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The Limits of China’s Influence in Maritime South Asia: Sri Lanka’s Foreign Policy Rebalance

Lucas Myers
Prime Minister Mahinda Rajapaksa and President Gotabaya Rajapaksa stand in front of two soldiers at a swearing in ceremony
President Gotabaya Rajapaksa (right) and Prime Minister Mahinda Rajapaksa during the ministerial swearing in ceremony at the Presidential Secretariat in Colombo Sri Lanka. November 22, 2019.

This summer, the return of the historically pro-China Rajapaksa family—Sri Lanka’s on-and-off again leaders with an authoritarian bent—was reinforced with a resounding victory in the August 2020 parliamentary elections to follow up on their November 2019 presidential win. Acquiring enough seats for a parliamentary supermajority, the Rajapaksa-led government of President Gotabaya Rajapaksa and his brother, former President and now Prime Minister Mahinda Rajapaksa, have an opportunity to potentially undermine democracy in Sri Lanka again after a four year hiatus. However, this authoritarian turn is not necessarily good news for China. Despite some arguments that the Rajapaksas’ return to power provides a strong opportunity for China to reignite its relationship with Sri Lanka, signs point in a different direction: the new Rajapaksa government is rebalancing towards India and emphasizing neutrality.

Sri Lanka’s new balancing act demonstrates the difficult realities facing China’s attempt to acquire allies and military basing in South and Southeast Asia. Considering the lack of desire and popular will among regional actors to pick sides between the United States and China, combined with the People’s Liberation Army’s inability to adequately project power in the region, China cannot practice the gunboat diplomacy or provide the security guarantees that would enable it to truly add countries to its camp beyond its immediate periphery, a dynamic that allows for some optimism about the United States and its allies’ ability to contest Chinese influence in South and Southeast Asia.

China and Sri Lanka’s Warm Period

Starting in Mahinda Rajapaksa’s term as President from 2005 to 2015, China and the Rajapaksa clan entered into a close relationship. Generally, although Beijing has demonstrated an ability to work with any type of government it encounters, China prefers to work with fellow small-coalition autocratic governments over more unpredictable democracies. To that end, Sri Lanka-China relations were considerably close under the notably authoritarian Rajapaksas. China supported Rajapaksa’s government during the final, bloody stages of Sri Lanka’s civil war versus the Tamil Tigers, as well as against the United Nations and other Western countries’ accusations of widespread human rights abuses. Upon his ascension as paramount leader, Xi Jinping escalated the relationship with personal diplomacy. In 2014, he directly called Mahinda Rajapaksa to express his hope of enhancing ties even further, and Xi soon became the first Chinese leader to visit Sri Lanka. Xi even tied his “China Dream” to Rajapaksa’s “Mahinda Chintana” (Mahinda Vision) in an op-ed in a Sri Lankan newspaper. This engagement included billions of dollars of loans and foreign direct investment and culminated in the 2017 signing of a 99-year lease for the Chinese-developed port of Hambantota to a Chinese firm. Perhaps signaling China’s ambitions for future naval basing in the Indian Ocean, a Chinese nuclear submarine visited Colombo Port in 2014.

With China investing and fostering ties to the Rajapaksas, [India] began fearing that China would turn Sri Lanka into another “Pearl” in the so-called “String of Pearls,” or Chinese naval facilities in the Indian Ocean.

This pro-China approach in Sri Lanka ended abruptly with a coalition of opposition parties’ victory in 2015 and Indian diplomatic intervention. The 2014 visit to Colombo by a Type-039 nuclear sub triggered deep-set fear of Chinese encroachment into the Indian Ocean on the part of the Modi administration in India. For much of the post-independence period, India viewed Sri Lanka as within its sphere of influence—it intervened militarily in the Sri Lankan Civil War in 1987 before backing off following the 1994 assassination of Prime Minister Rajiv Gandhi. With China investing and fostering ties to the Rajapaksas, it began fearing that China would turn Sri Lanka into another “Pearl” in the so-called “String of Pearls,” or Chinese naval facilities in the Indian Ocean. This concern that was not likely assuaged by Xi Jinping’s direct reference to Sri Lanka as a “’Pearl in the Indian Ocean’” in his 2014 op-ed.

The 2015 electoral contest featured the Tamil and Muslim minority-supported opposition facing down the Sinhalese-majority Rajapaksa government. Difficult to prove allegations abound of behind-the-scenes support by India and China in favor of the opposition and Rajapaksa respectively, so much so that Indian intelligence was accused of interference and the Chinese embassy in Colombo issued a pointed rebuke of a New York Times report on the issue. Regardless of outside support, the fact that India clearly favored the opposition soon became clear in the aftermath of the opposition’s surprise victory in 2015.

