Sri Lanka crisis: political turmoil may have ‘big impact’ on China ties, observers say
- Gotabaya Rajapaksa – whose family is seen as Beijing-friendly – has confirmed he will resign as president, according to the prime minister’s office
- Chaos also a ‘reminder’ for Chinese that ‘local governance competence should be taken into consideration when investing overseas’
On Monday, a day after tens of thousands of protesters stormed his residence as well as the prime minister’s in Colombo, Sri Lankan President Gotabaya Rajapaksa confirmed that he would resign, according to the prime minister’s office.
Prime Minister Ranil Wickremesinghe – who last week declared the nation “bankrupt” – has also said he would step down. His office said cabinet ministers had agreed on Monday that as soon as there was an agreement to form an all-party interim government they would hand over their responsibilities.
The latest political turmoil comes after months of protests over the financial crisis and will be a blow for Chinese ties with the island nation, according to Lin Minwang, a South Asia expert at Fudan University in Shanghai.
The Rajapaksa family, which has dominated Sri Lankan politics for nearly two decades, was considered friendly to Beijing. When Mahinda Rajapaksa – Gotabaya’s older brother – was in power from 2005 to 2015, Colombo agreed to a number of Chinese infrastructure projects including a port in Hambantota that was leased to a Chinese state firm under a 99-year deal as part of a controversial debt-for-equity swap.
“In the short run, there will be a big impact on China’s relations with Sri Lanka because the influence of the Rajapaksa family in Sri Lanka’s political circles will be undermined and a political comeback will be unlikely in the near future,” Lin said.
He said the crisis, driven by soaring inflation, high debt and economic mismanagement, was also a “reminder” for Chinese investors looking to developing nations that are vulnerable to increasing fuel costs, food shortages and rising US interest rates.
“I won’t call it a lesson but it is a reminder that local governance competence should be taken into consideration when investing overseas – especially when the overall international environment is not good and given that the debt ratio of countries in South Asia is generally very high,” Lin said.