Chinese money finds a new empire in Sri Lanka

China has made substantial investments in Sri Lanka, making analysts describe the move as a ‘game changer,’ the Guardian reports.

The entire region of south Asia has been receiving an influx on funds from Beijing. Nepal, for instance, has received at least two dozen investments from China. Bangladesh was the recipient of USD 35 billion worth of Chinese money. But none of them has been thriving under Chinese investment wave quite like Sri Lanka, and in particular, its capital, Colombo.

According to local economists quoted by the Guardian, the rates on Chinese loans were not necessarily more advantageous than those on the international markets. What favoured them was a connection established by a previous leader, former president Mahinda Rajapaksa who lent USD 8 billion and the fact that the Chinese would ask fewer questions on the business model to be implemented.

And the loans are proving to have been a good investment. For China. In 2010 Sri Lanka agreed to pay a Chinese company USD 1.5 billion to build a new airport, however, after struggling to make repayments, the government leased the port as well as the land surrounding it to the Chinese company for 99 years. The local community, however, fears the country might be slipping into a ‘debt trap’ that will see it give up on more assets in the future.

Mohamad Nasheed, the exiled former Maldives president, called China’s involvement in his country an ‘acute crisis.’ In his view, it is propping up Sri Lanka’s current ruler, Abdulla Yameen, so it can continue to acquire territory in the archipelago. Whatever the interpretation, the country faces decades of repayments to the Beijing government.

However , the move is not singular in the area, with neighbouring countries being equally courted by India, another power house looking to further its interests in the region.