Sri Lanka’s Brief Pro-India Stance

With Rajapaksa out, the new government of President Maithripala Sirisena and Prime Minister Ranil Wickremesinghe began stalling Chinese investment projects and embracing India. Modi quickly demonstrated India’s preference for the new regime with formal visits in 2015 and 2017. The Sirisena-Wickremesinghe government largely returned the favor to a warmly-receptive India, especially early on in its tenure. Clearly indicative of the security-element in India’s concerns, the opposition-led Sri Lankan government rejected a requested second visit by a Chinese submarine in 2017.  The Indian government even offered to purchase the economically-struggling and debt-ridden Hambantota airport at above-market rates. In 2019, a joint Indian-Omani venture promised to invest $3.85 billion USD into an oil refinery near the controversial port at Hambantota in a deal that surpassed the $1.4 billion USD China-financed land deal in Colombo, which was the largest foreign direct investment prior to the refinery.

However, given the amount of Chinese investment and a clear hope by China to avoid a catastrophic alienation from the new government, Sri Lanka was not wholly able to embrace India and reject China. The Chinese worked carefully to smooth over the new regime’s antipathy. For instance, Chinese Foreign Minister Wang Yi expressed in 2016 that “China-Sri Lanka relations were affected due to government transition in Sri Lanka. With joint efforts of both countries, the transition period has come to an end and this page has been turned over.” Two years later, China provided Sirisena—a defector from the Rajapaksa regime and clearly less willing than Wickremesinghe to drop China—with a $295 million USD development grant. Additionally, the country’s enormous debt burden forced the handover of a majority stake in the Hambantota Port in 2017 to a Chinese firm. Regardless of China’s outreach, however, the new government contrasted itself with the Rajapaksas in its embrace of India and relative coldness to China.

Within a day of Wickremesinghe’s ouster, the Chinese ambassador visited Rajapaksa to “convey congratulatory wishes from Chinese President Xi Jinping...”

In perhaps the clearest sign of China’s unwillingness to lose access to Sri Lanka, it wholeheartedly supported a sudden and shadowy constitutional crisis that shook up Sri Lanka’s political scene in 2018. Shortly after Prime Minister Wickremesinghe’s visit to India, President Sirisena abruptly dismissed parliament and Wickremesinghe to appoint the previously-ousted and pro-China Mahinda Rajapaksa as Prime Minister (now currently serving as the elected Prime Minister in 2020). Within a day of Wickremesinghe’s ouster, the Chinese ambassador visited Rajapaksa to “convey congratulatory wishes from Chinese President Xi Jinping,” as documented in a Tweet from Rajapaksa’s official account. The Chinese Foreign Ministry initially remained evasive about formal recognition but soon signed two port deals worth $56 million USD with the new government. India, for its part, chose not to intervene but did issue a statement hoping that “democratic values and the constitutional process will be respected.” Although Mahinda Rajapaksa’s return in 2018 proved short-lived after the Supreme Court found Sirisena’s actions unconstitutional, China displayed strong signs of its preference.

The political damage to the Sirisena-Wickremesinghe government, as well as the fallout of the 2019 Easter Sunday terrorist bombing, paved the way for Mahinda Rajapaksa’s brother, Gotabaya, to run and win a populist, national security-oriented campaign in November 2019. This was followed by a commanding win the August 2020 parliamentary election.

President Rajapaksa and PM Modi shaking hands in front of the flags of Sri Lanka and India
Indian Prime Minister Narendra Modi meeting the President of Sri Lanka, Gotabaya Rajapaksa, at Hyderabad House, in New Delhi. November 29, 2019.

Rebalancing Towards India

Despite the previously close Rajapaksa-China relationship, the new regime has continued the Sirisena-Wickremesinghe government’s approach and publicly moved towards Modi and away from Xi on several fronts. Most prominently, Gotabaya Rajapaksa publicly declared that he wanted to renegotiate the Hambantota port deal to ensure greater local control. It also promised to review “all loans.” Throughout the campaign, the Rajapaksa’s avoided anti-India rhetoric and appeared to desire stronger ties with India. Following a visit to India, President Gotabaya Rajapaksa argued in favor of improving ties with India: “We genuinely want to strengthen our relationship. I have always said that we don’t want to do anything which will jeopardize the security of India or act against the concerns of India in any way. This is genuine.” Modi eagerly snapped up the opportunity by being first leader to call and congratulate now Prime Minister Mahinda Rajapaksa after his victory in the August 2020 election. India has also presented Sri Lanka with a $400 million USD currency swap facility and a currently proffered $1.1 billion USD agreement to pay off Sri Lanka’s debt. Shared domestic concerns and a majoritarian and anti-Muslim nationalism also drive the Sri Lanka-India convergence.

