongla and Chattogram are commercial facilities, concerns remain within India’s strategic community over their possible future dual use.
However, publicly available agreements do not provide for the establishment of Chinese military bases at these ports. A clear distinction must be maintained between potential risks and verified facts. India’s security concerns should not be dismissed, but portraying every Chinese project as part of a military encirclement could deepen regional mistrust.
The digital and cyber dimensions have made the situation more complex. Digital connectivity can improve trade, financial transactions, public services and industrial production. Yet excessive dependence on a single foreign technology provider for telecommunications, government data, port management and critical infrastructure could create risks involving data security, cyber sovereignty and systemic vulnerability.
The solution is not necessarily to prohibit Chinese technology. Clear data-protection laws, independent security testing, diversification of technology sources, local skills development and transparent cyber-reporting systems are required. China should respect domestic laws, independent testing and national oversight if it wishes to demonstrate the reliability of its technologies.
Environmental and climate risks are no less important than economic opportunities. Bangladesh is highly vulnerable to flooding, cyclones, sea-level rise and coastal erosion. Environmental impact assessments for Mongla, Chattogram and coastal industrial zones must therefore be more than procedural formalities. Marine ecosystems, mangrove forests, fisheries, local communities, natural water flows and climate adaptation should be integral to project planning.
These developments represent opportunities as well as challenges for India. If Bangladesh’s ports, roads, railways and inland waterways remain open and non-discriminatory, transport costs for northeastern India could decline. Products from Assam, Tripura, Mizoram, Meghalaya and Manipur could gain easier access to the Bay of Bengal and Southeast Asian markets.
Coordination among India’s Kaladan Multimodal Transit Transport Project, the India–Myanmar–Thailand Trilateral Highway, the BIMSTEC transport plan and Bangladesh’s ports could transform northeastern India from a security-sensitive frontier into a regional commercial hub. It would also provide a practical foundation for India’s Act East policy.
Energy cooperation offers similar potential. Nepalese and Bhutanese hydropower, India’s vast electricity market, Bangladesh’s rising demand and Myanmar’s energy resources could be connected through a regional network. Such cooperation could reduce production costs and improve the reliability of energy supplies.
Rather than pursuing a strategy of blocking every Chinese project, India would benefit more from improving the speed, financial capacity and credibility of its own initiatives. China, for its part, should address India’s security sensitivities by offering greater clarity regarding port ownership, project financing, data security and possible military use.
Policies that force Nepal, Bangladesh or Myanmar to choose between India and China will not produce stability. These countries’ priorities are infrastructure, employment, energy, market access, climate security and human development. Major powers should treat them as independent and equal partners rather than as components of exclusive spheres of influence.
The emerging equation in the Bay of Bengal should not be interpreted as a Chinese victory and an Indian defeat. China can provide infrastructure, capital and production networks. India can offer a vast market, technology, services and geographic access. Bangladesh can become a manufacturing and maritime gateway. Myanmar can serve as a land bridge between South and Southeast Asia. Nepal can act as a trans-Himalayan connector for trade and energy.
If these opportunities are transformed into military mistrust, opaque debt and competition for exclusive influence, the Bay of Bengal could become a new centre of great-power rivalry. If they are pursued through open connectivity, financial sustainability, humanitarian responsibility, cyber security, environmental protection and respect for sovereignty, the region could instead emerge as a centre of peace, stability and shared prosperity.
The success of the new regional equation will not be determined solely by the number of roads, railways and ports constructed. Its real measure will be how many jobs are created, how much poverty is reduced, how effectively the environment is protected, how far humanitarian crises are addressed and how much trust is built among the countries of the region.
