Sri Lanka is a vital link in the Chinese security scenario. This will be an important consideration in the debt relief discussions with Colombo. But the Chinese are loath to write off debts or take ‘haircuts’ in repayments.

By Rajasinghe

In his Budget speech, the President stated that bilateral discussions with China regarding debt relief would start soon since the five-yearly Chinese National People’s Congress was over.

Our attention has to be focused on a priority basis since debt relief from China is a precondition for an agreement with the International Monetary Fund (IMF). The anticipated relief from an IMF bailout is not likely to be available to us till next year.

Since our Chinese debt repayments are technically due to two Chinese State banks and not the Chinese State, the China Development Bank has sent a delegation to Colombo to initiate a dialogue. A settlement with China is pivotal since other creditors and the IMF are awaiting the outcome of these negotiations to look into their own problems. No doubt debt relief will be a difficult path for us to traverse.

The Chinese response will have to be cleared by supreme leader Chairman Xi Jinping, who was awarded a third five-year term as President and Commander-in-Chief of the Chinese armed forces a few weeks ago by the People’s Congress. This long tenure is an exceptional privilege given before only to Mao Tse-tung. Thus, while Xi’s elevation has consequences for Sri Lanka, it is, even more importantly, a move which has important global implications now that China is a front rank political, economic, and military power.
What manner of leader is Xi, who dramatically showed his power to the world when he publicly had his predecessor Hu Jintao removed forthwith from the leader’s podium during the last day of the Congress meeting?

Who is Xi?

Xi is a ‘princeling,’ as the sons of the leaders of the Chinese ‘red revolution’ are called. He was born in 1958. His father was Xi Zhongxun – a comrade in arms of Mao and a Vice Premier of the new Communist China when it was formed in the ’50s. He supervised southern China from Canton or Guangdong in the early days for the Maoist regime.

But like Zhou Enlai and Deng Xiaoping, he was a reformer and therefore a target for humiliation by the Red Guards during the Cultural Revolution. He was dismissed and sent to a farm for hard labour. His daughter and Jinping’s sister Xi Heping committed suicide in the face of harassment by Maoist youths. Xi Jinping himself had to leave school and undertake manual labour in Shaanxi Province.

After several years of such humiliation, he returned to Beijing after the fall of the ‘Gang of Four’ and the end of the Cultural Revolution. It is said that Zhou Enlai himself intervened to reinstate Xi senior and reunite his family. Xi Jinping joined the Communist Party and attended a technical university in Beijing and graduated as an engineer. Many in leadership positions in China come from the hard sciences. He rose steadily within the party apparatus and became the Party Secretary or Chief Administrator in Fujian Province, which is a rich and entrepreneurial powerhouse overlooking the Taiwan Straits.

The present Chinese preoccupation with Taiwan – the main cause of conflict with the US – can be attributed to Xi’s intimate knowledge of the Taiwan problem. Fujian, with its proximity to Shenzhen, the first Chinese economic zone, holds a special place in Xi’s heart. Behind his large desk in the President’s office in Beijing is a painting which depicts the hills and rivers of Fujian Province. It was not an easy ascent for Xi junior. He was challenged by another ‘princeling’ – Bo Xilai [son of Bo Yibo, Vice Premier and economic expert under Mao]. But Bo Xilai and his wife were arrested on murder charges and are now languishing in prison in Chungking.4

China’s security and Sri Lanka

The Belt and Road Initiative (BRI) is Xi’s signature attempt to provide assistance to developing countries which at the same time fits into China’s security concerns. High among these concerns is the need to secure the oil lanes from the Middle East to China.

Thus Sri Lanka’s Hambantota Port, the Colombo Port City, road, rail, and air connectivity, and the proposed Hambantota economic zone are important development projects for us, while at the same time being vital for China’s rapid industrial growth. As a large energy importer, any threat to China’s oil supply has very serious implications for the security of the State and will be met with a stern reply to the agency that threatens it.

Thus Sri Lanka is a vital link in the Chinese security scenario. This will be an important consideration in the debt relief discussions. The Chinese are loath to write off debts or take ‘haircuts’ in repayments.

Debt solution

A Sri Lankan delegation led by then Prime Minister Ranil Wickremesinghe (RW) of the Yahapalanaya regime and his Cabinet ministers discussed this matter in Beijing with Xi long before the economic downturn and Covid. The Chinese side, which included Xi and Prime Minister Li Keqiang, were not agreeable to a debt write-off because all other debtors – and their numbers are legion – would ask for the same concession. Xi joked that his Finance Ministry would not let him sleep in peace.

His solution was to form a joint stock company between Sri Lanka and a Chinese enterprise to manage the project. Shares would be available in the stock market and the Sri Lankan side could buy up the Chinese-held shares when it mustered its resources. Once the new company is established, China will reimburse the full amount granted as a loan to Sri Lanka. It was this model that followed in Hambantota and Sri Lanka received over $ 1 billion, which was used to repay our debt instalment for that year. Today the Hambantota Port is a net revenue earner for Sri Lanka and one of the most efficiently-run ports in the region.

This may be compared to our own Ports Authority, which is not only corrupt and inefficient but also helped in jeopardising our future viability as a ‘sea junction’ by delaying the joint development of the East Terminal.

East Terminal error

One of the biggest indictments of the Gotabaya Rajapaksa (GR) regime will be its lack of vision and courage when it backed off from the proposed development of the East Terminal. It is a crime for which history will also condemn the Rajapaksas, Vasudeva Nanayakkara, and Wimal Weerawansa for following an outdated philosophy and permanently sabotaging our country’s long-term interests.
Anybody who compares the dismal performance of our Ports Authority – where trade unionists steal even from lunch packets and poor lorry drivers who come to clear cargo – with privately-managed port companies like in the QEQ, which win international awards, will curse the politicians who have brought our economy to this sorry pass and forced the country to go on bended knee to creditors all over the world. The ignorant voter does not know that it was the so-called Marxists and Bandaranaike-Rajapaksa ‘socialists’ who crippled the Colombo Port and paved the way for Singapore to become a global maritime hub.

It is an irony of gigantic proportions that Communist leaders like Xi Jinping have to advise our ‘socialist’ politicians to get their act together and encourage foreign investments like in China and Vietnam if they are to come out of the hole that they have dug for themselves and their starving compatriots.

Courtesy:Sunday Morning