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Alex Lo
SCMP Columnist
My Take
by Alex Lo
My Take
by Alex Lo

India jumps in as China plays Scrooge with Sri Lanka

  • In a diplomatic masterstroke, New Delhi’s more humane treatment of Colombo has both outsmarted and humiliated Beijing

When it comes to helping Sri Lanka and keeping diplomatic scores, lately it’s been: India 2, China 0.

Even when it isn’t exactly Beijing’s own goal, it’s close to being one. The story so far, so humiliating: this week, Colombo refused a Chinese research vessel Yuan Wang 5 to dock at the Hambantota port for refuelling; of all places! The decision was made under pressure from India.

If there is a silver lining for China, it’s that the Sri Lankan refusal rather punctures the Western narrative about China’s debt-trap diplomacy, of which Hambantota is inevitably cited as a prime example. The port was built with Chinese money and engineering.

As Colombo had trouble making repayments, a Chinese shipping company has secured a lease on much of the port for 99 years, but crucially not ownership, as it’s often reported.

Well, so much for the debt trap when the Chinese can’t even dock a boat at the port. Washington at one point claimed Hambantota could become a People’s Liberation Army naval base!

How did Colombo dare refuse the Chinese now? Simply put, money talks. As Sri Lanka sinks deeper into political and financial crises, India has emerged as a top lender and rescuer, by committing to provide about US$5 billion worth of aid, of which US$3.8 billion is for this year. Included are food, fuel and medicine, as well as cold hard cash.

What has China done, on which Colombo has rested so much hope? Earlier this year, Beijing rejected a request to reschedule its loans. Instead, it offered refinancing with a new US$1 billion loan to help repay part of the existing loans. Controversially, China’s Sri Lanka envoy Qi Zhenhong said: “Countries that colonised Sri Lanka have more obligations to help at this juncture.” Beijing was angry that Sri Lanka had gone to the International Monetary Fund for help.

Understandably, Colombo now tilts towards India. New Delhi has claimed, no doubt an exaggeration, that the Yuan Wang 5 could track missiles and trace intelligence signals. What India has really demonstrated is that it can bend Sri Lanka and humiliate China in a single act.

China has a choice. It can play hardball and make life difficult for Colombo at the IMF, thereby pushing the country further into bed with India.

Alternatively, it could play nice and join IMF debt restructuring efforts, to retain some diplomatic goodwill.

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