CHINA-SRI LANKA RELATIONS

Introduction

• On 21^st April 2023, the China Merchants Port Holdings Co. Ltd., the Sri Lanka Port Authority, and Access Engineering Group, a Sri Lanka-based company, formally signed the South Asia Commercial and Logistics Centre Project Agreement, thereby jointly agreeing to build South Asia’s largest logistics complex in Colombo. The Ports, Shipping and Aviation Minister of Sri Lanka, Nimal Siripala de Silva, hailed the project, saying that it will help Colombo Port become more competitive globally and attract investment. Miao Jianmin, Chairman of China Merchants Group, said that the group would look to consolidate cooperation with local companies and further contribute to Sri Lanka’s development.
  
  
• This recent development is part of the ongoing cooperation between the People’s Republic of China and Sri Lanka. The relations between Beijing and Colombo have generally been positive, and in recent times, it has acquired a strategic character. This development has discomfited Sri Lanka’s northern neighbour, and an emerging major power, India. Moreover, China’s relations with Sri Lanka are indicative of a broader trend, of how China is looking to solidify its footing in South Asia and the Indian Ocean Region. This has some important implications for India, as this overall region is considered its traditional zone of influence, and through various manoeuvres, China is limiting India’s breathing space in South Asia. This paper seeks to look at how China is strengthening its position in South Asia by analysing China-Sri Lanka bilateral relations as a case study. Further, the paper will also shed light upon how China-Sri Lanka ties affect India’s interests in the region, and how New Delhi could approach the situation.

China’s Interest in the Indian Ocean: A Game of Weiqi

• The Indian Ocean Region features heavily in Beijing’s strategic calculations, for certain important reasons. The Straits of Malacca, which serves as the gateway between the Indian Ocean and the Pacific Ocean, is crucial for China, as a vast majority of its oil imports pass through this route. China fears that if the Indian Ocean Region is under the sway of rival powers, they could potentially choke the route, thereby restricting China’s energy imports, which would be heavily debilitating for Beijing. In this context, the country that China believes would further intensify this Malacca Dilemma is India. The Indian Ocean is generally considered to be New Delhi’s zone of influence, for geographical and historical reasons. Moreover, India and China have had a tumultuous history of bilateral relations, marked by a sense of mistrust, which has more often escalated to military actions and border clashes, a recent example being that of Tawang in December 2022. For a combination of these reasons, it is imperative for China to have a strong grip over the Indian Ocean Region, and this would involve enhancing its hold in South Asia as an important step.
  
  
• China’s play in South Asia involves encircling India in the region, a strategy similar to that employed in the Chinese game weiqi, where the goal is to surround more territory than the opponent, thereby restricting the opponent’s moving space. China is looking to build strong relationships with the smaller states in South Asia, so as to encircle India and restrict its breathing space in the region. While India shares cordial relations with most of its neighbours, there are some segments within these countries that exercise considerable influence in the decision-making processes that have apprehensions about New Delhi’s true intentions. Plus, there is also the aspect of Pakistan, whom China considers its ‘all-weather ally’. Beijing’s plan of action in South Asia has comprised of measures such as credit-driven investments, consolidating relationships with regional political elites, infrastructure building with military motives and so on. Through its flagship foreign policy initiative of the Belt and Road, China has undertaken many important projects in South Asia, the most prominent being the China-Pakistan Economic Corridor.

China-Sri Lanka: A Case Study

• This piece seeks to understand China’s gameplay in South Asia in a closer manner, by taking the case study of Sri Lanka, and seeing how these dynamics play out. The island country was the first South Asian nation to extend diplomatic recognition to the People’s Republic of China, in January 1950, three months before India did. China-Sri Lanka bilateral relations have generally been on a positive trajectory, beginning with the Rubber-Rice Pact between the two countries in 1952, followed by the establishment of full diplomatic relations in 1957. Geo-strategically, Sri Lanka’s location on the Indian Ocean offers China a much-needed vantage point, since it is favourably located in the middle of the sea lanes for open communication. In recent years, China-Sri Lanka ties have also gathered some quick momentum and have acquired a strategic colour.
  
  
• In 2005, in a joint communique, China and Sri Lanka announced that they will develop an All-Round Cooperative Partnership, featuring cooperation in various sectors like trade, technical cooperation, infrastructure, etc. China has invested in major infrastructural projects in Sri Lanka, like the Hambantota Port, Katunayake-Colombo Expressway, Norochcholai Coal Power Project, etc. In this way, China managed to gain leverage within the Sri Lankan political elites. During the Chinese President Xi Jinping’s visit to Sri Lanka in 2014, the two countries agreed to deepen the strategic and cooperative partnership. With the launching of the BRI, Sri Lanka became a part of the Maritime Silk Road Initiative, thereby bringing in more Chinese investment and infrastructural development.
  
  
• It is in this context that China’s port-building initiatives in Sri Lanka deserve special attention, considering its direct connection with Beijing’s regional and geopolitical objectives. China has heavily invested in the port-building projects of Colombo and Hambantota. While for Sri Lanka, the two ports aim to serve as vehicles for economic expansion, for China, they carry geostrategic and military importance, particularly Hambantota. While the official line is that China is interested in Hambantota only for commercial purposes, its strategic significance cannot be dismissed. A strong foothold for the Chinese in Hambantota would allow them to have dominance over a vast area of the Indian Ocean extending from Australia in the east, Africa in the west and up to Antarctica in the south. It will also enable China to closely monitor all ships that shuttle between the eastern and western coasts of India encircling Sri Lanka.
  
