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BANKING

Sri Lanka questions reliance on China

When Sri Lanka, a key link in the Belt and Road Initiative, sold China a deep-water port in exchange for debt alleviation, it raised eyebrows around the world – yet Colombo continues to borrow from Beijing even as its fiscal situation worsens.

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Of the many infrastructure projects included in the broad sweep of China’s Belt and Road Initiative (BRI), surely none is as controversial as Sri Lanka’s Hambantota Port.

For critics of the BRI, here, surely, was incontrovertible proof of a premeditated programme of trapping smaller, fragile states in debt to make them financially dependent on China.

On the surface, these voices had a point.

When Sri Lanka started rebuilding the country in 2009, after 26 years of bloody civil war, it had few international allies. At first, only China answered the call. Its development banks were flush with cash and many were only too willing to lend. The introduction of the BRI, president Xi Jinping’s flagship plan to rewrite the global trade map in China’s image, accelerated the flow of capital into the south Asian state, long seen as one of Beijing’s staunchest regional allies.

At first, the focal point of mainland lending was in the south of the island around Hambantota, the stronghold of then-president Mahinda Rajapaksa, widely seen in the West as being pro-China and keen to borrow from Beijing at any cost.




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