Photo: Bandaranaike Memorial International Conference Hall, built between 1970 and 1973, was a gift from the People’s Republic of China in memory of Solomon Ridgeway Dias Bandaranaike who was Prime Minister from 1956 to 1959. CC BY-SA 2.0 - Photo: 2018

China and Sri Lanka: A History that Stretches Back into the Mists of Time – Trade, Religion and Diplomacy – 2

Viewpoint by Dr Palitha Kohona

The writer of this 2-part series is former Permanent Representative of Sri Lanka to the United Nations, former Foreign Secretary and former Head of the UN Treaty Section. The articles are based on a talk on ‘China and Sri Lanka: A History that Stretches Back into the Mists of Time – Trade, Religion and Diplomacy’ given in Sydney on August 26, 2018. Read Part 1 here. – The Editor

COLOMBO (IDN) – In this second part of the series on China and Sri Lanka giving a sweeping overview of the pivotal role of Sri Lanka throughout history, the author looks at latter-day international relations. 

More recently, particularly during the time of the domination of Asia by Western powers, and during China’s “Century of Humiliation”, many Chinese, tormented by incessant internal conflicts and starvation, migrated to other countries in search of a better life. Some came to Ceylon (Sri Lanka) and settled down to become the Sri Lankan Chinese community. 

Dr Palitha KohonaMany Chinese intermingled with the local community and for most purposes they identify themselves as Sri Lankans. Some continue to speak their native dialect. The well known Darwin restaurant, Hanuman, owned by Jimmy Shu, a Sri Lankan of Chinese origin and a Thomian, recently received the award for the best restaurant in the Northern Territory.

In 1950, independent Ceylon became the 13th country to recognise the People’s Republic of China and, since then, has unconditionally endorsed the One China Policy. Subsequently, in 1952, with post-Korean War rubber prices crashing, Ceylon breached a Western embargo and concluded the Rubber-Rice Pact with China to swap rubber (which was listed as a strategic material) for rice.

China agreed to import 50,000 tons of rubber in exchange for 270,000 tons of rice. The rubber was purchased by China paying five dollars per ton above the market price. The Chinese have never forgotten Sri Lanka’s risky diplomatic and commercial gesture. 

Prime Minister Zhou En Lai visited Sri Lanka in 1957 and established the framework for a lasting solid relationship which flourished particularly during the stewardship of Prime Minister Mrs Sirimao Bandaranayaka who visited China in 1972. The Bandaranayaka Memorial Conference Centre stands proudly as a symbol of the bonds developed during this period. It is still the largest conference facility in Colombo. (And Colombo is crying for a bigger conference facility now).

It is said that Chairman Deng Xiaoping sent a delegation to Sri Lanka to study the Greater Colombo Economic Commission before setting up the spectacularly successful Shenzhen Special Economic Zone.

During Sri Lanka’s conflict with the Liberation Tigers of Tamil Eelam (LTTE), China provided weapons and other assistance unconditionally while most Western countries progressively distanced themselves from Sri Lanka and withheld weapons and funding as a means of exerting political pressure on the government. Australia was an exception to this development.

China’s warm support contributed in no small measure to the eventual defeat of the LTTE and the elimination of the terrorist threat. China also provided unqualified support to Sri Lanka at international fora, including the United Nations. As the Permanent Representative to the United Nations, I was a beneficiary of the Chinese diplomatic umbrella.

Subsequently, as the country sought desperately to recover and reconstruct and Western assistance continued to be frugal or heavily laden with conditionality, an economically resurgent China contributed magnificently to Sri Lanka’s recovery efforts. In the absence of a willingness on the part of the traditional partners to come to the development party, Sri Lanka naturally turned to China.

BRI and Sri Lanka’s aspirations

While traders from distant lands sought mutual prosperity, invaders sought and succeeded in grabbing Sri Lanka’s wealth and stunting the development of the people. The BRI initiative can be compared to the multitude of traders who visited Sri Lanka in the past and gave us the opportunity to prosper.

