AMN/ WEB DESK
China on Wednesday commended Indian government’s efforts in helping Sri Lanka to pull through its worst financial crisis even as it tried to correct the image that China is hesitant in announcing big financial assistance for Sri Lanka despite being a major investor in the country.
Sri Lankan President Gotabhaya Rajapaksa said in an interview on June 6 that Sri Lanka couldn’t tap a $1.5 billion credit line from China and has yet to hear back on the request to China for a $1 billion loan.
Responding to this, Chinese Foreign Ministry spokesman Zhao Lijian told a media briefing in Beijing that “We have all along provided support to Sri Lanka’s socioeconomic development as long as our ability permits.”
” We have taken note that the Indian government has also done a lot in this regard. We commend those efforts,” Zhao Lijian said on a question about whether China, a major investor in Sri Lanka, is hesitating to help it when the island nation is facing the worst economic crisis.
China is ready to work with India and the rest of the international community to help Sri Lanka and other developing countries experiencing difficulty to pull through the hardship as early as possible,” he said.
India has sent about USD 3 billion in assistance in the form of line credit and other modes to help Sri Lanka which has virtually declared insolvency and defaulted on all foreign loans including that of China totaling to $51 billion.
At this critical juncture for Sri Lanka, China has announced assistance of 500 million RMB (about $73 million) for the supply of essential goods but remained silent about President Rajapaksa’s request to defer the loan repayment and as well as its earlier announcement to consider a $2.5 billion loan facility for Colombo. China is competing with India to expand its influence in South Asia especially in Sri Lanka.
Zhao also downplayed Sri Lankan President Gotabaya Rajapaksa’s remarks that Beijing has shifted its strategic focus from South Asia including its all-weather friend Pakistan, to South-East Asia, saying the South Asian countries, along with the other countries in our neighboring areas, are China’s priority in its diplomacy.
China attaches high importance to developing good neighbourliness relations with these countries,” Zhao said.
Sri Lanka has been grappling with unprecedented economic turmoil since its independence from Britain in 1948. Sri Lanka’s economic crisis has created political unrest with protesters demanding President Gotabaya Rajapaksa’s resignation.
Beijing appeared to be riled over the remarks by Sri Lankan President that China appears to be shifting its strategic focus towards South-East Asia and Africa and has less interest in South Asia as before, where many regional countries including China’s all-weather friend Pakistan, are in financial trouble.
Sri Lanka and Pakistan are the biggest recipients of Chinese investments and loans in the region. While Colombo received about $8-10 billion investments and loans from China, Beijing is currently committed to build $60 billion China Pakistan Economic Corridor (CPEC) over which India has protested as it is being laid through the Pakistan-occupied Kashmir (PoK).
Significantly, both the countries are seeking IMF bailout packages to tide over the worst economic crisis. With these, China is facing the specter of these big-ticket investments turning into non-performing assets.
Zhao said, China has noted with concern that South Asian countries are facing financial, fiscal difficulties and also difficulties in their balance sheet. These difficulties partly stem from the challenges brought by the COVID-19 pandemic.
They also have a lot to do with the Russia-Ukraine conflict and the unilateral sanctions slapped by the US and other Western countries on Russia in the wake of the conflict. Those sanctions aggravated the food crisis and financial difficulties in developing countries and inflicted even more hardships on the people.