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PM in Beijing, what next?

5 April 2016 12:39 am - 0     - {{hitsCtrl.values.hits}}

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Prime Minister Ranil Wickremesinghe will visit Beijing this week; his first to China  since becoming the Prime Minister. Not only would his much anticipated visit bring a clarity to Sri Lanka’s recently troubled ties with China, it would also signal that, at a domestic level, Sri Lankan politics is returning to reality.  It may be tempting to read geo-politics into the recent strains on the bilateral relationship, but it was local politics that was the primary catalyst. China got caught in the middle of a no-holds-barred election campaign between the ex-president and the incumbent. Beijing’s cozy relations with the former regime, which anyway had few good international friends, became a convenient target.  Since the main accusation against the Rajapaksa regime was corruption, the main financier of most of Rajapaksa’s landmark projects could not go unscathed. In the election platforms, China became the fountainhead of all evil.
 It was a major turnaround of things, no less dramatic than the fall of ex-president Rajapaksa himself from all mighty heroic king to a zero kleptocrat or at least it was projected to be so.
Not long ago, China was held with affection by many millions in the South for maintaining a ready supply of weapons to fight terrorism, at a time most other states refused to sell us weapons and defend the country at the UN. Suddenly to their bewilderment, the Chinese found themselves at the other end of the equation: The neo-imperialist that ripped the country off through its unsolicited projects and has propped up a corrupt regime. 

 

"Good relations with China and expanding its economic role in the country are in Sri Lanka’s self interest. Only a misguided nation would disregard its self interest for some pie-in-the sky idealism"


The Chinese, who generally have troubles in discerning the flow of events in democracies, and are increasingly vocal of the superiority of their own system of efficient yet authoritarian delivery of policy were befuddled. Beijing which savours the principle of noninterference of internal affairs, had rarely, if ever, spoken out on domestic matters of a sovereign state. And they expect that to be reciprocal and the others keep away from China’s own issues of contention from Xinjian to Tibet to human rights. 
 Democratic politics, at times can get cheap and hit new lows. If the Republican presidential campaign of the world’s most powerful democracy can get as crazy as it is now, by comparison, Sri Lanka’s misdemeanorus during its own election campaign were just a minor irritant.  However, the beauty and the strength of democracy is that it bounces back and finally sanity prevails. Sanity in the context of our relations with China is the acceptance of Beijing’s looming presence as the economic power with the deepest pocket.


 Before his visit, Prime Minister Wickremesinghe, reportedly, did a bit of homework, with the help of a consultancy firm in Hong Kong on  as to how best to tap into China’s riches. The government reportedly wants to finalize the Colombo Port City, the 1.4 billion dollar land reclamation project, to build a modern township on 263 hectares of reclaimed land. The Chinese thought it was a done deal when President Xi Jinping who visited Colombo during his South Asian tour inaugurated the construction work. Later, it got caught in the political maelstrom during the presidential election campaign and was suspended and again, after much negotiation was granted permission to resume. Now the Chinese investor, Communications Construction Co Ltd (CCCC), has demanded US$125 million  as compensation for the cost incurred due to the delay or more land to fill in, to offset the damage.  Investment projects of the magnitude of the Port City which is expected to generate 80,000 jobs, bring in about $15 billion in Foreign Direct  Investment in the second phase and add 1.5 per cent to the GDP are of national significance and should not be held hostage by  political bickering. It was Mr Wickremesinghe who at an election meeting with small time hoteliers in the Western province, promised to suspend the Port City project. It is a promise that the Prime Minister might be regretting in hindsight. 
Among other projects,  the government intends to give 1,000 acres in Hambantota to a Chinese firm for an industrial park. That, in addition to creating 100,000 jobs, according to the government, a tall number though, would at least make the Hambantota Port commercially viable. Several other projects such as a ventures for aircraft maintenance at the Mattala Mahinda Rajapaksa Airport are also  meant to make use of the 209 million-dollar investment, which has now been forced to fend itself off  from wildlife straying into the tarmac. 

 

"Not long ago, China was held with affection by many millions in the South for maintaining a ready supply of weapons to fight terrorism, at a time most other states refused to sell us weapons and defend the country at the UN"

 

China is needed, if not for fresh project loans, at least to salvage the vanity projects that the ex-president launched in his pocket borough.
The new administration has sought to focus more on private–public partnerships, which would lower debt servicing associated with future funding as well as curbing  inefficiency generally associated exclusive government ownership. The Colombo Megapolis Project is looking into Public–Private Partnerships  as the first option and the Prime Minister is expected to woo the Chinese investors to the Megapolis projects.
For the past decade or so, China went on a shopping spree, buying copper mines, hotels and big brands, built infrastructure all over the world and sent droves of tourists who now form the largest outbound tourist market in the world. However, when Mr Wickremesinghe visits Beijing this week, the Chinese economy is not in the best of its shape. Li Keqiang, the Chinese premier, warns about a ‘battle for growth’; George Soros projects a hard landing, and China could well now be sitting on a debt bubble accumulated, thanks to large wasteful investment projects.  Unoccupied large housing towers in all big cities portend an ominous housing bubble. The Chinese may not be overly enthusiastic to open their wallets as they had been a couple of years back. That is our misfortune too.  They could also be feeling being let down by their counterparts in Colombo. However, an industrious government should be able to assuage those concerns and win back their goodwill and bring home their red Yuan. 

 

"China also needs Sri Lanka, at least to some extent, for a different reason"


China also needs Sri Lanka, at least to some extent, for a different reason.  Goodwill that the Chinese painstakingly built over the decades in its neighbourghood is dissipating partly due to its manoeuvring in the disputes over the South China Sea. On the eve of Premier Wickremesinghe’s visit to Beijing,  China commended the new government’s commitment to the bilateral relationship. Its foreign ministry spokesperson told a news conference, that Beijing sought to enhance the relationship to a new high with the PM’s visit.
The Chinese don’t like to lose friends, and offer a face saving option even in most difficult situations,  a behavioural dynamic  born out of the Chinese culture. Sri Lanka, on our part, should know not to upset the apple cart, by making some stupid remark on Tibet, Taiwan or on the South China Sea. Our new friends would coax us to do so, however, its only we who will incur the cost of such foolhardiness. 
Good relations with China and expanding its economic role in the country are in Sri Lanka’s self interest. Only a misguided nation would disregard its self interest for some pie-in-the sky idealism.  In retrospect, ex-president Rajapaksa’s dealings with the world, after he was shunned by the West, smack this logic of self-interest. He looked to China for loans and investments. Then he reached out to India for the same. New Delhi would not have been as enthusiastic as it became lately in funding projects in Sri Lanka, had it not been for the Chinese presence in the country. Indian investments, as much as commercial, had the ‘balancing’ intent and the desire not to be overtaken  by the Chinese in its own sphere of influence.  
Mr Rajapaksa invited controversial Ahmadinejad and the Iranian president came with a hefty investment to build an oil refinery in Sapugaskanda.  Rajapaksa stood shoulder to shoulder with Libyan dictator Gaddafi.  He later acknowledged that  Gaddaffi agreed to lend a $500 million  on a single phone call when the IMF refused to bailout Sri Lanka in 2009 during the height of the war.  That is a very commendable level of political realism on the part of Rajapaksa. However, his problem was that he antagonized the traditional friends in the West and became increasingly autocratic at home. 
Now, it is Mr Wickremesinghe’s turn to show how smart he is.  

 

Follow Ranga Jayasuriya 
@RangaJayasuriya on Twitter.

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