A hospital and clean water: China on the charm offensive in Sri Lanka

China Harmony Auto Holding

20/11/2019 24:30

* China has invested billions of dollars in Sri Lanka
    * The island nation is part of China's global trade network
    * Relations have cooled after some deals go sour
    * Beijing on charm offensive with hospital, water projects
    * New president seen embracing Chinese investment once again

    By Shihar Aneez and Sanjeev Miglani
    POLONARRUWA, Sri Lanka, Nov 20 (Reuters) - Amid the lush
paddy fields of central Sri Lanka, a large, state-of-the-art
hospital rises between the cranes and cement mixers.
    Its perimeter walls are adorned with pictures of China's
president Xi Jinping and prime minister Li Keqiang, along with
Sri Lankan leaders hailing the $67 million gift from Beijing.
    The hospital, specialising in kidney-related diseases, is
helping China gain popular support in a country where its
mega-projects have added to rising debt and raised concerns
about excessive economic and political leverage.
    Water plants and a Chinese radio station promoting its
economic and social programmes are part of the campaign to win
over doubters.
    China has invested an estimated $11 billion in Sri Lanka,
around $8 billion in the form of loans related to Xi's signature
"Belt and Road Initiative" designed to boost trade and transport
links across Asia.
    Chinese firms, employing thousands of local workers, have
built a giant port and plan to construct power stations and
expressways as well.
    But the terms of some of those projects have drawn criticism
from politicians in Sri Lanka and overseas and led to policy
reversals that have stalled China's ambitions on the Indian
Ocean island.
    "We ... expect our companies to help the Sri Lankan people
with donations and corporate social responsibility work," 
China's ambassador to Sri Lanka, Cheng Xueyuan, said last month
after inviting local journalists on a tour of the big Chinese
investment projects on the island.
    The charm offensive may pay dividends.
    
    FRIENDS IN HIGH PLACES
    This month's presidential election, won by Gotabaya
Rajapaksa, puts Beijing back in the driving seat in Sri Lanka.
    Gotabaya's brother, former president Mahinda Rajapaksa,
courted China in the aftermath of the 26-year civil war against
Tamil separatists that ended in 2009.
    Much of the world shunned Sri Lanka, accusing the Rajapaksas
of widespread human rights violations during the conflict -
allegations which they deny.
    China seized the opportunity to develop a vital staging post
to much of Asia, Africa and beyond.
    Ties soured in 2015 with the election of Maithripala
Sirisena as president. Wary of growing Chinese influence and
mounting debt, he suspended all Chinese investment projects,
citing allegations of corruption and overpricing.
    Sirisena eventually allowed projects to resume the following
year, although he demanded changes to some terms.
    At his inauguration on Monday, Rajapaksa said Sri Lanka
didn't want to be drawn into a regional quest for influence.
China's expansion has come at the expense of India,
traditionally Sri Lanka's economic and diplomatic champion.
    "We want to remain neutral in our foreign relations and stay
out of any conflicts amongst the world powers."
    But shortly before his election, adviser Palitha Kohona told
reporters that Rajapaksa would "restore the relationship (with
China) to where it was.
    "I suppose the thinking was if we upset China, the West
would come to us with endless bags of gold ... But the bags of
gold never materialized."
    
    HEARTS AND MINDS
    At Polonarruwa, where the kidney hospital is due to open
early next year, families say their struggle to get treatment
should ease once they have an alternative to over-stretched
local hospitals.
    "It is really a good project because of the number of people
who are suffering in this area. At the moment, we are struggling
for routine checkups and dialysis," said Lakmal Prasad, 27, a
former state employee who's already had a kidney transplant.
    China has also completed two water facilities in a parched
part of the island, while a third, the biggest, is nearing
completion and will supply clean drinking water to villages in
the Puttalam area.
    But China's biggest interest lies in mega-projects. The new
southern port of Hambantota, near one of the world's busiest
shipping lanes, cost $1.4 billion and kicked off a major
post-war construction boom.
    It also raised fears of a "debt trap". When Sri Lanka was
unable to pay back the loan on the port, it was forced to hand
over control to China on a 99-year lease in 2017.
    Ambassador Cheng said China's construction spree had created
as many as 100,000 jobs across the island of 22 million people
and there were more opportunities opening up.
    To help spread the message, a Chinese state-run radio
station broadcasts reports about Chinese-backed economic and
social programmes in Sri Lanka in the local Sinhalese language.
    It also offers lessons in Chinese language to help the
growing number of Sri Lankans working with Chinese, from grocers
to bank managers.
    Last week, it featured a story about a Sri Lankan man who
started working with Chinese telecom equipment maker Huawei in
Sri Lanka a few years ago and the company moved him to Shanghai.
    
    "NO ONE STOPPING THEM"
    The next big-ticket projects that China wants to develop
include a $1 billion central highway connecting the capital
Colombo with the central Kandy district, a 15,000-hectare
investment zone in Hambantota and oil refineries.
    China Harbour Engineering Company is already building a $1.4
billion port city next to Colombo port that is designed to be a
financial centre with hotels, marinas and even a motor racing
track on land reclaimed from the sea. 
    "Their focus has been unrelenting; even over the last few
years their projects have all gone through. There's no one
stopping them, in the end," said an Asian diplomat. "But they
are also doing a lot more of soft-power diplomacy."
    To explain the sheer scale of the Belt and Road Initiative,
Beijing has taken Sri Lankan politicians, journalists and local
residents on tours to China.
    Muhshi Rahmathullah, a former councillor in the northwestern
town of Puttalam where China Machinery Engineering Corporation
built a 900 MW coal-fired power station, said he was among a
group of 15 people who went on a company-funded tour of China.
    The Puttalam plant meets half of Sri Lanka's electricity
demand, but some residents have opposed it, saying it had caused
air and noise pollution.
    "They showed us power plants and said that there won't be
any environmental impact," Rahmatullah said of his trip. "They
wanted to show how power plants help develop the country."
 ($1 = 180.5000 Sri Lankan rupees)

 (Additional reporting by Aditi Shah and Ranga Sirilal; Editing
by Mike Collett-White)
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