The Sri Lankan Parliament’s go-ahead for the Colombo Port City Bill has in effect given the Chinese a carte blanche to operate on Sri Lankan territory, without any strings attached. This is the second such instance after the ceding of Hambantota Port to China under a 99-year lease. The Sri Lankan example, illustrates a new aspect about China’s penetration of South Asia under the garb of economic cooperation, in fact creating the conditions for debt trap and takeover of national assets by China. The example of the spread of CPEC in Pakistan and concomitant increase in Chinese influence illustrates intensely how China has used economic aid and assistance to purchase the power elite in Pakistan and make them bend to their will. Sri Lanka is no stranger to Chinese investment and is fully aware of the risks of getting into a debt trap. So, what is new about the Chinese strategy in South Asia?
In attempting to explain this strategy, one has to look at the different forms of engagement used by China across South Asia and how China has cultivated the power elite in all of South Asia. However, while China has been reaping the benefits of such penetration, it continues to face popular resistance to their investments. Take the case of Nepal for instance. Reports suggest that the Nepalese Army recently (14 May 2021) signed an agreement with a Chinese firm to construct bridges and tunnels along the Kathmandu-Terai expressway. That the agreement was signed despite the Public Accounts Committee of Nepal’s Parliament having issued a directive to asking the government to scrap the contract for violating the “competitive bidding process” indicates the level of influence and reach of China in Nepal. Notably, out of 22 bidders who had applied, only the bid from an engineering company based in Guangzhou, China was considered.
At a time when Nepal is undergoing a political crisis, China’s economic engagement threatens to undermine the institutional balance in Nepal. China has assiduously cultivated the entire political spectrum in Nepal, including the military and is today, therefore able to reap the benefits by winning lucrative contracts. The best illustration of this is the steady uptick in visits by senior Chinese leaders to Nepal and other countries in South Asia. Pertinently, since January 2020, there have been at least nine visits by senior Chinese leaders (such as Xi Jinping, Wang Yi, Wei Fenghe and Yang Jiechi) to Myanmar, Pakistan, Sri Lanka, Bangladesh and Nepal. Apart from that, Pakistani President Arif Alvi and Foreign Minister Shah Mahmood Qureshi visited China last year.
Just how consciously China has worked to increase its influence, even in the midst of the Covid-19 pandemic, was witnessed when the Chinese Foreign Minister Wang Yi hosted a Conference on South Asia with his counterparts from Afghanistan, Pakistan, Bangladesh, Nepal and Sri Lanka to discuss the Covid-19 situation. This was the fourth such meeting since the outbreak of the pandemic, previous meetings having taken place in July and November 2020 and January 2021. Almost immediately, Defence Minister Wei Fenghe went to Dhaka and Colombo and met with the top leadership to discuss ways to boost bilateral ties. Wei had earlier travelled to Nepal and Pakistan in November-December 2020.
What is clear from a perusal of this high-level engagement is that China’s engagement with the region is happening with the political leadership in most of the countries of South Asia and the challenges they face come from the people. There have been instances of people protesting against Chinese investments and assistance across South Asia in recent months and years. As the narration of incidents below will show, these protests have taken place across South Asia and are not confined to one country.
Let us examine the case of Pakistan first, which is likes to showcase the CPEC as a game-changer. Just last month, there was a car bomb explosion at a hotel in Quetta in which the Chinese ambassador was staying. In 2020, there were protests by Pakistani laborers working on Chinese-funded projects in Karachi on the issue of unequal pay. There were protests also in Muzaffarabad, a city in Pakistan Occupied Kashmir, against the construction by Chinese firms of dams on the Neelum and Jhelum rivers. The persistent social tensions created by the presence of large number of Chinese workers in Pakistan have often led to clashes. There were similar incidents between Chinese nationals and Pakistani police in 2016 as well.
In April 2021, at a Chinese financed power plant in Bangladesh, still under construction, witnessed protests on-site over “unpaid wages, working hours and alleged discrimination.” During the protests, five people were shot dead by Bangladeshi police and several others were injured. Earlier instances of conflict between Chinese employers and locals in Bangladesh have also occurred. Two years ago, clashes occurred at the Payra power plant, also funded by China. During the protests, one Chinese worker died and six others were wounded. Further, last year, protesting workers were fired at by private security guards at the Padma Bridge Rail Link project, being implemented by a Chinese firm.
Also, in April 2021, Sri Lanka’s Supreme Court found inconsistencies in a legislative bill seeking to provide special governance frameworks for the China-funded US$ 1.4 billion Colombo Port City. Members of the ruling party in Sri Lanka as well as the opposition have expressed concerns that new provisions in the new bill will reduce the role of elected bodies and limit direct oversight by regulators. Despite such concerns, the Sri Lankan Parliament passed the bill recently, after incorporating amendments suggested by the Supreme Court, on 20 May 2021.
Sri Lanka has been concerned that the Port City could result in establishment of a Chinese colony, but that has not stopped the incumbent government from going ahead with the project. A few years ago, similar concerns were expressed when there were violent protests, against the leasing of private land to China for an industrial zone close to Hambantota Port. Also, the Gotabaya government recently awarded the China Harbour Engineering Company a contract to build a 17 km, four-lane highway in Colombo. Clearly, China has made substantial inroads in Sri Lanka and this has created conducive conditions for further penetration of the island nation.
The point of this exercise was to take note of the fact that while the political elite in South Asian nations have scaled up economic engagement with China, there continues to be popular resistance to Chinese projects. Political leaders validate China’s economic offers of aid and assistance with the expression of such engagement providing more jobs and helping the economy. Yet the promises made in many instances have not translated into reality. This is precisely why the local populations have been contesting Chinese-led investment-oriented development strategies. It may be noted that popular resistance to Chinese presence in South Asia does not take the form of contestation of foreign direct investment, but relates more to resistance to China’s infrastructure investments, which lead to expressions of concern of debt traps, lack of transparency, and friction due to excessive use of Chinese labour resulting in discord at the local level.
What is seen is that just as China employs a complete ecosystem including labour to operationalise projects in the host country, they also use an elaborate system of patronage and corruption to reach out to the power elite in each country in South Asia, leading to a distorted mechanism which allows China to extract it’s pound of flesh when required. What is urgently required is a renewed focus on the long-term implications of China’s presence in South Asia and stakeholder consultations at all levels to enable smaller countries in the subcontinent to overcome this challenge.