A friend in need a friend indeed

Sri Lanka is on its last leg. With the last fuel shipment of 40,00 MT, under the Indian credit line docking, the need to for fuel, LP gas and food is evident. Many are on the streets voicing their grievances with the current Government and Colombo cannot delay its response. Given the situation, we cannot be choosers of the handouts we receive, even if that means damaging ties with the longstanding strategic partner of the current Government: China. 

Beijing was first to rush to Sri Lanka’s side when the troubles started appearing in 2021 and suddenly turned cold to now lukewarm. Keenness to help yet again has resurfaced. With $ 76 million in support so far, China rivaled to our immediate neighbor constantly by our side. According to some estimates Delhi has out matched all other unilateral support extended by $ 3.5 billion worth in aid and credit. 

China has been playing ‘tough love’, by being critical of Sri Lanka’s economic management policies missing opportunities provided to spur growth and attract foreign investment – widely held by them to be a crucial part of the current solution. The two “growth engines” mentioned are the Colombo Port City Project and Hambantota Port that can develop the Regional Comprehensive Economic Partnership (RCEP) plan. Coupled with further Chinese FDI and aid, this was to be the making of the Belt and Road Initiative (BRI) in Sri Lanka. 

China constantly needed reassurance that it is in fact the main oversees player in the Sri Lankan growth story and not second fiddle to India, Japan or the West. Chinese interest in Sri Lanka was never assumed to be without strings attached, similar in parts to India, and expected ideological alignment in the case of the west. Western nations expect Sri Lanka to play ball with the IMF before they make investments that lead to the Sri Lanka solution; China expects to be the belle of the ball in the Sri Lankan solution.

China still does not expect Sri Lanka to align its stance with the West and would rather expect Colombo to follow an independent policy. In March Chinese Ambassador Qi Zhenhong claimed that Beijing is looking into a loan of $ 1 billion and a credit line of $ 1.5 billion. Meanwhile, $ 120 million has been approved by the US International Development Corporation to the Sri Lankan private sector.

The Government stance on the surface too, seems divided on the approach to Chinese support. President Gotabaya Rajapaksa explains China’s failure to step in and help, as a loss in interest in South Asia and a shift in focus to Southeast Asia and Africa instead. This means Chinese support now is out of the question, a concerning notion from Rajapaksa himself.

However, Prime Minister Ranil Wickremesinghe told WION TV that China is “very much still involved in South Asia”, reiterating the economic interest held in the sub-continent. Unlike the President, the PM believes that negotiations with China on debt rescheduling is crucial to support recovery, and that conditions made on the loans can be waived off. China not being a member of the Paris Club was also pointed out as a reason to which ties cannot be wholly severed, even momentarily.

Sri Lanka has had to rely on India during the crisis because China turned cold and came up with stringent conditions. With the clock ticking, India fast tracked material aid and loosened its purse strings making it the obvious choice. However, if China keeps pushing on radical changes to be made in the best interest of Beijing in the Sri Lankan economy the path forward would need to be strategically shaped as financial aid would not be guaranteed. This would mean Sri Lanka will have no option but to forget about the good run it had with China and hitch its wagon to India and the West instead.