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The Chinese Desire in Sri Lanka

| by Bandu de Silva

( January 20, 2014, Colombo, Sri Lanka Guardian) The question as to what the Chinese want came to my mind when I visited China 58 years ago. That was when I was posted to Sri Lanka’s pioneering diplomatic mission in Beijing in 1957, under Wilmot A. Perera. I continued to ask that question for the near four years I spent there. My assignment was to oversee administration and also negotiate the annual rice contracts under the bilateral agreements of 1952 and 1957 as well as oversee cultural/media relations.
From L-R Sudharman De Silva Dharmawardena (Treasurer-Sri Lanka China Friendship Association) Theja Gunawardena (President - Sri Lanka China Friendship Association) Ananda Kumara (General Secretary - Sri Lanka China Friendship Association) Badra Gunathilake- Asst. Secretary with Lin Lin the President of the Chinese People’s Association for Friendship with Foreign Countries and with Chinese diplomats in 1957 establishment of Diplomatic Relationship between two countries.

These functions gave me access to a wide range of varied contacts, though under normal circumstances such contacts were not easy to establish in China at the time. When the Chinese officials realized that I was an understanding person, the opportunity to observe became more open. My official reports sent to Colombo were filled with answers to this major question, and boiled down to the three basic needs of human society which we learned during in our school days, namely – food, clothing and shelter.

These had to be elaborated, however, for purposes of my reports explaining the nomenclatures and popular slogans used by the Chinese in their usual traditional way, and citing examples of how the country was meeting these challenges. After the long civil war and before that, centuries of foreign exploitation, at times subjected to rapacity, the Chinese needed the basic requirements in abundance.

Four years later, when I left China, pertaining to the problems of food, clothing and shelter remained the same, having worsened despite the great hardships the Chinese had to do through, for four, one full post-revolution decade, and the great sacrifices they made, and were not rewarded under Mao Tse Tung’s rule as Party Chairman. All Mao’s innovations during that decade carried under the slogan of “Great Leap Forward” and finally leading to the establishment of Communes, which shocked even the East-bloc Communists, could not lead China to the Communist Utopia that he had dreamed of. The final Cultural Revolution signified the total failure by trying to draw attention in another direction.

Despite the changes which China has undergone in the decades due to the 1949 Revolution, I find that in the final analysis, the needs of the Chinese remain the same as in any other country, but had been expressed in different terminology.

This article is an attempt to look at the same question “What the Chinese Want?” raised by a modern-day head of a services company which had established close relations with China since 1987, employing nearly 13,000 Chinese in its staff. Tom Doctoroff, the CEO of the company, Walter Thompson, who writes with a nine-year-long association with China with his business having grown to be larger than all other international marketing services groups, combined, in his new book entitled What The Chinese Want? ,2013, (Palgrave Macmillan,USA), conceives that what the Chinese want today is to be “more than a volume producer of low-priced generic goods but to acquire more services and be able to produce internationally recognized brand names of luxury goods…

They are now producing for the local market but are ambitious and diligent, and will compete in developed markets.” (That is for the internal market with some exports to back the industry). I found during my three-month stay in Australia recently, that practically every item sold in quality Australian shops is a product of China. These include even very high-priced shoes with brand names. The Australian products I found were meat and other food products, and wines and beverages. I was not too sure whether the fruits on sale were locally produced or imported as the time I was there was during part of the winter and early spring.

Global Chinese investments
Globally speaking, Doctoroff sees the Chinese looking for investments in foreign countries. The most recent AFP report says China’s investment in the US had doubled to US$ 14 billion, and Chinese firms accounted for 70,000 full-time jobs in the US. (Ceylon Today, FT, 8 January 2014). That is despite the recession facing the US economy. Perhaps, the recession is seen by the Chinese to acquire investments. In respect of India, another up-coming economic giant in Asia, when the Indian Prime Minister, Manmohan Singh, signed eight agreements with China during his visit to Beijing in October last year, seven of them pertained to economic affairs and one only on easing relations over border affairs (Border Defence Cooperation Agreement – BDCA).

Despite China’s growing role as an internationally, highly-rated investor, which generally escapes attention, the Indian Prime Minister, recognizing China’s potential, in his speech made in the Great Hall of Beijing, invited Chinese investment in her US$ 3 trillion investment plan in infrastructure development. It was this inevitable partnership between China and India that made Doctoroff identify the growing China-India relations as a “Match made in Heaven.”

It was Deng Xiao Ping’s economic revolution which put China on a path of recovery from total collapse, and paved the way for what one would call modernization. Though Maoism was ditched, as Jonathan Fenby observed (The Penguin History of Modern China, revised edition, 2013, p.582), the Four Cardinal Principles Mao had put in place as the guiding light for the future were present under the new dispensation. This curious relic from the past, which Fenby calls an ‘uninspiring mix’ which is at odds with new economic reforms, meant that when challenges came, the only answer could be the resort to force, as so often seen in Chinese history.

