Decoded: India’s development model shines as China abandons ‘friend’ Sri Lanka

As the new regime in Sri Lanka tries to manoeuvre the country out of its worst crisis in decades, many have stepped in to help. Ranil Wickremesinghe, the new President, will need help from the international community. Neighbour India has already stepped in to help in a big way. But one question has been on everyone’s mind - where is China?

As Sri Lankan protesters stormed the presidential residence in Colombo, the Chinese Embassy released no statements. Beijing’s assistance to its self-proclaimed ‘all-weather friend’ has also been found wanting, especially given the fact that many think it has contributed to Sri Lanka’s current state.

A symbiotic relationship between the Rajapaksas, the erstwhile ruling family of Sri Lanka, and Chinese leadership, has been posited as one of the major reasons for the current crisis.

China’s role in the Rajapaksas’ rise and Sri Lanka’s fall

Mahinda Rajapaksa first took oath as President in 2005, assisted by his siblings who held key portfolios. The Rajapaksas came to power in the wake of a decades long civil war, which they were able to end because of a fast-tracked and unrestricted supply of weapons and ammunition from China. China also bucked international pressure and defended the Rajapaksas against charges of human rights violations.

From 2005 to 2015, China emerged as Sri Lanka’s leading source of development assistance and FDI. China seized the opportunity to invest in several mega infrastructure projects, which often lacked the possibilities of returns, but allowed the Rajapaksas to show them off as a sign of Sri Lanka’s growing development, and reap political benefits. China saw these investments as opportunities to further entrench its influence in the country.

China preyed on Sri Lanka’s economic vulnerabilities and loopholes to further its own political and economic ends. For the Sri Lankan government, the easy inflow of money allowed the leaders to ignore structural weaknesses in the country’s economy. By 2019, the value of Chinese development finance in Sri Lanka had reached $12 billion.

And when the road China helped Sri Lanka along led the country to crisis, Beijing went missing.

As China deserts Sri Lanka in crisis, India steps up

Many have said that China ‘deserted’ Sri Lanka, and the Rajapaksas. Some analysts argue that China is eager to disassociate itself from the Rajapaksas, who are now immensely unpopular politically. Beijing did not help its long-time allies to escape their country, or provide them asylum.

China also did not actively respond to Sri Lanka’s requests for debt-restructuring. In June, it denied Sri Lanka access to a $1.5 billion credit line, and did not respond to requests about a $1 billion loan to buy essential commodities.

China’s treatment of Sri Lanka may be a cause of worry for multiple other countries who have similar investments from Beijing. More than 40 low and middle-income countries owe debt to China which is more than 10% of the size of their annual GDP, who may need to seriously reconsider their method of relying on Beijing’s investments.

China’s approach to the crisis, and consequent aid, is in stark contrast to India. While China has sent emergency grants worth $76 million, India has already provided over $3.8 billion in assistance. India’s aid supplies have included rice, kerosene, milk powder, and medical supplies which often kept the country’s emergency systems going, which may otherwise have died. While others have fled the scene, India has stuck around in Sri Lanka’s darkest hour.

This has also created an opportunity for India to show the world that its development model is different. As showcased in India’s investments into countries like the Maldives, Afghanistan, Guyana, and Niger, New Delhi’s model is not predatory but based on mutual respect, and sustainable development.