In Sri Lanka, assistance provided by China has had a distinct impact on the development process. The sums provided have been estimated at eight billion dollars and China is the country’s main provider of development funds now. About 10 percent of Sri Lanka’s debt is owed to China and most of the  borrowings have been at less than prevailing commercial rates. The Kandy/Kurunegala Highway, the Northern Expressway and the extension of the Southern Highway from Matara to Kataragama are examples.

In addition, external connectivity has been improved through China’s support for construction of Hambantota Port (which The Economist suggested would become the leading port in South Asia), Colombo South Harbour and Mattala International Airport. The rapidly emerging Colombo Port City is being built mainly with Chinese investments and others have been invited to join. Colombo Port City has the potential to become another Dubai. The Norochcholai power plant, built by the Chinese, is now a major contributor to the national power grid.

The Lotus Tower in Colombo, which is the tallest telecoms tower in South Asia and is expected to be declared open soon, was again built with Chinese funds. It will be a significant boost to our communication capabilities. The 350-metre-high tower draws inspiration from the Buddhist Lotus Sutra, and provides an incentive for China to formulate a sustainable and peaceful “soft power” strategy that would appeal globally.

The BRI’s regional impact

Despite muttered reservations and orchestrated criticisms of the BRI, mostly about the Chinese debt trap, the countries of the region, especially in Africa, are already reaping substantial benefits from China’s investments. Economists, including at the World Bank, agree that the recent rapid upward movement of the economies of a number of African countries has been the result of significant Chinese investments.

Many African economies are prospering for the first time in years and analysts ascribe this development to Chinese investments in infrastructure in Africa. By 2014, that had risen more than 20-fold to 220 billion dollars, according to the China Africa Research Initiative at Johns Hopkins School of Advanced International Studies in Washington. It is likely that this trend will accelerate as China also learns from experience, irons out irritations and responds more to the aspirations of the people of the region.

Since 2000, Ethiopia has been the second-biggest recipient of Chinese loans to Africa, with financing for dams, roads, rail and manufacturing plants worth more than 12.3 billion dollars, more than twice the amount loaned to oil-rich Sudan and mineral-rich Congo.

The BRI while raising some concerns, especially among the former colonial powers that ruthlessly ravaged Africa, can be used by countries of the Indian Ocean region and beyond to enhance their mutual prosperity without being constrained by fears and suspicions inculcated by the colonial past – more importantly, without territorial occupation, racial discrimination and forced alteration of cultures.

Further East, Australia received 15.4 billion Australian dollars in Chinese investments involving 103 transactions. Australia has been a major destination for Chinese investments after the United States and Europe and investors have acquired hotel assets, real estate, agri-businesses, vineyards, health care institutions, infrastructure, etc., giving rise to a latent xenophobic anti-Asian and anti-Chinese sentiment.

Australia has slowly begun to take measures to restrain Chinese investments in strategically important sectors. Most recently, Australia excluded Huawei from participating in installing the proposed 5G telecoms network in Australia. Previously the acquisition of property by non-Australians had been made subject to punitive constraints and it is widely believed  that these legal constraints were mainly aimed at Chinese real estate acquisitions.

But already the port of Melbourne is controlled by a Hong Kong-Chinese concern. Darwin is also now controlled by a Chinese company. (Australia will have to tread carefully in restricting Chinese investments, as China which is a critical trading partner absorbs nearly 60 percent of Australia’s commodity exports).

The major share of Chinese overseas investments has gone to Europe and the US. The European Union, whose second largest trading partner is China, received 35 billion euro in Chinese investments in 2016 alone. Iconic facilities like the Toulouse airport where the Airbus 380 is assembled (sold to the Shandong Hi-Speed Group and a Hong Kong investment firm while current President Emanuel Macron was Finance Minister), and the Piraeus harbour (controlled 70 percent by COSCO) are now owned by Chinese companies not to mention a number of historic vineyards and buildings.

A Chinese billionaire now owns Volvo, controls Lotus and London Black Taxis. Another, the AC Milan football club. The German robot manufacturer Kuka is now owned by a Chinese company. Chinese companies are building the rail link between the Piraeus harbour and Serbia and Hungary. Chinese trains now travel to European capitals, including London, on the new overland Silk Route and also link up with Tehran bringing East Asian products to European markets, by-passing the bottlenecks of the Malacca Straights and Suez Canal. Natural gas from Central Asia now flows along four pipelines to China.

