The military stopover in Sri Lanka is a misstep for the Chinese navy

China did itself a disservice with the PLA’s visit this month, raising fears it is trying to militarize the island.

The surveillance and tracking vessel Yuan Wang 5 (PLA Navy)

Posted on August 21, 2022 at 3:02 p.m. by

Lowy’s interpreter

[By Rupert Stone]

The Chinese Tracker Ship Yuan Wang 5 eventually docked at the port of Hambantota in Sri Lanka for resupply after India and the United States tried, and ultimately failed, to persuade the local government to refuse it. The arrival of the huge vessel could seem like a victory for Beijing in this strategically important island nation.

But it’s actually nothing like that, as it reinforces China’s image as a predatory imperial power trying to exploit Sri Lanka for its own ends. Beijing has done little to help the country through its devastating economic collapse, providing far less aid than regional rival India.

Why China would sit idly by and allow an adversary to reap the soft power benefits of this current crisis is puzzling when it has often been blamed by the US government and others for causing the Sri Lanka’s problems and that she could use the opportunity to improve her reputation on the island.

It has long been claimed that Beijing is engaging in ‘debt trap diplomacy’, overwhelming poor countries with such debt that they cannot repay their loans and have to relinquish control of strategic assets, allowing China to expand its geopolitical influence under the guise of seemingly benign policy. infrastructure projects.

Exhibit A in this regard is Hambantota, where the PLA ship docked. The project was funded by Chinese loans, but in 2017 Beijing reportedly seized the port as Sri Lanka could not repay its debt. Since then, the example of Hambantota has been cited by Western officials seeking to warn of the perils of Chinese loans.

However, this episode was heavily twisted. China did not take over the port, but leased it for 99 years. Sri Lanka proposed the deal because it urgently needed foreign currency to pay Western creditors. The loans used to finance Hambantota have not been cancelled; they are still in the books.

China reportedly seized Hambantota because it wanted to establish a naval base along strategic shipping lanes. But there was no evidence of PLA military activity there prior to the arrival of this scout ship. And Indian and American ships have visited, so why not Chinese?

Debt-trap diplomacy is little more than a conspiracy theory. Eurobonds represent the largest proportion (36%) of Sri Lanka’s sovereign debt. China’s share is certainly significant, between 10 and 20% depending on how it is calculated. But however you calculate the numbers, Beijing is not primarily responsible for the country’s crisis.

Yet while accusations of nefarious Chinese designs on Hambantota may be wrong, they are widely believed, and China has done itself a disservice with the PLA’s visit this month, raising fears that it attempts to militarize the island, giving Delhi a propaganda victory.

In recent years, China and India have been engaged in a bitter struggle for influence in Sri Lanka. China wielded influence during Mahinda Rajapaksa’s presidency from 2005 to 2015; then he lost ground to Delhi under his successor; but regained influence when Mahinda’s brother Gotabaya took the helm in 2019.

Now the tables have turned again. Both Gotabaya and his brother resigned from government this year, depriving China of its best friends in Colombo. India has stepped in to ease desperate food and fuel shortages in Sri Lanka with over $3.8 billion in aid. Beijing, on the other hand, provided a relatively paltry $74 million.

For months, Sri Lanka pleaded with China for more support, but to no avail. While India extended a currency swap deal with Sri Lanka in April, the People’s Bank of China suspended its own swap line as the country lacks sufficient foreign exchange reserves.

China has also expressed reluctance to cancel its Sri Lankan loans, playing on accusations of greed over debt renegotiations. Indeed, China’s record in this area shows a refusal to negotiate debt relief with other creditors and a preference for engaging in covert bilateral loan restructurings.

Beijing has been happier granting new loans than canceling old ones, fulfilling a role akin to that of the International Monetary Fund, which provides cash-strapped countries with emergency financing. But in many of these cases, liquidity is not the issue; solvency is. And what countries really need from China is debt reduction, not more credit.

Things could change. China has just reached an agreement with Zambia’s other creditors to provide some form of debt relief under a G20 multilateral initiative. But the details of this agreement remain unclear and it is too early to say that Beijing has softened its approach.

Certainly, his image will suffer even more if he plays rough in Sri Lanka. While China has been unfairly blamed for its role in the island’s crisis, its handling of the situation has so far been clumsy and self-defeating, allowing rival India to claw back some influence. If Beijing does not make amends, it could also experience setbacks in other indebted countries.

Rupert Stone is a freelance journalist working on Asian security and geopolitics, with a focus on South Asia. Educated at Oxford University and the University of London, Stone has written for various publications including Newsweek, VICE News, Al Jazeera English, Nikkei Asia, The National Interest and The Independent.

This article appears courtesy of The Lowy Interpreter and can be found in its original form here.

The views expressed here are those of the author and not necessarily those of The Maritime Executive.

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