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Sri Lankan President Anura Kumara Dissanayake is on a four-day visit to China from 14 to 17 January 2025. During his visit, he met with Chinese President Xi Jinping and other high-ranking officials to discuss bilateral ties and cooperation.
The two countries signed 15 cooperation agreements, focusing on economic and technological development, as well as aligning China's Belt and Road Initiative with Sri Lanka's 2030 digital economy blueprint.
President Dissanayake's visit to China comes after his first overseas trip to India in December, where he met with Indian Prime Minister Narendra Modi. This visit to China is seen as an effort to navigate the rivalry between India and China, both of which are crucial for Sri Lanka's economic recovery.
The discussions between President Dissanayake and President Xi Jinping covered various topics, including economic development, climate change, and regional peace and stability. Sri Lanka's severe economic crisis has forced it to seek financial assistance from both China and India. This situation has put Sri Lanka in a vulnerable position, as it navigates the competing interests of these two major powers.
During President Dissanayake's visit to China, the Chinese side expressed their expectation for Sri Lanka to expedite the implementation of preferential policies for the SINOPEC refinery project at Hambantota Port. This refinery project, valued at $4.5 billion, is a significant investment aimed at enhancing Sri Lanka's petroleum processing capabilities. Prior to the actual visit, during a meeting with the Sri Lankan Ambassador, on January 2 Deputy Director General of the Chinese MoFA’s Asian Affairs Department, Zhang Maoming, conveyed that the Chinese side expects Sri Lanka to expedite the preferential policies with regard to the SINOPEC refinery in Hambantota Port. He also conveyed that the Chinese side prefers the use of the phrase ‘One China Principle’ rather than ‘One China Policy’ in the Joint Communiqué to be issued at the end of the visit.
Using diplomatic, economic, and political means, China has been actively promoting the "One China Principle" internationally. The term ‘One China Policy’ has always been used to describe the diplomatic acknowledgement by other countries, including the United States, that there is only one Chinese government. However, it does not necessarily imply recognition of the PRC's sovereignty over Taiwan. Through insistence on the “One China Principle” the People's Republic of China (PRC) is trying to assert that Taiwan is an inalienable part of China. This principle is non-negotiable for China and is a fundamental aspect of its foreign policy. Additionally, China has pressured international organizations and companies to adhere to the "One China Principle" by limiting their interactions with Taiwan.
President Xi Jinping proposed elevating the bilateral relationship to a "China-Sri Lanka Strategic Cooperative Partnership with sincere mutual assistance and everlasting friendship." Sri Lanka joins Pakistan and the Maldives as the third country to achieve this level of bilateral relations with China. There are considerable complexities and potential risks associated with Sri Lanka's growing economic ties with China.
In the recent past, China's involvement in Sri Lanka raised concerns about potential interference in the country's sovereignty. Sri Lanka's economic dependence on China, especially under the Belt and Road Initiative (BRI), has already led to a "debt-trap" situation. High-interest loans for infrastructure projects like the Hambantota Port have raised concerns about Sri Lanka's ability to repay its debts. When the Sri Lankan government decided in 2002 to build a new port in Hambantota, China offered $1.1 billion in loans. It also supplied Chinese contractors. And when the port opened in late 2010 and immediately began losing money — so much that Sri Lanka couldn't even make interest payments on those loans — China offered a solution: foreclosure. The Chinese state-owned operator physically took control of the port in late 2017 — on a 99-year lease — after the Sri Lankan government defaulted on its loans.
Additionally, large-scale infrastructure projects funded by China, such as the Colombo Port City and Mattala Rajapaksa International Airport, have caused environmental damage and the displacement of local communities
China's strategic interests in Sri Lanka, including the docking of Chinese research vessels with advanced surveillance capabilities, have also raised security concerns as they are often dual-use platforms with both civilian and military functions. In fact despite this being a delicate subject, Zhang Maoming of the Chinese MoFA brought up the subject of allowing China to conduct Marine Scientific Research (MSR) in Sri Lankan waters and urged Sri Lanka to uphold its sovereignty and not allow others to disrupt it. He emphasized that China considers cooperation on MSR as a testimony to Sri Lanka’s ability to uphold its sovereignty as well as to bilateral friendship. He added that China had very high expectations that Sri Lanka would not allow its territory to be used for any security threats by the neighbours and that China-SL relations would be kept at a high position without allowing other parties to disturb them.
In October 2023, scientists from China and Sri Lanka conducted joint research onboard the Chinese vessel Shi Yan 6. This collaboration has raised concerns from India and the United States, but Sri Lanka granted permission for the research activities to proceed. : In response to these concerns, Sri Lanka has imposed a one-year moratorium on allowing foreign research vessels to operate in its waters. This decision aims to prevent potential diplomatic conflicts and avoid geopolitical complications
During President Dissanayake's recent visit to China, Sri Lanka reaffirmed its support for China on issues related to Xizang (Tibet) and Xinjiang, a complex and sensitive topic. Sri Lanka’s support of China's policies in Xizang and Xinjiang, which include allegations of human rights abuses and suppression of cultural and religious freedoms, may be seen as condoning or legitimizing actions that many international human rights organizations and countries have condemned, thus undermining the ethical implications of this support
Sri Lanka’s asymmetric power relationship with China has limited Colombo’s ability to negotiate in its favor. After falling into the Chinese debt trap, Colombo is paying off its loans in varied ways, from leasing its strategic assets through debt-equity swaps to creating extra-jurisdictional Special Economic Zones.
For politicians, delivering economic development and social welfare correlates with their political survival and consolidating power. Infrastructure projects, financed by China, become tools for the ruling elite to demonstrate their performance legitimacy. As a result, political elites since 2005 have been strategically using Chinese loans to advance their ambitious development-through-infrastructure political agenda. But China’s involvement from financing to implementation has attracted criticism and as a result, China-financed projects have been plagued with controversies. When these projects failed to generate expected revenues, Sri Lanka struggled to repay the loans, leading to a foreign exchange crisis and severe shortages of essential goods
It is hoped that moving forward, President Anura Kumara Dissanayake would show a more assertive approach in his leadership, and backtrack its China ‘bandwagoning’ foreign policy, bring a ‘balance’, and develop a considered perspective on the geopolitical and regional security concerns its close relationship with China brings. Already, Sri Lanka's overdependence on China has played a significant role in exacerbating its economic crisis. Meanwhile China’s growing role in Sri Lanka is also derived from its political and strategic ambitions in the Indian Ocean region. Unarguably, the Indian Ocean region is emerging as the economic and geopolitical center of gravity in the 21st century.
China’s relations with small countries is domineering, leaving no room for the small state to maneuver. The challenge for President Dissanayake is to ensure that Sri Lanka no longer remains a pa bilateral relations and exercising agency in the planning and implementation of infrastructure projects. While engaging with the PRC, the Dissanayake administration must keep in mind that Chinese state-owned enterprises embody a new modus operandi that encroaches upon the sovereignty of countries where China invests. (Vaishali Basu Sharma)
The author is an analyst on geopolitical and macroeconomic issues