It is important to note, however, that this is not to say that the new Rajapaksa regime aims to completely jettison its previous pro-China approach or reach out to the West. For one, the pro-India approach by the two brothers does not indicate an embrace of democracy, as the previous government did, but a turn back towards the authoritarianism that defined the 2005 to 2015 period. Nor does it mean a total rejection of China and its lucrative aid during COVID-19, as evidenced by Mahinda Rajapaksa’s defense of China against opposition allegations of widespread corruption by Chinese companies and the Defense Minister’s public expression of gratitude to China. In an interview with Sri Lankan media, the new Foreign Secretary, Admiral Professor Jayanath Colombage, downplayed China’s strategic interest in the country: “China really understands it. I have not seen China pushing for strategic things. But, China is pushing for commercial things.” For its part, China has issued signals that it is willing to consider the new government’s request on Hambantota.

[Sri Lanka's] new, balanced foreign policy in Sri Lanka reflects two impetuses: popular and elite wariness of outside interference and China’s current lack of power projection capabilities.

Overall, the new Sri Lankan government looks to be adopting a more neutral foreign policy that avoids leaning too sharply towards one side or the other in the region’s emerging great power competition. As indicated in an October 28th, 2020 Tweet from President Gotabaya Rajapaksa following a visit from U.S Secretary of State Pompeo: “Sri Lanka will always maintain a neutral stand in foreign policy and will not get entangled in struggles between power blocs.” If China does indeed hope to turn Hambantota into an active military facility over the long-term, or acquire a client in the Rajapaksas similar to Prime Minister Hun Sen in Cambodia, then this can be considered a geopolitical setback. Given the Rajapaksa’s previously close relationship to China and their shared authoritarianism, the question remains: why this shift in foreign policy towards balance between India and China? Upon analysis, this new, balanced foreign policy in Sri Lanka reflects two impetuses: popular and elite wariness of outside interference and China’s current lack of power projection capabilities.

Why a Rebalance?

As with other Belt and Road countries, such as Malaysia, Myanmar, and others in the Indo-Pacific, Sri Lanka remains concerned about losing autonomy and being caught up in great power competition. In the aftermath of the 2017 Hambantota deal, protests broke out over concerns that Sri Lanka’s sovereignty was infringed upon. Moreover, the opposition in Sri Lanka has long argued that Chinese investments are corrupt and dangerous. In a sign that Sri Lanka’s reticence to outside interference is general and not restricted to China, the United States has more recently come under fire in the country. The Trump administration’s attempts to advance two defense agreements meant to improve U.S. military access to Sri Lanka, a renewal of the Status of Forces Agreement (SOFA) and a logistics-focused Acquisition and Cross-Servicing Agreement (ACSA), triggered significant local opposition. Both agreements were negotiated during the previous government’s tenure, and the current Rajapaksa administration has slow walked the formal approval of the SOFA. Furthermore, a $480 million USD Millennium Challenge Corporation grant—highlighted in the Free and Open Indo-Pacific Strategy—has also been delayed by the new government. With the electoral contests of the past year centering on nationalism, emphasizing sovereignty is good politics.  Despite a symbolically positive visit by U.S. Secretary of State Mike Pompeo in October 2020, the agreements are going nowhere fast. Overall, Sri Lanka’s Rajapaksa government appears to avoid undue entanglements.

Beyond a desire to defend its sovereignty, perhaps the most important driver of Sri Lanka’s shift lies in the security realm. The fear of Indian military intervention looms large in Sri Lanka given the extensive history of India’s involvement during the Civil War and its ties to Sri Lanka’s Tamil minority. As Nilanthi Samaranayake argues in a special report for the United States Institute of Peace: “[South Asian] leaders are well aware of the Indian military’s operational reach into their countries—whether invited or uninvited…As a result of their fundamentally asymmetric relationship with India, [South Asian] countries do not have the political will or capability to meaningfully cross this rising power. This includes providing military basing access to China.” Certainly, the fear exists in the family’s mind: Mahinda Rajapaksa blamed Indian intelligence for his ouster in 2015. In his interview with Sri Lankan media, the new Foreign Secretary explicitly addressed Indian fears of China: “In 2015, India feared that we had moved towards China too much. Probably, India wanted that regime to be changed…We actually made India jittery during the period between 2015 and 2019. But India is comfortable with President Gotabaya Rajapaksa.” Hoping to avoid any unwanted Indian intervention, President Gotabaya Rajapaksa prioritized alleviating India’s security concerns immediately after coming to power in late 2019.