Growing wealth
As Doctoroff observes, a recent list has recorded the presence of 270 billionaires In China, not counting those who do not wish to be in limelight.This growing and already grown economic miracle which Doctoroff sees from his close association in a marketing field, is not what others in their chanceries, see. They see China’s growing military power with a defence budget approaching US$ 80 billion, her nuclear capabilities, missile development which can now reach ships 900 miles away, space technology, her expanding blue water capacity and the addition to aircraft career capacity (though so far they have only a recently fitted, old Soviet ship used for training which is much behind India in that respect), as threatening their vested interests.

That is to ignore the more important development in China as a country approaching the status of the largest economic power in terms of GDP growth by the year 2019. It is already the largest oil consuming country in the world, and the second-largest economy, “soaring from industry neophyte in the mid-1990s to a manufacturing powerhouse today.” It has also the largest auto market, an unbelievable situation from the single taxi, a pre WW 11 vintage Czech Tetra run on foul-smelling petrol, which ran errands in Beijing when I was there from 1957 to 1960, and I assume would have continued for many more years.

As Doctoroff asks, naturally, with a population of 1.3 billion people, couldn’t China herself be expected to be heard in global politics? It is already happening with her growing share in the World Trade Organization (WTO), International Monetary Fund (IMF) and G20. In the IMF, though China along with India has no voting power yet, she holds an increasing share to the relief of the original members. The Shanghai Cooperation which is attracting even the interests of the US was China’s own initiative.

China’s military budget, which as Doctoroff observes is only a fraction (one-eighth) of that of the US, China is seen expanding when the rest of Europe is seen cutting down. He sees that America will continue to underpin geopolitical clout even as the country’s status as an 800-pound gorilla diminishes in a multipolar world. He also thinks that American values – as opposed to the political system – will have appeal for generations. He also thinks China will not invade other countries though she may seem militarily provocative over outlandish territorial claims in the South Sea, and vilification of Hillary Clinton when she had the temerity to challenge them, confrontation on the high seas with Japan and the Philippines, and having installations of over 1,000 ballistic weapons aimed at Taiwan.

The veteran CEO argues that China and the West have inherently different strengths and weaknesses, and if America accepts that it will no longer be the only tiger on the mountain, we can happily co-exist. China will always need partners, and so will we, he says. He does not see the Chinese economy and the Chinese people as a threat to eclipse Western counterparts because he thinks that as the nation races towards super power status, it will remain quintessentially Chinese – ambitious yet cautious at the core…”China’s social structure and cosmological orientation yield strengths and weaknesses that compliment rather than debase our own Western worldview.”

China in Sri Lanka
Two countries where China’s growing presence in Sri Lanka is being discussed are in neighbouring India and the US. That perspective for US arises because despite all remonstrations to the contrary, she has not totally lost interest in the island as a strategically important country. Even if earlier priorities may have changed for the US, still the consideration of the island’s proximity to oil shipping routes in the Indian Ocean predominates her thinking.

For India, it is a different question. India has been obsessed with two trends of thoughts. The one which did not lose its relevance was India’s interest to inherit Britain’s earlier imperial role as the regional power in the Indian Ocean. That may be more of a military concept which was earlier kept under close wrap but has since emerged out of hibernation into the forefront of Indian policy making, sending the country’s thoughts on Non-Alignment and Indian Ocean Peace Zone onto the back-burner. The other is India’s own problem of seeing China in adversarial terms since the eruption of border problems with China, which had led to a border war in which India was badly disadvantaged. Consequently, it has become customary in Indian circles as much as in some Sri Lankan circles influenced by Indo-US strategic regimes, to look at China’s growing role in Sri Lanka, keenly, from the point of view of security.

This is despite India’s political and economic relations with China having taken a turn to the better in the new millennium. This new trend of improving India’s relations with China was demonstrated by the five-day official visit of the Chinese Premier, Zia Ronge, in January 2002, which was followed by President Hu Jin Tao’s four-day official visit to New Delhi in November 2006. These visits not only eased the tension that had marked the relations between the two countries since the latter half of 1950s and the final border war, but they were a pointer that there was a change of heart in China towards her relations with India. The economically resurgent China was now looking at India differently, as much as other countries, in terms of prospective complementary economic partnerships. India too began to respond positively, and in the resultant, mutual understanding that the two countries are two rising economic powers in the region, and would have much to benefit through mutual cooperation.

This became manifest in the eight agreements which were signed during Premier Manmohan Singh’s official visit to Beijing, in October 2013. These were signed against the backdrop of the realization of the economic growth achieved by the two countries - China in the field of manufacture and India in the service sector. Consequently, it was seen that there was great potential for the two countries to benefit from each other’s economy in a complementary partnership. Seven of the agreements signed in 2013 pertained to cooperation in mutually beneficial fields. One agreement alone as observed initially, pertained to the BDCA.

It was significant that India agreed to the Actual Line of Control in this agreement which sent the old dispute over the border to the backburner. What was emphasized during Indian Prime Minister’s visit was that, a stable global environment and a peaceful periphery were required for the two countries to promote the other economic related objectives. In any case, India was the loser on the border issue which she inherited from the British Raj. Strategically, she was disadvantageously placed in relation to China which had the advantage of geography in her favour. Both countries could not be found carrying the old border-war baggage forever.

