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ABC News
ABC News
National
South Asia correspondent Avani Dias

China's bid for influence in Asia does not stop with Solomon Islands. This is how Beijing gained a foothold in Sri Lanka

Chinese companies have built highways, ports, bridges, oil refineries, and industrial towns across Sri Lanka.  (Reuters: Dinuka Liyanawatte)

For weeks, Sri Lankans have been protesting and occupying their country's picturesque commercial capital Colombo, angry about a debilitating economic crisis that has stopped basic services.

But behind them, work continues on a noisy and dusty construction site for a Chinese-funded port city with major strategic value.

Chinese companies have built highways, ports, bridges, oil refineries, and industrial towns in Sri Lanka, a country at the centre of the Indian Ocean in a crucial vantage location.

It's a stark example of China's growing influence in the Asia-Pacific region. 

"China is now part of the political architecture of Sri Lanka," said Paikiasothy Saravanamuttu, the head of the Colombo-based public policy organisation the Centre for Policy Alternatives. 

Mr Saravanamuttu said China offered major loans to vulnerable nations for projects with tactical importance for Beijing. 

An artificial sand island was built by Chinese investors as a port facility off the coast of Colombo. (Reuters: Dinuka Liyanawatte)

But they don't necessarily help fix the nation's economic problems. 

"It doesn't provide any quick return or indeed, any return to the country and its people and so in that respect, it is seen to be a situation of buying influence," he said. 

The Solomon Islands has inked a security pact with China which could lead to a Chinese naval base in the South Pacific. 

It's a slap in the face for countries like Australia and India, which are looking to reduce their dependency on China and its influence in the Indo-Pacific region. 

But with China strengthening its hold in the Asia-Pacific for several years already, it may be too late. 

China's tried and tested method to gain a foothold

After Sri Lanka's civil war ended in 2009, the country was facing the daunting task of rebuilding after thousands of deaths and almost 30 years of fighting. 

Sri Lanka's then-president Mahinda Rajapaksa sought investment from China after the war.  (Reuters: Dinuka Liyanawatte)

Sri Lanka's then-president Mahinda Rajapaksa, who is now Prime Minister, had a vision to develop the country and usher in new jobs.

But he needed help to get there, and the Chinese government was waiting in the wings to assist. 

"The Sri Lankan government moved towards a kind of post-war reconstruction boom and the Chinese were on hand with the cash — with the liquid cash — to help us to do that," Mr Saravanamuttu said.

"The Chinese also provided diplomatic protection to the government of Sri Lanka internationally in terms of war crimes and crimes against humanity." 

Both sides in the civil war — the Sri Lankan government and the Tamil Tigers separatist group — have been accused of atrocities.

Sri Lanka's devastating civil war was fought from 1983 to 2009, and killed at least 100,000 people.  (Reuters: Buddhika Weerasinghe)

The UN has been collecting evidence against Sri Lanka alleging it committed war crimes, something its government denies.

But China was among a few countries that abstained on voting on a UN motion to accuse Sri Lanka of "obstructing accountability". 

It's a tried and tested method for the Chinese government: Negotiate investments in countries facing war and in desperate need of help. 

It has made similar moves in post-war African nations, and equipped countries like Bangladesh and Pakistan with military equipment — the latter now calls China a close strategic ally. 

China has signed a free trade agreement with the Maldives. 

In the Maldives, just 980 kilometres by sea from Sri Lanka, China has signed a free trade agreement, while encouraging its citizens and businesses to invest in the tropical nation.

China has also invested in road and housing construction, the expansion of a power station, and a bridge-building project, among other initiatives in the tropical paradise.

The billion-dollar deal 

In 2017, Sri Lanka signed a $1.1 billion deal with China for the control of a deep-sea port in Hambantota, in the country's south. 

There were concerns that the port could be used by the Chinese military, but Sri Lanka needed the money to pay off its already growing foreign loans.

Many of the debts were to Beijing itself.

China promised it would only run commercial operations from the port, and a state-run company was given a 99-year lease. 

Sri Lanka signed a $1.1 billion deal with China for control of a deep-sea port in the country's south.  (Reuters: Dinuka Liyanawatte)

It led to protests and critics calling Sri Lanka a "Chinese colony".

China has now invested billions of dollars in the country.

"I wouldn't say Sri Lanka is a Chinese colony, but it is correct to say that China exerts a very different influence on the overall economic and political environment in Sri Lanka," Mr Saravanamuttu said. 

"The Chinese have an interest in the maritime waterways around Sri Lanka, because a lot of their energy supplies goes through [there]. 

The United States calls this "debt-trap diplomacy", but some researchers say it's more nuanced than that.

"China is slowly emerging to being the new superpower in the South Asian region," said R Ramakumar, a professor of economics at Mumbai's Tata Institute.

"But these are large commercial contracts being built across this region, these countries are tipped to benefit from these loans as well." 

China declines to help Sri Lanka in its hour of need

Sri Lanka's economic crisis has been caused by huge foreign debts, some to China, others to Japan, India and major investment firms.

Sri Lanka is suffering from prolonged power cuts and fuel and medicine shortages, triggering widespread protests.  (Reuters: Navesh Chitrakar)

The country has officially asked the International Monetary Fund (IMF) for emergency financial help, but China is not offering much support for a problem experts say it partly helped create. 

"In this particular crisis that Sri Lanka is going through where we desperately need assistance, China has distanced itself somewhat and said, 'Go to the IMF,'" Mr Saravanamuttu explained. 

"Because if they were to bail out Sri Lanka, they probably will have a queue of other countries lining up to get similar assistance." 

India and Australia have joined the US and Japan in a security pact called the Quad, which officials have all-but confirmed is a strategy to stand firm against China. 

"There's a panda in the room," Australia's High Commissioner to India Barry O'Farrell said of the pact.

But researchers like Paikiasothy Saravanamuttu have said the animosity towards China needs to be reassessed, because the country has already locked itself into the region. 

"So it's working out a way in which we can involve the Chinese [to] ... contain it [the rivalry] to competition and not let it spill over into conflict."

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