China reacts guardedly to Ranil Wickramasinghe's appointment as Lanka PM

| | Beijing
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China reacts guardedly to Ranil Wickramasinghe's appointment as Lanka PM

Friday, 13 May 2022 | PTI | Beijing

China reacts guardedly to Ranil Wickramasinghe's appointment as Lanka PM

China, one of the largest creditors of Sri Lanka, on Friday reacted warily to the appointment of Ranil Wickramasinghe as the country's Prime Minister succeeding pro-Beijing Mahinda Rajapaksa, saying it supports the government's efforts to sustain stability in the face of chaos.

"As a traditional, friendly country to Sri Lanka, we closely follow the latest developments, and we also support the Sri Lanka government's effort to sustain stability," Chinese Foreign Ministry spokesman Zhao Lijian told a media briefing here.

He was replying to questions, seeking China's reaction to United National Party (UNP) leader Wickramasinghe's appointment considering that he had a history of probing Chinese investments and whether Beijing will offer debt relief to Sri Lanka like India.

Zhao reiterated Beijing's earlier call to all political parties in Sri Lanka to maintain solidarity, sustain stability, and overcome difficulties together but gave no indication whether China will step in to help the debt-ridden island nation like India which has committed more than USD 3 billion in loans, credit lines and credit swaps since January this year.

“For the debt issue, our position has been made very clearly on multiple occasions. We will continue to work with Sri Lanka to stay in communication, and help Sri Lanka in restoring political, social, and economic stability at an early date," he said.

Significantly, China has maintained conspicuous silence on the resignation of Mahinda Rajapaksa, who paved the way for Beijing's substantial strategic investments in the island nation.

Mahinda Rajapaksa, 76, resigned as Sri Lankan Prime Minister on Monday amid unprecedented economic turmoil, hours after his supporters attacked anti-government protesters, prompting authorities to impose a nationwide curfew and deploy Army troops in the capital Colombo.

Mahinda Rajapaksa is a well-liked Sri Lankan leader in China for promoting large-scale Chinese investments in the island nation disregarding India's security concerns and the US criticism and warnings over Beijing's "debt-trap diplomacy" in the strategically located Indian Ocean island.

Chinese Foreign Minister Wang Yi during his meeting with Mahinda Rajapaksa in Colombo in January showered praise on him saying that “you are an old friend to the Chinese people. You paid six visits to China. We hold this special friendship dear and this story will be enshrined in the history of China-Sri Lanka relations”.

While most Chinese investments were made during Rajapaksa's tenure, Wickramasinghe is also no stranger to Beijing as during his previous term, he signed and handed over the Hambantota port as a debt swap to China on 99 years' lease.

The deal subsequently emerged as a symbol of China's debt diplomacy acquiring real-estate far from home.

Though Wickramasinghe had opposed Chinese investments before his election in 2015, his government later cleared the controversial USD 1.4 billion Colombo Port city project to carve out a 665-acre artificial island which he criticised before the polls.

During his visit to China in 2017 to attend Beijing's annual Belt and Road Forum (BRF), China has offered Sri Lanka USD 24 billion more additional project finance even as Colombo struggled to repay the USD eight billion debt it owed.

After the BRF meeting, China has offered more loans to the countries taking part in the One Belt One Road initiative (BRI), Wickramasinghe's close associate and the then Sri Lanka's Minister on Special Assignment, Sarath Amanugama said.

It was not clear how much of the USD 24 billion additional Chinese funding was availed by Sri Lanka during Wickramasinghe's earlier tenure followed by Rajapaksa's rule.

As Sri Lanka defaulted on USD 51 billion foreign debt last month with most of its forex reserves drained out with no money to import fuel and cooking gas, the expansive Chinese build infrastructure projects were being showcased as projects that drained public exchequer for that lack of utility.

Also with the government desperately trying to secure long-term IMF funding to recover from the complete bankruptcy, the future of the much-touted Chinese funded Colombo Port City project to build an artificial 665-acre island to set up an international financial hub also hangs in balance. As per the recent data carried by the state-run Chinese media, 10 per cent of Sri Lanka's USD 51 billion debt belongs to China.

Weeks before his resignation, Mahinda Rajapaksa spoke to Chinese Premier Li Keqiang for assistance and his younger brother and President Gotabaya Rajapaksa, urged visiting Chinese Foreign Minister Wang Yi last December to reschedule Sri Lanka's debt owed to China.

Earlier, Beijing announced about USD 33 million (200 million yuan) assistance to Sri Lanka but is so far silent about its envoy to Colombo Qi Zhenhong's statement that China is considering a USD 2.5 billion credit facility to Sri Lanka, though Beijing has agreed to roll over USD 4.5 billion debt of Pakistan, according to former Pakistan Foreign Minister Shah Mahmood Qureshi.

The Beijing-based Asian Infrastructure Investment Bank (AIIB) is reportedly considering a USD 100 million loan for Colombo.

While maintaining silence on Sri Lanka's debt deferment, Qi was quoted in the Sri Lankan media criticising the country's decision to approach the Washington-based IMF. Later reports quoted him as saying that China supports Colombo's plans to take IMF assistance.

Observers say that it is ironic that both Pakistan and Sri Lanka, which are largest recipients of Chinese loans and investments, faced serious debt repayment problems, prompting them to seek IMF's interventions much to the chagrin of Beijing as it may lead to international scrutiny of the agreements of its loan and investments.