Competing with China in Sri Lanka: Part II


China began to increase its diplomatic ties with Sri Lanka during the 90’s with the conclusion of several commercial treaties. These treaties greatly helped the Sri Lankan economy. China facilitated Sri Lanka’s membership to the World Trade Organisation in 2000, thus gaining a lot of goodwill from the island State that needed the prestige that comes with WTO membership.

China had also helped Sri Lanka with its defence during the Sri Lankan Civil War by providing them with weapons and ammunition. China was the only nation who had assisted Sri Lanka in its time of need. Even India, Sri Lanka’s natural ally had been unable to openly provide the government with significant military aid. The Civil War and India’s inability to help the Sri Lankan government eroded relations between the States paving the way for China. At the time, India’s hands had been tied because of Tamil Nadu’s DMK Party. The DMK was an important member of the central governments coalition. The DMK supported the LTTE and threatened to pull out of the coalition if India sent military aid to Sri Lanka. Faced with the possibility of losing power, the United Progressive Alliance (UPA) refused Sri Lanka’s requests for support. Hence, Sri Lanka was forced to approach China.

The war against the LTTE was lead by former President Mahinda Rajapaksa and was wrought with allegations of Human Rights abuses by Sri Lankan forces. In 2011 the UN published a report in which it issued a damning indictment of the governments actions during the war. The Rajapaksa lead government refused to allow an international investigation into the alleged war crimes and stated that they would not allow the investigators to enter Sri Lanka. Indian Prime Minister Manmohan Singh appeared to support the UN when he boycotted the Commonwealth Heads of Government Meeting at Colombo in 2013 citing Sri Lanka’s human rights record. But in 2014, when the UNHRC tabled a resolution that dealt with Sri Lanka’s alleged human rights abuses, India abstained[1] from voting for it which showed a huge shift in position. Unfortunately, Sri Lanka didn’t appreciate the lack of consistency, especially since China voted against the resolution stating that Sri Lanka had made significant progress already[2]. While India did gain some mileage for abstaining, China’s vote against it had more impact and pushed Delhi further away from Rajapaksa. Hence, China managed to increase its influence with Rajapaksa and alienate India.

Since 2013, China has been attempting to get a stronger position in Sri Lanka, putting India on the back-foot. International Affairs analyst Patrick Mendis refers to their method as ‘Buddhist Diplomacy[3].’ This peculiar brand of diplomacy appears to cite the nations’ shared beliefs and consequent shared history as a forerunner to 21st Century economic cooperation. At Colombo in 2014, Chinese Premier Xi Jinping made a unique move and wrote an editorial in Sri Lanka’s oldest national newspaper. He wrote about the two nations’ shared cultural and historic ties, citing Fahein and Zheng He’s voyages and then spoke of China’s tremendous contributions to the Sri Lankan economy. The Premier even spoke about the Maritime Silk Route Proposal to connect the oil rich Middle East to China, emulating the medieval Silk Route that connected European markets to the spices and silks of the Orient. This endeared the Sri Lankan public to the Chinese and reminded them that India isn’t the only neighbour that has contributed significantly to their economy.

India appears to have had an ambivalent attitude towards the Chinese advance. China began to establish defence cooperation with Sri Lanka reportedly by agreeing to construct a Maintenance Facility in Trincomalee, India’s Sri Lankan stronghold. This agreement violates an Indo-Sri Lankan Agreement on Defence[4], but India barely reacted to China’s moves towards India’s strategic assets. There have also been two occasions in 2014 alone when Sri Lanka allowed Chinese Nuclear Submarines to dock at its ports in Colombo, once in September, along with a Chinese Warship and then again in November. India merely expressed its displeasure at the complete disregard of their agreement in a message to Defence Secretary Gotabaya Rajapaksa, but eventually accepted Sri Lanka’s explanation that the Chinese submarines were simply docking at Sri Lanka on their way to and from anti-piracy activities near Somalia[5]. India quietly decided to re-evaluate its Indian Ocean policy behind closed doors somewhere in Delhi[6], although it could have engaged in a number of retaliatory measures.

Hence the question arises, why did India not show a stronger reaction and cement its status as the hegemonic power in the Indian Ocean?

The reason for this is that the Rajapaksa administration had consistently been trying to play China against India and make both nations compete for influence in Sri Lanka, while the tiny island nation reaped the benefits. He appears to have been engaging in a dangerous game of brinksmanship to see how far India will allow China to penetrate before reacting. Sri Lanka even offered India the opportunity to develop the Hambantota Project. India declined and lost the project to China, but in hindsight, this appears to have been a wise move because the Hambantota port operates far below capacity and has been a major loss for its Chinese investors.