Fundamentally, China in 2020 lacks the military capabilities to truly challenge India for the allegiance of smaller South Asian nations.

The reason that India weighs far more heavily on the Rajapaksas’ minds than China lies in the issue of power projection. Fundamentally, China in 2020 lacks the military capabilities to truly challenge India for the allegiance of smaller South Asian nations. Although a Chinese sub visited Sri Lanka in 2014, the People’s Liberation Army Navy lacks the capacity to contest the Indian Ocean against the United States, operating out of Diego Garcia, and India. Until China can successfully overcome the so-called “Malacca Dilemma” via strategic Belt and Road Investments such as Pakistan’s CPEC and Myanmar’s CMEC or establish a defensible naval basing presence in the region, it remains a distant goal for it to intervene effectively in the Indian Ocean. As James R. Holmes and Toshi Yoshihara argue in their chapter of Deep Currents and Rising Tides: The Indian Ocean and International Security, a permanent Chinese base in the Indian Ocean constitutes a red line for India. Even the vaunted Gwadar Port investments in Pakistan “will not necessarily have utility as a base in a wartime scenario,” as Wilson China Fellow Isaac Kardon argues. Paradoxically, China needs greater basing and logistics facilities in the Indian Ocean in order to improve its power projection capabilities enough to adequately maintain a strong presence and acquire the option of pressuring autonomy-minded partners into acquiescing to its interests, but it currently cannot guarantee security to those same partners if they cross one of India’s red lines.

In the end, China can offer economic and diplomatic support, as well as surreptitious backing for friendly authoritarians, but it lacks the real muscle to intervene and defend its interests beyond the first island chain. Scott Wingo explains the issue for China well: “It is difficult to convert economic influence into military access without either some degree of willingness on the part of the recipient—as was the case in Djibouti—or an outright invasion…Chinese basing ambitions can succeed in countries with few economic alternatives and low elite turnover—Cambodia fits this bill, and perhaps Pakistan—but are unlikely to succeed elsewhere, regardless of debt.” Beijing likely understands these limitations, and a sense of precariousness in China’s position can be interpreted in its diplomatic warning to U.S. Secretary of State Pompeo not to “bully” Sri Lanka prior to the Secretary’s October visit. At this time, China can only offer economic and diplomatic incentives but no security guarantees or military coercion. True gunboat diplomacy remains a bridge too far for the PLA in 2020.

China’s Reach Exceeds Its Grasp

Many analyses of Chinese geopolitical ambitions highlight the Hambantota Port facility as a naval facility. Unlike in Cambodia, where China wields true influence, Sri Lanka remains well-within the military reach of India and must act accordingly. Sri Lanka may provide the promise of massive—and strategic—Belt and Road investment for Xi Jinping’s China, but local actors prize their autonomy in a neighborhood replete with competing great powers. China may also prefer fellow authoritarians, and the Rajapaksas clearly hold their ties to and patronage by the Chinese dearly, but India and the United States continue to outclass China beyond its immediate periphery and the first island chain. With the addition of a new U.S. embassy and defense agreement in the Maldives, China’s efforts in the Indian Ocean seem at times to be counterproductive.

While China continues to swiftly and dramatically modernize its naval forces and expand its economic influence, it lacks anywhere near the same power projection capabilities as the United States and India in the Indian Ocean. This weakness, along with significant local opposition, raise serious questions about the reality behind China’s much vaunted naval access to Hambantota and client-friendship with the Rajapaksa family. Until the Chinese military develops the power projection capabilities to credibly maintain a regular presence, or addresses the concern its influence arouses in popular opinion, its “String of Pearls” and, more importantly, growing list of the partner countries supposedly beholden to Chinese interest are more a distant goal than actual reality.


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The views expressed are the author's alone, and do not represent the views of the U.S. Government or the Wilson Center. Copyright 2020, Asia Program. All rights reserved.

About the Author

Lucas Myers

Lucas Myers

Program Associate, Asia Program
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Asia Program

The Asia Program promotes policy debate and intellectual discussions on U.S. interests in the Asia-Pacific as well as political, economic, security, and social issues relating to the world’s most populous and economically dynamic region.   Read more