China and the Indian Ocean Region

The Geopolitics of Chinese Investments in Sri Lanka

13 Apr, 2015    ·   4862

Teshu Singh analyses the geopolitical implications of China's inroads in South Asia and the Indian Ocean Region

Teshu Singh
Teshu Singh
Senior Research Officer
Chinese investments in Sri Lanka are can be primarily found in three sectors: trade, infrastructure and defence. Infrastructural investments such as the Colombo-Katunayake Expressway, the National Theatre of Performing Arts, and the Bandaranaike Memorial International Conference Hall (BMICH) are symbolic of Chinese presence in Sri Lanka. Apart from these investments, two other projects – the Hambantota port and the Colombo Port City project – have drawn attention to the nature of the Chinese investments in Sri Lanka. This article seeks to analyse the geopolitics of the recent Colombo Port City project and the larger Chinese game plan vis-a-vis such investments in the region.

The Colombo Port City Project
The Colombo Port City project was inaugurated by Chinese President Xi Jinping in September 2014, with a budget of $1.4 billion; it is funded by China’s state-controlled China Communication Construction Company (CCCC) Ltd., a subsidiary of the China Harbour Engineering Company. The Colombo port city project aims to play a major role in the Maritime Silk Road (MSR) project. With the change of government in Sri Lanka, the project is under scrutiny – for its high interest rates, corruption, environment issues and most recently on exclusive rights over the air space above the Colombo Port City land – and has been withheld at the moment.

The project has opened up divisions within the new government, a fragile alliance between parts of the old opposition United National Party, defectors from former President Mahinda Rajapaksa’s ranks (including President Sirisena himself), and smaller groups. Sirisena had promised that “equal relations will be established with India, Chinaa, Pakistan and Japan...the principal countries in Asia.” This has heralded a new political process in Sri Lanka; the new government had come to power on the issue of curbing China’s increasing role in Sri Lanka, but not much has been done; Sirisena has stated that “India is a good neighbour and China is a good ally.”

Sri Lanka is balancing both countries in the unfolding geopolitics of the region. Sirisena visited india in his first international trip since assuming power and there have been four high-level bilateral visits between the two governments. Sirisena also visited Beijing in March 2015. Not much clarification was made regarding the port city project; in fact Sirisena stated that Sri Lanka “welcomes more investment from China, promising a healthy investment climate.” This is in sharp contrast to the Sri Lankan foreign minister’s statement where he reiterated that Colombo will focus on “the ‘back to the center’ foreign policy” during his visit to Beijing. 

In Pakistan, apart from the geopolitics surrounding Sri Lanka’s Colombo Port City project, there are similar developments that have been affected by the domestic politics. The Karakoram Highway/ Friendship Highway and the Gwadar port built by China in Pakistan’s Balochistan Province have been affected by the latter’s domestic politics. Not much commercial activity has taken place in the Gwadar port due to domestic politics. Apart from Gwadar, two joint mining ventures at Saindak (copper) and the Duddar (zinc) are stuck due to serious contentions the between Balochi residents and Islamabad. The Baloch nationals do not want mega projects but sovereign autonomy so that they can control their own local resources.

In fact, the hashtag, #ChinaQuitBalochistan, has been trending on Twitter to express wariness towards China.

Despite the delay in these projects, the Sino-Pakistan relation still thrives.

China's Endgame in the Region
With the aforementioned projects in process, China gets an opportunity to maintain its presence in South Asia. These investments give Beijing an opportunity to maintain its presence in the Indian Ocean intermittently. Through these investments, China gets strategic and commercial space in the region. Sri Lanka has consistently supported China’s ‘One China Policy’ and has opposed any attempts in the past by Taiwan to seek membership in the United Nations. Over a period of time China-Sri Lanka relations have deepened, and with the growing economy, Sri Lanka is a readymade market for Chinese goods and services. The overall China-Sri Lanka bilateral is a win-win situation for both countries, militarily and economically.

China has made investments in many Indian Ocean littorals, and especially in Sri Lanka and Pakistan to ensure smooth transportation of its energy resources through the Ocean. To this end, Beijing needs a peaceful and stable neighbourhood to achieve ‘Comprehensive National Power’ and for this a ‘peaceful periphery’ has become a pre-requisite to Chinese foreign policy. Meanwhile, domestic politics of the host countries are playing crucial roles in shaping the geopolitics of the region.