China’s growing international role as an internationally highly-rated investor generally escapes attention in this assessment. India herself invited Chinese investment in her US$ 3 trillion investment plan in infrastructure development.

Top infrastructure builder cum investor
China has become the number one infrastructure-builder and investor in Sri Lanka during the last half decade. In terms of foreign aid, China has now outstripped Japan which held that honour earlier on account of Japan now facing slow growth rate in her economy while the Chinese economy is rising. China’s investments in Sri Lanka fall into place against the (above mentioned) perspective of her global performance. These are but only a fraction of China’s global engagement in infrastructural building and investment, but in Sri Lanka’s own context as a small country, and with India’s view of seeing China’s intrusion here as a big challenge to her in what she considers a legitimate area of her influence next door, the Chinese investments here may be seen as very ambitious, and exceeding proportions. That sort of ambitious nature in Chinese business deals was something that Doctoroff recognized as being present in all Chinese global engagements, and consequently, can be considered not unique to Sri Lanka’ situation.

Looking at the global context, already, over 800,000 Chinese are living and working in Africa alone, engaging in projects associated with infrastructure development and investment. There are others further afield in Mediterranean Central Europe. As Doctoroff points out, Beijing is also on a global acquisition spree including Swedish car companies, Greek infrastructure, an oil firm in Canada, a mining company with assets in Central Africa –all snapped up by China in the past few years. A Chinese businessman and poet, Huang Nubo, Doctoroff claims, has offered US$ 9 million for 300 square kilometres of wilderness in Iceland which is 0.3% of the country, to build a tourist facility (a US$ 100 million hotel) but some suspect there could be ulterior motives in this venture.

Indian view
India looking at Sri Lanka’s growing relations with China commenced only after the eruption of the border war with China. Premier Jawaharlal Nehru’s remonstration against Prime Minister John Kotalawala, in Bandung in 1956, for upsetting the atmosphere created by China’s willingness to join other Asian nations in a spirit of co-operation, giving up the earlier, much-suspected interference in Asia, pointed the extent to which Indo-Chinese relations were then moving. Earlier, Prime Minister Chou-en Lai, undertook a round of diplomatic visits to China’s neighbouring states such as Myanmar and India, during which India and China signed a pact based on Pancassela, the five principles on which Chinese-Indian relations were to be governed. That included peaceful settlement of disputes. Later,

ramifications in bi-lateral relations which began to manifest, first after the eruption of the Tibetan issue over which India tried to intercede on behalf of Nepali businessmen, claiming they were Indian citizens, and more so over what India considered as a bufferstate coming under the strict control of Beijng, and India finding that the Chinese had built a road link with Ladak passing over territory which India had considered its own, which finally sparked off the border war.

The events that followed led to the hardening of the situation on both sides, which thereafter came down to the people’s level to mobilize popular sentiments against each other. It had some effects on both countries. In China, it helped to draw attention away from non-performance in the economic field under the new economic policies, while in India, it helped to create a new feeling of nationalism and suppress growing centrifugal tendencies at state level.

Sino-Lanka relations
China entering into relationships with Sri Lanka is not new. It goes back to the early 1950s when the two countries signed the first Trade and Payments Agreement of 1952. In recent times, China made great strides during the latter part of the Eelam War when Sri Lanka looked to her for military hardware. These were followed by Chinese participation in a number of infrastructure building projects like the Norochcholai Coal Power project, the Hambantota Port project, Mattala International Airport project, Colombo-Katunayake Highway project, construction of a section of the northern railway, the A 9 road development project, and the reclamation of the sea in front of the Galle Face Green and building infrastructure on that property, to mention some. Other investment projects envisaged include the seven-star Shangri-La Hotel project at Galle Face which is through Chinese investment.

Considered against Doctoroff’s assessment of Chinese investment overseas, China’s participation in infrastructural projects in Sri Lanka as well as investment projects need not be looked at as those that are security related. 

Despite these realities of improving relations between China and India, yet geo-politics being what they are, it is difficult to think that the alternative perspective of security considerations will altogether disappear from India’s mind, particularly in its security establishment.

Besides, India’s growing security partnership with the US is keeping the security aspect alive. India’s increasing partnership in the Indian Ocean security arrangements, especially in guarding the Straits of Malacca, and more recently over the piratical activities in the East African coastal areas, point to Indo-US collaboration in the security measures in the Indian Ocean area. China’s entry to the Blue Waters even to safeguard her shipping interests off the African coast came to be viewed suspiciously. Within Sri Lanka, sections of the media and pro-Indo-US lobbies have been active in presenting a gloomy side of the picture of increasing Chinese engagements in the island by placing emphasis on slogans such as the ‘string of pearls’ harbours China has developed from Myanmar to Bangladesh, Sri Lanka and Pakistan and others, as a threat to India’s security.

(The writer who was Sri Lanka’s senior Ambassador in Europe is the only remaining member of Sri Lanka’s first diplomatic team sent to China. The article was originally published by the Ceylon Today, an independent newspaper based in Colombo, Sri Lanka )