The fundamental flaw in China’s policy towards Sri Lanka is that it had been geared towards pleasing the Rajapaksa government instead of the Sri Lankan nation. Rajapaksa seemed to have a strong dislike for India, especially in the context of India’s role in supporting the LTTE in Sri Lanka and the IPKF’s failed attempts to resolve the issue. In his view, India had double standards in accusing his government of Human Rights abuses when the IPKF itself had been accused of the same. India’s investments in Sri Lanka were also far lower than the billions they had been investing in Afghanistan. Hence, China and its money came as a welcome change, and also helped him win votes. Most of China’s construction projects pandered to the Rajapaksa family’s need to appeal to it’s home base, Hambantota and they haven’t actually had any developmental impact on the lives of ordinary Sri Lankans. An deeper analysis of India’s Sri Lanka policy reveals that India was simply biding its time and waiting for a pro-India government, while engaging in developmental projects that will generate more long-term benefits for the nation as a whole, than China’s flashy, vanity projects.

Eventually, China’s principal ally, Mahinda Rajapaksa was voted out of power in 2015 and succeeded by Maithripala Sirisena, a man whose most effective policy has been to represent the opposite of everything Rajapaksa stood for. Where Rajapaksa openly displayed his wealth and power, Sirisena is the emodiment of austerity, he even got rid of the flower pots in the Presidential Palace citing unnecessary expenditure. He intends to bring back the parliamentary checks and balances that Rajapaksa scrapped in the 18th Amendment and is attempting to bring minorities back to the forefront of Sri Lankan society. Anti-Corruption policies are the hallmark of his administration and one of his first acts as President was to bring all Chinese projects under the scanner, even leading to the suspension of the Colombo Port City Project. China will have to use all its influence and adopt a fresh policy to regain its foothold in the country.

India has been monitoring these developments closely, and since leadership changes bring opportunities, Prime Minister Modi and External Affairs Minister Sushma Swaraj were quick to capitalise. They were the first to congratulate and visit Sirisena during his first 90 days in office. Modi prayed at a Buddhist temple, he visited the war torn region of Jaffna and unveiled plans to help fund power plants and railroads. During his visit, the two sides agreed on a $1.5 billion currency swap that would moderate volatility of Sri Lankas rupee. This showed that India was more interested in Sri Lanka’s welfare as opposed to the Chinese practice of pleasing the ruling family. Modi also announced that India would help further develop the Trincomalee Port.

While experts believe that Modi’s deft diplomacy managed to wean Sri Lanka off China, is it too little too late?

The Chinese will not allow a new President to jeopardise their Maritime Silk Route and they have valuable bargaining chips. Sri Lanka needs more investment and China has more money than India. While the volume of trade between China and Sri Lanka remains high, most of this consists of Chinese exports. The lethal combination of a massive deficit, with billions of dollars worth of investment still in the pipeline will make it very difficult for Sirisena to initiate a fundamental shift in policy towards India, or even away from China. However, Sri Lanka accrues a disproportionate benefit from India who allows its own imports to exceed Sri Lankan exports, reducing the trade imbalance.

When Sirisena visited China, it became clear from the ensuing press conferences that China would remain supportive of Sri Lanka’s actions in reviewing Chinese projects as part of theirz broader anti-corruption investigation. More recently, the Chinese foreign ministry spokesperson spoke of the resumption of the Colombo Port Project and the creation of favourable conditions to advance their mutually beneficial cooperation[7]. This shows that the Chinese have enough leverage to prevent Sri Lanka from allowing a paradigm shift in policy towards India, or any other State. Sirisena appears to have been scoring political points when he suspended the Colombo Project, and he evidently does not intend to actually lose Chinese investment. Sri Lanka recently promised to resume the construction of the Colombo Post City after China threatened legal action. Another factor in China’s favour is the fact that Sirisena only won by six percent and their ally, Rajapaksa is set to make a comeback in the impending Prime Ministerial elections[8]. 


China is aiming for the ‘great renewal of the Chinese nation[9]’ and has extended multibillion-dollar loans to the island nation. However, these massive sums are misnomers because as per R. Sampanthan, a member of the Sri Lankan parliament, only 2% of the total funding provided by China is in the form of grants. The remaining 98% has been given in the form of loans[10].

Further, several other experts have talked about how the Chinese used these investments to revive their own flagging economy by using Chinese labour, and in the event of damage, ensuring that only the Chinese have the capability to repair machinery. The Norochcholai Thermal Power Plant is a perfect example of China using its investments as a method of revival. It was funded by the EXIM Bank of China, with the caveat that only Chinese raw materials and labour could be used[11]. It suffered repeated and costly breakdowns that amounted to a quarter of its operational life and it was built such that only Chinese engineers could repair it.

