China Grants $90M To Sri Lanka

By   —  Shyamal Sinha

New Delhi  – China announced Sunday that it was providing a $90 million grant to Sri Lanka, two days after the island nation’s president sought help from a visiting Chinese delegation in disproving a perception that China-funded megaprojects are debt traps.

Calling the financial assistance a timely grant, the Chinese Embassy in Colombo said that it would be used for medical care, education and water supplies in Sri Lanka’s rural areas. and that it would contribute to the well-being of (Sri Lankans) in a post-COVID era.

The announcement follows a visit to the Indian Ocean island nation Friday by a Chinese delegation led by Yang Jiechi, a Communist Party Politburo member and a former foreign minister.

During talks with Yang, Sri Lankan President Gotabhaya Rajapaksa asked China to help him in disproving a perception that China-funded megaprojects are debt traps aimed at gaining influence in local affairs.

China considers Sri Lanka to be a critical link in its massive Belt and Road global infrastructure building initiative and has provided billions of dollars in loans for Sri Lankan projects over the past decade. The projects include a seaport, airport, port-city, highways and power stations.

Critics say that the Chinese-funded projects are not financially viable and that Sri Lanka will face difficulties in repaying the loans.

In 2017, Sri Lanka leased out a Chinese-built port located near busy shipping routes to a Chinese company for 99 years to recover from the heavy burden of repaying the Chinese loan the country received to build it.

The facility is part of Beijings plan for a line of ports stretching from Chinese waters to the Persian Gulf. China has also agreed to provide a $989 million loan to Sri Lanka to build an expressway that will connect its tea-growing central region to the Chinese-run seaport.

China expanded its footprint in Sri Lanka during the leadership of former President Mahinda Rajapaksa, the older brother of the current leader. Mahinda Rajakapaksa, who is currently prime minister, held separate talks with Yang on Friday.

Chinas economic influence over Sri Lanka has worried its closest neighbor, India, which considers the Indian Ocean region to be its strategic backyard.

Yangs visit came days after the top diplomats of four Indo-Pacific nations the U.S., Japan, India and Australia met in Tokyo to increase their involvement in a regional initiative called Free and Open Indo-Pacific aimed at countering Chinas growing assertiveness in the region.

India’s relative size by itself, regardless of policies, makes it a threatening actor in the subcontinent. Sometimes, policies add to the problem. It is no surprise that small neighbours would want an extra-regional balancer to temper Indian influence and even to secure better terms from the bureaucrats in New Delhi. China is the most obvious option to balance India. Besides geopolitical balancing, there is genuine need for capital for infrastructure projects in SriLanka . If India cannot service those needs, then China’s bottomless pocket comes in handy. There is also the angle of Chinese money greasing the political economy of  small  countries.

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