Is China Colonizing Sri Lanka?

Chinese plans to construct a port and industrial zone complete with a Formula 1 racetrack in an underdeveloped part of rural southern Sri Lanka has been met with fierce opposition in the South Asian island nation. Just last week, 21 people were injured in skirmishes between police and protesters during a visit to celebrate the opening of the Chinese port in Hambantota by Sri Lankan Prime Minister, Ranil Wickremesinghe.

Construction of the new port and industrial zone has started in Hambantota, located about 240 kilometers (150 miles) southeast of the capital, Colombo. The town was hit badly by the 2004 tsunami, and plans for a major drive of Chinese investment in the region should have been cause for celebration. However, corruption scandals relating to illegal land grabs as well as fears that the port area will become a "Chinese colony,” have created a tense standoff between the pro-China government, and locals who fear that the presence of the Chinese at such a scale will result in “cultural erosion and demographic change.”

For the Chinese, Sri Lanka is a valuable ally in the development of its “One Belt, One Road” strategy. Furthermore, it’s an important part of Chinese strategic initiatives in the Indian Ocean. The US$1.12 billion investment by China Merchants Port Holdings Company Ltd to develop the port grants the Chinese state-owned company a 99-year lease, with the option to extend by another 99 years. China's interest in developing the port reflects the ambitions of Beijing to build a "Maritime Silk Route" to the oil-rich Middle East and onwards to Europe. Sri Lanka and its geographical position close to important shipping lanes in the Indian Ocean make it vital to such plans.

"No force can stop the cooperation from China to Sri Lanka," claimed the Chinese Ambassador to Sri Lanka, Yi Xianliang. He added, the Chinese investment would create 100,000 new jobs over the next three to five years. However, the deal has raised concerns in some quarters about the implications of Chinese investment in the region. There are also questions about the security dynamics, with Chinese using Sri Lanka to possibly rekindle a rivalry with neighboring India, with whom China fought a short, but bloody border conflict in 1962. A considerable level of distrust remains between Beijing and Delhi.

The basis of China’s current relations with Sri Lanka began in earnest in 2005 after the election of the former president, Mahinda Rajapaksa. With the decades-long fight against the Tamil Tigers still raging in the north of the country, Sri Lankan leaders looked to Beijing to fill the void left by the U.S. after Washington suspended military aid in 2007 citing human rights violations in the bloody civil war. Beijing obliged, supplying Sri Lanka with US$37 million worth of armaments, alongside a huge jump in non-military aid - just a few million dollars in 2005 to US$1 billion in 2008, replacing Japan as Sri Lanka’s biggest aid donor.

Sri Lanka owes a staggering US$8 billion to China, and Colombo recently started measures to convert a portion of the debt into equity for infrastructure investment by Chinese companies. That goes some way in explaining why since 2005 Chinese investment has funded or constructed 70 percent of Sri Lanka’s recent infrastructure projects. In 2010, Beijing lent Sri Lanka more than US$200m to construct a new international airport at Hambantota, the site of the controversial port. Beijing also gave the green light for investment in a number of new railway projects. When Chinese President Xi Jinping (習近平) visited Sri Lanka in September 2014, the port at Hambantota was already losing millions of dollars each year in interest payments that Sri Lanka couldn’t afford to pay. Xi agreed to ease the conditions of the loan for the port, and in return, Rajapaksa quietly signed an agreement giving Chinese companies operating rights to four of the seven container berths at Hambantota under a 35-year lease.

The opposition displayed towards the development of the port in Hambantota is perhaps reflective of Sri Lankan concerns that the Chinese influence on the island is becoming too strong. The current administration has accused its predecessor of agreeing to unfavorable terms for Chinese loans. The forced eviction of thousands of villagers, plus the environmental impact on the area, and its knock-on effect for the tourism industry on which Sri Lanka is so reliant are all cause for concern amongst locals, who have become suspicious at Beijing’s increased operations in the region.

Now that the first ceremonial bricks of the port and industrial zone have already been laid, the locals stand little chance of stopping the development, even after Buddhist monks petitioned the government.

"Ninety-nine years means at least two generations,” said Magama Mahanama, from the Sri Lankan Monks' Organisation to Protect National Assets. “When they (the Chinese) take root here, what's the guarantee that we will have it back? There is a major threat of cultural erosion and demographic change."

Editor: Edward White