Passive investor to partner in crime: How China lost the plot in Sri Lanka

Bandara Chaminda's enthusiasm is almost infectious.

The sprightly 30-something engineer at Hambantota port reels off the benefits of this port-industrial complex on the southeastern tip of Sri Lanka about 240km from the capital Colombo. "There's massive demand for transshipment of vehicles and it's increasing by the day. Once companies set up their production lines here, we'll get much more ships," gushes Chaminda as he gives a tour of the port.

Hambantota could use more ships, there are none in sight. The port, which started operations in 2010 and was supposed to challenge Singapore, received all of six ships in 2011 and 18 in 2012. The government finally had to ask ships carrying vehicles to offload their wares in Hambantota rather than Colombo.

Naturally, not many share Chaminda's optimism, least of all his boss. Back in Colombo, Sri Lanka Ports Authority chairman Lakdas Panagoda makes little effort to hide his contempt for it. Unfolding a map of Sri Lanka on his desk, he points out two existing ports that could have done the job. "Trincomalee and Galle are natural harbours; there was no need to build a new port."

The only other people who seem to have kept their faith in Hambantota are the Chinese. China Exim Bank funded 85 per cent of the US$361 million for the first phase of the port project that China Harbour Engineering Company and Sinohydro Corp executed. The US$808 million second phase is being built by China Communications Construction Company (CCCC) and China Merchants Group.

Hambantota port is among the many infrastructure projects bankrolled by China since the three-decade civil war between Colombo and Tamil rebels ended in 2009. Many of these are being reviewed by the new government of Maithripala Sirisena that sees them as corruption-ridden relics of the previous regime.

South Asia's tropical paradise is estimated to have received up to US$5 billion from China in the form of aid, soft loans and grants in the past five years. Nearly 70 per cent of infrastructure projects have been funded by China and built by Chinese companies.