Sri Lanka’s many harbors and its location amidst major shipping routes bestow strategic importance on the island nation and have also made it one of the many sites where India and China are competing for influence.
In an effort by Sri Lankan President Maithripala Sirisena’s government to increase cooperation with China, the country’s prime minister visited Beijing last week, the first visit to China since Sri Lanka’s current government was formed in January 2015.
As China forges ahead with Silk Road trade and development initiatives in countries across South and Southeast Asia, Sri Lanka included, India faces unwelcome economic competition from China.
“The Indian reaction has not been enthusiastic,” said Walter Andersen, Administrative Director of South Asia Studies Program at Johns Hopkins School of Advanced International Studies.
Sri Lanka has a history of moving back and forth between Chinese and Indian spheres of influence.
The previous government under President Mahinda Rajapaksa moved away from India’s influence and became increasingly open to Chinese involvement, whereas the Sirisena administration publically shifted away from China, which it saw as exploitative, and began strengthening ties once again with India.
However, the strategy appears to be changing again. Sirisena’s government had halted a $1.4 billion Chinese investment project to develop a port city in Colombo. But at last week’s meeting in Beijing, Sri Lankan officials sought to improve relations between the two countries by moving forward on free trade and investment cooperation.
But Andersen cautions, “Relationships are not smoothed over by one single visit.”
On Saturday, the two countries officially announced the resumption of the controversial Colombo port city project, indicating that relations are warming slightly – despite serious losses incurred by the state-controlled China Communications Construction Co. when the project was delayed.
The port city project entails a significant investment from China with the construction of hotels, offices, and shopping centers on more than 550 acres of reclaimed land. The project was halted over claims of suspected corruption, questions of land ownership, and concerns that development will harm the environment and destroy local fishing industries.
According to a Bloomberg report, a few amendments were made to the plans that allowed the project to resume. These include applying a 99-year lease to the land rather than allowing China complete ownership and ensuring that Sri Lanka’s government has a role in managing the project.
However, the debate is far from over as protests continue in Sri Lanka among those who think the amendments are not adequate.
China’s proposal to upgrade the Sri Lankan port city falls in line with the county’s long-standing policy of increasing its presence in the Indian Ocean region.
India’s concerns about having a Chinese-built port city in its “backyard” were exasperated when a Chinese submarine docked at Colombo in 2014.
China’s territorial claims and military build-up in the South China Sea have prompted India to align itself with Japan in opposition to what India considers a potential threat to maritime security.
Other issues, such as the unresolved territorial disputes, which led to China’s invasion of India in 1962, and the biggest geopolitical threat in the eyes of India – China’s increasing closeness with Pakistan – also have the potential to derail relations between these two rising Asian powers.
“India in the long term, looks to itself as the dominant regional power in South Asia and it sees itself as surrounded by states that have, from an Indian point of view, too close a relationship with China – such as Pakistan,” said Karl Jackson, an expert in Southeast Asia at Johns Hopkins School of Advanced International Studies.
Sri Lanka is just one of many countries neighboring India with which China has recently made an effort to increase diplomatic and economic ties; Nepal, Bangladesh, and Myanmar are some of the other nations.
“Each of the Southeast Asian countries is stuck between India on the one hand, which is emerging, and China on the other, which is a little farther down the line towards fully emerging. But they are two very different countries,” Jackson said.
China is not alone in its efforts to expand its regional influence.
“The Indians have their own plans to have connectivity in Southeast Asia, and they are moving briskly ahead on that,” said Anderson.
For example, India is in the process of building rail connections from eastern India to Myanmar, Thailand, and Vietnam.
“The trade relationship between India and these countries is also at a rather significant increase,” Andersen added. “China still has more, but the gap is closing.”
In Sri Lanka however, China seems to be surging ahead with rapidly expanding trade and travel. Sri Lanka's overall trade with China increased by 12 percent in 2015, with Sri Lanka’s exports to China increasing by 69 percent, according to the Sri Lanka Department of Commerce. And China recently surpassed India as the largest source of visitors to Sri Lanka.
Though Sri Lanka’s current government may prefer India, China represents a huge source of investment for Sri Lanka. The island nation’s growing fiscal deficit and depleted reserves have forced the country to seek outside help. In other words, the Sri Lankan Prime Minister may have made the trek to China last week more out of necessity than choice.