Pakistan, described as an all-weather friend by President Xi Jinping, has been promised 62 billion dollars in investments for infrastructure projects. The China-Pakistan Economic Corridor is the flagship project under this initiative.  The Bangladesh-India-China-Myanmar corridor linking China with the Bay of Bengal.

The Asian Railways Network Agreement negotiated under the auspices of the Economic and Social Commission for Asia and the Pacific (ESCAP) also provides South Asia with the opportunity to link up with the European network through Central Asia. Tremendous trade opportunities could open up with a high-speed railway linking South Asia with Europe. Natural gas from Central Asia flows along four pipelines to China.

The United States itself has received 90 billion dollars in Chinese investments since 2007. The New York’s revered Waldorf Astoria is now owned by a Chinese concern. However, China has also tightened overseas investments, especially in real estate, hotels, film and entertainment and sports clubs, to reduce excessive capital outflows and foreign exchange risks. Those countries seeking to benefit from the Chinese gravy train should be conscious of this development.

The United States and China in Asia

The expansion of China’s economic and political reach has caused more than a few adverse reactions in certain international circles, especially among powers which had been used to dominating the global arena and find China’s emergence on the world stage difficult to accommodate.

A torrent of adverse commentary has emanated from Western commentators. Australia has begun to place limited restrictions on Chinese business initiatives in Australia and has also mobilised Japanese and New Zealand support to extend assistance to South Pacific countries which have now begun to bask in the in the long hoped for regional attention. France, Germany and Italy are leading an initiative to require the European Union to scrutinise Chinese investments in Europe more carefully.

Recently, it has been said that America’s focus on terrorism as its main security threat has now shifted to Russia and China. According to a recent Pentagon strategy released by Defense Secretary Jim Mattis, the United States must build up its military to prepare for the possibility of a conflict  with Russia and China. The United States persists in viewing the world in terms of hostile competitors. Given that China and the United States are closely intertwined in a complex economic embrace, the use of such terminology is curious.

The United States is China’s major trading partner. Bilateral trade in 2016 was worth 579 billion dollars while the US trade deficit was over 379 billion dollars. China is the main lender to the United States and also holds over 1.7 trillion dollars in US securities. China is the biggest market for US agricultural products and millions of Chinese tourists visit the United States annually, not to mention the 750,000 plus students who study there spending over 11 billion dollars annually. A further escalation of the trade conflict between the two countries, with both countries imposing prohibitive import duties, would do irreparable damage to both, not to mention the rest of the world.

The two countries have a unique opportunity in history to get away from historical power-based competition to cooperate for the common good. Former NATO Supreme Commander James Stavridis, perceptively observed “dialogue, diplomacy, economic instruments, private and public cooperation were necessary to initiate conversation with China, which could help to promote a free and open Indo-Pacific region, while avoiding conflict.”

Cooperation may not be managed in a hurry but the opportunity is there. Many aspects of East Asian culture, including food, eating habits, traditional health care, yoga, Zen meditation and mindfulness, martial arts, dress, philosophy have been seeping in to Western and American life over the years.

The United States has been an inspiration in liberal ideas, democracy, transparency, legal propriety, management style, sports, music, film, etc. These ideas will not be adopted by the East overnight. Nor will the Eastern style of living, religion or doing business be adopted lock stock and barrel by the West any time soon. It will take time.

There are clear opportunities for teaching the two to each other. Instead of breast thumping and posturing, it will serve humanity’s interests better in the long run if the giants of the world, both Eastern and Western, could cooperate for mutual betterment. [IDN-InDepthNews – 05 September 2018]

Photo: Bandaranaike Memorial International Conference Hall, built between 1970 and 1973, was a gift from the People’s Republic of China in memory of Solomon Ridgeway Dias Bandaranaike who was Prime Minister from 1956 to 1959. CC BY-SA 2.0

IDN is flagship agency of the International Press Syndicate. – –

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