China’s ‘White Elephant’ investments[12] have also been accused of being frivolous, poorly planned and debt generating. They are mostly vanity projects – A cricket stadium, an airport, a seaport and a highway. In fact, as soon as Rajapaksa was voted out of office, Sri Lanka’s national carrier stopped flights to the Mattala Rajapaksa International Airport in Hambantota because it was incurring a loss of $18 million per annum[13]. The seaport and the airport function largely under capacity.

There is widespread resentment among Sri Lankans about the predatory nature of Chinese investments – they have left Sri Lanka highly indebted to China, paying higher interest rates than under the Asian Development Bank or the World Bank[14], and have shown little benefit. The Chinese and the Rajapaksa regime had failed to recognise public resentment behind the allegations of corruption and neo-colonial behaviour by China. Their shortsightedness lead to the ousting of Rajapaksa from power, not once, but twice. The new president, Sirisena has been elected partially because of the anti-China and anti-Rajapaksa wave. His anti-corruption and austerity promises have brought all Chinese projects under the scanner and have lead to the suspension of the flagship Colombo Port City Project.

But India will have to remind the Sri Lankans of the benefits they have brought vis-à-vis the Chinese. While China built multi storied towers, stadiums, unusable airports and highways, India brought direct benefits to the people. India developed the railway networks that serve 300,000 commuters daily[15] and is helping to rehabilitate people displaced by the Civil War by building houses. India has been four times as generous in terms of grants, while the Chinese have only provided them with high interest loans.

In terms of security, the Indian Ocean Region is dominated by the Indian Navy and it simply outnumbers Chinas forces in the region[16]. China will never be able to match the security that India can provide simply by its proximity. Sri Lankan military officers have trained at Indian military academies and India helped put down a country-wide rebellion in 1971 at the request of the Sri Lankan President. Although China says that it provided Sri Lanka with weapons and diplomatic support during the civil war, India, despite its domestic constraints, played an equally important role by facilitating arms deals and providing critical naval and intelligence support[17]. Since the end of the fight against the LTTE in 2009, 10% of Sri Lanka’s officers have, at some point, trained in India. The Indian and Sri Lankan Navies also pariticipate in joint military exercises and training.

Both nations enjoy shared cultural influences such as Bollywood and their liberal democratic political system. 20% of Sri Lanka’s tourists come from India in stark contrast to the 3% from China[18]. India can even use the Tamil minority in Sri Lanka to make trouble for the government as it did in 1980.


India’s interests are naturally allied with Sri Lanka’s and many experts suggest that Sri Lanka’s recent diplomatic overtures in India are suggestive of a pro-India tilt. But India shouldn’t rest on its laurels just yet because China’s Maritime Silk Route Proposal is largely dependant on Sri Lanka’s ports, some of which have been called the best in the world. China will not allow Sri Lanka to slip out of its fingers and will use all the tools at it disposal to maintain its grip on Sri Lanka’s ports. India’s recent diplomatic successes are commendable, but it must either try to match China dollar-for-dollar, or shift the goalpost to security and remind Sri Lanka of its dependency on India. India must prevent China from dominating Sri Lanka’s policy and thus, must continue to compete.

Image Credits:,width-640,resizemode-4/pm-modi-sirisena-offer-prayers-at-the-sri-maha-bodhi-tree.jpg

[1] Human Rights Council adopts a resolution on reconciliation, accountability and human rights in Sri Lanka – Human Rights Council, 27th March, 2014; (last accessed: 25th May, 2015)

[2] Ibid. 19

[3] Ibid. 12

[4] R. Sampanthan’s Speech in Parliament – Only 2% Chinese Aid to Sri Lanka are Grants While India Provides 33% As Grants; (last accessed: 24th May, 2015)

[5] Sachin Parashar – Sri Lanka snubs India, opens port to Chiense submarine again; (last accessed: 25th May, 2015)

[6] Ibid. 23

[7] Foreign Ministry Spokesperson Hong Lei’s Regular Press Conference on March 19, 2015; (last accessed: 24th May, 2015)

[8] Amantha Perera and Jason Burke – Mahinda Rajapaksa prepares for a political comeback in Sri Lanka; (last accessed: 25th May, 2015)

[9] Ibid. 11

[10] Ibid. 22

[11] Sameer Lalwani – China’s Port to Nowhere; (last accessed: 25th May, 2015)

[12] Ibid. 29

[13] Ibid. 29

[14] Ibid. 29

[15] Ibid. 29

[16] Ibid. 29

[17] Ibid. 29

[18] Ibid. 29


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