Building New Bridges
China’s growing presence in Sri Lanka could be perceived as a threat to India-Sri Lanka relations.
China is determined to establish a strong bond with Sri Lanka by taking a strategic approach.
Relations between India and Sri Lanka have always been more than just cordial gestures of diplomacy. The decision of Indian Prime Minister Manmohan Singh not to attend the Commonwealth Heads of Government Meeting ( CHOGM) hosted by Sri Lanka in September was conceivably the most overt stroke so far. Many analysts termed it as harmful for future relations between the two countries.
According to a Chinese staterun think tank “in dealing with its relationship with Sri Lanka, India has adopted a new approach that may harm its relations with neighbors." The action was viewed as the setting of a new direction in India’s foreign policy. The Sri Lankan media termed the boycott an attempt by the Indian government to placate its Tamil population in the Tamil Nadu state in view of the next general elections.
Nonetheless, China seems to be exploiting the situation to its advantage to establish a strong bond with Sri Lanka, by taking a strategic approach.
In October last year, when the Tamil Nadu chief minister was hauling the central government over the coals for its failure to implement a resolution that called for economic sanctions
against Sri Lanka, the Sri Lankan government was making arrangements for a tie-up with China in the form of the Free Trade Agreement (FTA) - the ‘biggest development’ in Sino-Lanka cooperation since the 1952 Rubber-Rice Pact.
The Deputy International Trade Representative of the Commerce Ministry of China, Yu Jianhua, who recently visited Sri Lanka, was hopeful for a fast completion of the first phase of the FTA. He made it quite clear that Sri Lanka was a priority country for China. “The FTA will upgrade trade levels between Sri Lanka and China. It will also enhance trade skills of both countries. We will work diligently in our joint efforts,” Jianhua said. He also hinted that the FTA would go beyond trade. “The FTA is not meant for trade only. It will institutionalize our strategic cooperation partnership as mandated by the leaders of both countries. We encourage Chinese firms to become involved in Sri Lanka’s economic development.”
Sri Lanka has had a Free Trade Agreement with India since 1996 that has benefitted Sri Lankan trade, which has increased from $600 million in 2000 to $5 billion in 2012. However, trade with China, even devoid of a FTA, has grown from $658.4 million in 2005 to $2676.13 million by 2012. Strengthened by a FTA, trade relations between Sri Lanka and China are likely to flourish further, affecting the growth and volume of India’s trade with Sri Lanka.
Hosting the CHOGM, along with its five concurrent international events, was indeed an outstanding accomplishment for Sri Lanka. However, the same event was also used to send a message to India that it needs to be careful in its dealing with Sri Lanka.
Subsequently, the presence of China in a trade exhibition held parallel to the CHOGM was quite overriding. Of the 83 foreign companies that participated in the event, 42 were Chinese. Conversely, only 21 companies represented India at the exhibition, although it still is Sri Lanka’s largest trading partner. The Sri Lankan government has been encouraging the Chinese to invest in the country, offering lucrative incentives.
The unsettled border claim between China and India along with the latter’s growing strategic ties with the U.S. and Japan, has added to China’s worries. It views India’s rise as a regional economic and military power with much concern although both countries have avoided a fullfrontal confrontation ever since the 1962 Sino-India war.
China realizes that Sri Lanka has the potential to make a major impact on India’s strategic security. This is the reason why Chinese presence seems to be ever increasing in this island nation. Projects such as the Colombo Container Terminal, Hambantota Port and Mattala airport along with heavy Chinese investment in the satellite and telecom sectors pronounce dire implications for India’s national and maritime security.
Apart from Chinese entry into the real estate and manufacturing sectors of Sri Lanka, a significant number of Chinese language and cultural programs are also in the pipeline. This is seen as a possible effort to counter the long-established cultural links between India and Sri Lanka.
The Tamil problem has already caused severe damage to the IndiaSri Lanka relationship. An increasing Chinese presence in the region could further amplify the tension, especially with the Sri Lankan government visibly favoring China probably with the aim to decrease its dependence on India.