China and Sri Lanka: Brotherly love, massive aid and no questions asked

The Economist
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Hitching up his clean white sarong, Basil Rajapaksa mounts a gleaming new motorcycle and has a breezy spin outside the office of his brother Mahinda, Sri Lanka’s president. As he brakes to a standstill by Yang Xiuping, China’s ambassador, both are wreathed in smiles. Mrs Yang has just presented more than 30 Chinese motorcycles to the younger Mr Rajapaksa, a minister in his brother’s cabinet, for use by officials in his constituency.

The bikes are just part of a huge infusion of donations, grants, investments and loans as China’s presence in Sri Lanka explodes. So often have they met over the past year that the Chinese ambassador and the president’s sibling, responsible for many of the government’s development initiatives, seem old chums.

There is no disguising China’s enthusiasm for good relations with Sri Lanka’s government, though the thinking behind it remains a topic of debate. One aspect is clearly commercial. Sri Lanka is a ready market for Chinese goods, services and labour, and runs a sizeable—and growing—bilateral trade deficit. But another is strategic. China is looking for a presence in the Indian Ocean—part of its “string of pearls” strategy of links with regional maritime nations, that it hopes may eventually help secure its supply routes. China also gains a staunch ally in international forums.

In Sri Lanka’s case, ties have historically been good—it was one of the first countries, in 1950, to recognise the People’s Republic. But as an article in the state-owned Sunday Observer newspaper noted in April, the “silky relationship” has reached new highs during the Rajapaksa era. From Sri Lanka’s point of view this is no mystery. As one government official puts it, China is “very generous”. It invests in big amounts and does not ask questions or impose conditions that are not directly related to the deals under discussion.

Last year, as Western nations harried Sri Lanka over the conduct of its brutal last-ditch battle with Tamil Tiger rebels, China moved in. Unlike the EU and America, it exerted no pressure on the government to stop the fighting. Indeed, by selling sophisticated weaponry, it helped Sri Lanka carry on. Military parades and exhibitions, of which there have been many since the victory in May 2009, are usually displays of towering Chinese battle tanks, armoured personnel-carriers and artillery.

The government often refers to China’s contribution towards the war, in contrast to the carping West. Gotabaya Rajapaksa, another sibling, who is the defence secretary, has noted that the president has visited China five times in office and three times before. Sometimes, he says, his brother speaks to China’s prime minister by telephone. “We have understood”, he boasts, “who is important to us.”

After starting with smaller undertakings, China is now financing nearly all of Sri Lanka’s biggest infrastructure projects. They include a new sea port at Hambantota, in the president’s constituency in the south, an oil-storage facility, a new airport, a coal-fired power plant and an expressway. China often provides cheap credit. It is also rebuilding the main roads in the war-shattered north and east, and is constructing a state-of-the-art performance-arts centre. It has sold diesel railway-engines and earthmoving equipment.

Government data show that in 2009 China was, in terms of commitments, Sri Lanka’s biggest aid donor, with $1.2 billion out of a total of $2.2 billion offered—hardly a huge amount for China. The Board of Investment reveals it is the biggest investor, too. Chinese companies have been investing in electronics, infrastructure projects, garment-making, and much else. The government has set up a free-trade zone for Chinese companies.

The blossoming of Sri Lanka’s relations with China comes as ties with some of her traditional trading partners have frayed over human-rights and labour concerns. The EU has just announced that Sri Lanka will not be eligible from August for preferential market access under the “GSP Plus” scheme, after the government rejected the EU’s conditions. America’s government has accepted a petition from an international trade union to review worker rights in Sri Lanka as part of its own GSP scheme.

This week hundreds of protesters laid siege to the United Nations’ compound in Colombo, trapping staff inside for eight hours. They were angered by a panel appointed by Ban Ki-moon, the UN secretary-general, to advise him on possible human-rights violations during the war. The government has rejected this as unwarranted interference. Backing it, naturally, is its friend China. On July 1st a foreign-ministry spokesman told a press conference that China believed the Sri Lankan government and people were capable of handling their own problems.

© The Economist