Sri Lanka will regret this engagement with Beijing

The Hambantota port lease highlights the risks of doing business with China

The Sri Lankan part of Hambantota has formally become a Chinese leasehold and will remain so into the twenty-second century. That the port would be handed over to a Chinese firm has been public knowledge for several months. As was the fact that Sri Lanka will also hand over 15,000 acres of land for a Chinese economic zone. All of this in return for China writing off a little over one billion dollars worth of Sri Lanka’s enormous bilateral debt to that country. India has become increasingly used to seeing any Chinese territorial gain in the subcontinent as a zero-sum game.

Hambantota has a different role in the constant shadow boxing between India and China. It is pointless for India to try and outbid and buy out every maritime facility that China builds and manages in the Indian Ocean. Beijing commands far greater economic and financial resources. It makes even less sense to fight over projects like Hambantota which has shown little commercial prospect. What India is trying to do is to showcase how the Chinese way of infrastructure building — high-interest debt, overpricing and demands on the host country’s foreign policy — is little more than a modern neo-colonial enterprise. These are white elephants with yellow chains attached.

That is exactly what is happening in Sri Lanka, where, in effect, two Chinese-built ports and two Indian-japanese ports are vying with each other. They are rivals not only in terms of commerce, but in showing to Sri Lanka and the rest of the world that there is a fundamental difference in dealing with Beijing and in dealing with New Delhi or Tokyo. The real contest will unfold over the coming years as the relative cost-benefit of these ports becomes obvious to everyone. And that is the battle India will have to focus on winning.