  
• Through this pattern of credit-driven investment, political elite capturing, and infrastructure building, China has strengthened its grip not just in Sri Lanka, but in other countries as well in the Indian Ocean Region, encompassing the likes of Pakistan, Bangladesh, Myanmar, Maldives, etc., thereby encircling India within a Chinese zone of influence.
  
  
• During last year’s financial crisis in Sri Lanka, China stepped up to the country’s aid, albeit in a tepid manner. By the end of 2022, Sri Lanka owed China $7.4 billion, around a fifth of its external debt, according to the China Africa Research Initiative. In light of Sri Lanka’s condition, China agreed to  restructure Colombo’s debt, with the Vice-President of Export-Import Bank of China, Zhang Wencai, saying that Colombo would not have to immediately repay the principal and interest due on its loans for the years 2022 and 2023. Also, China has assured Sri Lanka that it will help the country in securing the IMF 4-year bailout package worth $2.9 billion, in collaboration with the likes of India and Japan. However, China has committed only US$74 million in terms of humanitarian assistance in 2022. Also recently, in a meeting between China’s deputy Foreign Affairs Minister Sun Weidong and Sri Lankan Foreign Secretary Aruni Wijewardane, China pledged to support Sri Lanka through “difficult times” while renewing its commitment to developing the ports of Colombo and Hambantota under the BRI. As for economic aid, while help was assured, nothing tangible was revealed.

Implications for India

• From India’s perspective, an assertive China in the region does not bode well. India’s pre-eminent position in the subcontinent becomes tenuous, with the smaller countries hedging their bets towards Beijing. India is already facing a two-front challenge, with China and Pakistan breathing down India’s neck on the eastern and western borders, respectively. A pro-China neighbourhood, along with Chinese naval presence in the Indian Ocean, will further complicate the geopolitical situation for New Delhi. It must be acknowledged, however, that the Chinese presence cannot be completely wished away, for India’s neighbours have their own agency, and that they would not hesitate to welcome aid from Beijing if it suits their immediate needs and interests. While India cannot completely eclipse China in the short run, it can clearly look to match China through infrastructural investments.
  
  
• India has undertaken some important steps in Sri Lanka, so as to ensure that the crucial island country does not completely come under Beijing’s sway. Usually, India has always stepped in Colombo’s time of need, whether it be after the 2004 tsunami, or post-civil war reconstruction. Apart from immediate grant of US$ 100 million for relief and rehabilitation of the internally displaced, India supplied 250,000 family relief packs, one million roofing sheets and 400,000 bags of cement for constructing temporary housing, provided 95,000 starter packs of agricultural implements, financed seven Indian de-mining teams, gifted 500 tractors along with other agricultural implements to farmer organisations in northern Sri Lanka, and provided 10,000 bicycles to IDPs and returnees in Northern Province.
  
  
• Among recent initiatives, India was among the first countries to come to Sri Lanka’s aid during the 2022 crisis, in the form of around US$ 4 billion in rapid assistance, and supplying of petroleum, medicinal drugs and other essential products. With an eye on countering Chinese projects in the country, India is working with Sri Lanka to develop the Trincomalee harbour into a major port, and recently, India made the largest foreign investment in the country’s ports sector, in the form of the West Container Terminal project in Colombo.
  
  
• Overall, India has been active in aiding Sri Lanka, and ensuring that it does not concede the lead to China in terms of influence. It would be advisable for India to maintain this present trajectory, particularly in the port-building sector and post-economic crisis rebuilding. It should also be highlighted that India still enjoys the upper hand when it comes to naval infrastructure in the Indian Ocean vis-à-vis China. Hence, India should look to build on this further, through measures like stepping up collaboration with the likes of Indonesia, Singapore, Maldives, and Oman, along with infrastructural upgrade in the islands of Andaman & Nicobar and Lakshadweep.

Conclusion

• In conclusion, the bilateral relations between China and Sri Lanka have generally been positive, and have taken a strategic turn in recent times, owing to Sri Lanka’s location in the Indian Ocean. This development has put India at unease, considering the Indian Ocean Region is traditionally India’s backyard, and New Delhi would not want an assertive China in those waters. Similarly, China wishes to make its presence felt over there, so as to deal with the Malacca Dilemma. Employing the game of weiqi in the Indian Ocean, China is looking to encircle India in the region, by forming strategic partnerships with the smaller South Asian states. Sri Lanka forms an important part of this strategy, as evidenced by Beijing’s obsession with Hambantota Port, the numerous developmental initiatives undertaken in the country, and financial assistance post the 2022 crisis in the form of debt restructuring. India has looked to counter this situation by actively undertaking developmental aid and infrastructure building in Sri Lanka, so as to balance the Chinese influence. While progress on this front has been satisfactory from India’s side, China is also equally active, as shown by their recent investment in the Colombo Logistics Port. Therefore, China-Sri Lanka relations presents a highly contested arena, wherein there is an amalgamation of Colombo’s domestic priorities, China’s gambit of creating a zone of influence in South Asia, and India’s need for safeguarding its traditional backyard.