The recent visit of the Chinese Foreign Minister (CFM) to Sri Lanka has stirred significant attention. During a meeting, the CFM suggested a forum for Indian Ocean island nations and emphasized that no “third party” should interfere in China-Sri Lanka relations. Although the third party remained unnamed, it was largely interpreted as a reference to India.
Milestones and Proposals Discussed during the Visit
The CFM’s visit aimed to commemorate the 70th anniversary of the Rubber-Rice Pact of 1952 and the 65th anniversary of diplomatic relations between China and Sri Lanka. The 1952 pact was a solution for China’s need for rubber imports and Sri Lanka’s struggle with escalating rice prices and a downturn in rubber prices.
In addition to celebrating historic milestones, the Minister encouraged utilising “the two engines”, referring to the Colombo Port City and the Hambantota Port—both being major infrastructure projects in Sri Lanka. The CFM also proposed discussing the potential of the Regional Comprehensive Economic Partnership (RCEP), emphasizing restarting talks on free-trade agreements. A proposal for a developmental forum for Indian Ocean island countries was put forth to promote common growth and establish synergy.
China-Sri Lanka Ties: An Overview
China is Sri Lanka’s largest bilateral creditor, with loans to the Sri Lankan public sector making up 15% of the central government’s external debt. Between 2006-19, China invested about USD 12 billion in Sri Lankan infrastructure projects, solidifying its influence over Sri Lanka. This relationship could be further strengthened due to Sri Lanka’s economic crisis possibly causing it to align its policies more closely with China’s interests.
China’s Strategic Interest in the Indian Ocean
China enjoys favourable relations in South Asia and the Indian Ocean than in Southeast Asia and the Pacific as it faces resistance from Taiwan, territorial disputes in the South China Sea and East Asia, and frictions with the United States and Australia.
India’s Concerns
India perceives the proposition of an Indian Ocean island nations forum as a challenge to its regional strategy—SAGAR (Security and Growth for All in the Region). Additionally, China’s control over Sri Lanka’s Hambantota port and planned funding of a Special Economic Zone around the Colombo port city are seen as threats to India’s national security. This “Strings of Pearls Strategy” by China, aimed to encircle India, raises significant concerns.
Influencing India’s Neighbours
South Asian nations like Bangladesh, Nepal, and the Maldives have also been relying on China for financing large-scale infrastructure projects.
Preserving India’s Strategic Interests
For India, maintaining a ‘Neighbourhood First’ policy with Sri Lanka is crucial to safeguarding its strategic interests in the Indian Ocean region. To counter Chinese expansion, India must continue working on port projects in Jaffna and Trincomalee.
Leveraging Regional Platforms
Platforms such as BIMSTEC, SAARC, SAGAR and the IORA can play vital roles in fostering cooperation in diverse fields like technology-driven agriculture, marine sector development, IT and communication infrastructure, etc.
Private Sector Investments and Usage of Soft Power
Both countries should explore enhancing private sector investments to create economic resilience. Through its IT companies, India can leverage its soft power in Sri Lanka to create job opportunities and stimulate the service economy.
