Sri Lanka - China Relations: Trends

Introduction.

On Gotabaya Rajapaksa becoming the President, China picked up from where it left after the defeat of President Mahinda Rajapaksa in 2015. Implementation of Chinese projects has become smooth, with top leadership endorsing them through project site visits. Economic strategy with China follows big projects and preference to borrow from China to tide over the debt servicing burden. Any allegation of debt trap is dismissed. Importance of SL for China is evident by the visit of senior politburo member Yang Jiechi in Oct 2020, during Covid time. Chinese Foreign Minister Wang Yi too visited SL in Jan 2020. Chinese scholars perceive SL as a potential “Strategic Support Point” which could help defend maritime channel security and control of key waterways¹.

Political Influence

China has been presenting itself as a benign supporter of national interests and independence of SL against external pressure with no strings attached loans. President Xi, during his meeting with President Sirisena in May 2019, specifically requested for exchanges between parliamentarians, provincial councils and youth exchanges, suggesting efforts for deeper influence to overcome any local impediments to their projects. Between Oct 2015 and Jul 2019, 11 batches of Members of Parliament (192 in total) went on all expenses paid trips to China. China has also expanded its outreach to political parties. A video conference was held in June 2020, to consult on Covid problem. The SL Podujana Peramuna (SLPP) and Chinese Communist Party held a joint seminar on governance in Nov 2020².

Soft Power

China has cultivated think tanks, which facilitate Chinese events and issue statements in favour of China in its contest with USA including on Uighur and other issues. Other associations patronised include China-SL Friendship Association, SL-China Society, Association for SL-China Cultural Cooperation and SL-China Buddhist Friendship Association. The SL-China Journalist Forum was set up and its members are regularly hosted by China for long periods on scholarships. Notably all these associations issued supportive statements on Hong Kong Security Law in 2020.

A Cultural Centre run by staff of the Chinese Ministry of Culture has been set up to remove misconceptions about China. Scholarships have been awarded to 200 students besides special scholarships to 337 students by the Chinese Embassy since 2016. The Buddhist Friendship Association, founded in 2015, conducts charity work and invites monks to China. SL-China Journalist Forum publishes Mahajana Cheenaya (People’s China) since 2008. Xinhua has reportedly invested in Daily News and Daily Financial Times, two local publications. Two Confucius Institutes have been established besides teaching of Chinese language in schools. China is also engaged in archaeological excavations since 2019 in North East SL to establish historical links with Tamils and has reached out to Tamil media houses. It gifted laptops and mobile phones to Members of parliament and journalists. Chengdu Agriculture University has signed an MoU with University of Jayawardenepura for staff education and exchange, joint curriculum development and research.

Covid Aid

China went on an overdrive to extend Covid related help. Besides donations by Chinese embassy and companies, it reached out to specific target groups such as bus drivers, school children and election officials. An agreement worth RMB 600 Mn was signed for medical care, education and water supply in rural areas during the visit of Yang Jiechi in Oct 2020. SL leaders across parties have praised Chinese handling of Covid. Peng Liyuan, wife of President Xi wrote an appreciation letter to girl students of SL for their support to China for Covid.

Economic Presence

China has extended a total loan of $11.5 Bn since 2009 for various projects. It pledged an additional $1.2 Bn syndicated loan during tele-talk between President Xi and President Gotabaya in May 2020. Additional assistance is also under negotiation. China was the second largest source of tourists after India in 2019, accounting for 11.4 percent of total. SL has even allowed a China based company to process visa applications for Chinese nationals. However, SL has delayed the finalisation of FTA with China, apparently due to unfavourable terms and conditions. Trade deficit is also a matter of concern with exports being meagre in comparison to imports.

Expanding Chinese presence in new financial and digital arena would provide it long term clout and influence. Chinese fintech entities such as Union pay, Alipay and Wechat pay already operate in SL. The SL Central Bank has big currency swap arrangements with Chinese central bank for $1.63 Bn worth signed in 2014. China is already dominating the telecom infrastructure.

Military and Security Cooperation

Military cooperation has been long standing with China as the mainstay of weapons supply during anti-Eelam war. China gifted a retired frigate to SL in 2019 and is building a complex for it at Trincomalee. It routinely offers large number of vacancies to SL for defence courses in China. Chinese naval ship visits are frequent. The Ministry of Public Security of China has hosted a number of batches from SL police for degree courses on scholarships from 2020. The first meeting of alumni of PLA-NDU in SL was held in July 2020. A mechanism for cooperation between police academies on annual basis at DG level has been established. China also donated equipment worth $ 4.2 Mn for anti-terrorism.

China tried to depute their security personnel at their project sites after April 2019 terror attacks. While visits of Chinese naval ships have been limited due to Indian sensitivities, China is using civilian activity such as marine and ecological studies in Indian Ocean to invite cooperation from SL and other countries of the region. It also offered a so called scientific alliance for International Disaster Risk reduction in May 2019. The first SL satellite Supremesat was built with Chinese assistance.

Conclusion

The comprehensive and long term nature of Chinese influence in SL and its close relationship with its incumbent political leadership is evident. China has established a comprehensive sway in political, economic and digital fields and influencing public opinion. Anti-China sentiments do exist, but do not find adequate traction in the mainstream media. China appears envisaging SL as a base in the long term for its digital, economic and financial expansion in South Asia and beyond, with 25 Chinese companies already having their South Asian headquarters in SL.

SL professing a neutral foreign policy appears to be an effort to avoid entanglements in security competition. Short of overt military use, China can leverage its presence to gather intelligence, support its navy through leveraging dual use civilian facilities and reduce India economic presence.

Developing the Colombo International Port City is probably due to China realising the bleak future of Hong Kong in the sector. The Chinese long term aim is to likely establish a financial ecosystem for Indian Ocean Region where its companies, people and rules hold the sway, which is likely to run counter to Indian interests.

(The views expressed in the article are that of the author and do not reflect official views.)