Growing Chinese Presence in South Asia

Introduction
Growing Chinese influence in South Asia has been very evident in the past few years.
When Sri Lanka decided to develop the Hambantota port and areas around it, the Sri
Lankan government was not very keen on taking assistance from India or the Western
nations. During this time, China grabbed the opportunity and initiated major investments
in the region.
Similarly, Gwadar Port in Pakistan is another hub for Chinese investment and for the
military to have base and access to the connected regions. Chinas interest in both these
regions has raised quite a few questions in the mind of India and political thinkers about
its impact on India.

China and Sri Lanka

Chinese presence in Hambantota is a result of the Indian inclination towards developing
Colombo port and Chinas financial strength which made its investments in Hambantota
more viable. China has also acquired naval facilities in Hambantota to show its military
might.

Why Hambantota has been a domestic failure?

Other than the port construction, Chinas Exim Bank offered loans for projects such as a
southern highway, a tele-cinema park and an airport of which all the projects ended up as
financial failures. The reasons for this are:

As compared to Hambantota, Colombo is a natural port and a better location from

where goods are exported to and imported from India.
Hambantota has very limited share of imports entering Sri Lanka.
Similarly, no international flights are using the Hambantota Airport even though
free landing facilities have been offered.
Financial liabilities far outweigh the revenue.

Opportunities for China

As a result of the above situation where the domestic financial viability of development
of Hambantota has been very poor, China has been able to get access to lot of
opportunities which are as follows:

Ownership of Norochcholai power plant has been transferred to China, under a

debt swap agreement, due to no repayment of debts incurred on its construction.

Due to overflowing debt and increasing liabilities, Sri Lanka has sold 80% of the
Hambantota port to China.
Sri Lanka has also offered an investment zone to China in the same region.
As a result of this entire scenario, China will now manufacture in Sri Lanka and
export to India making best use of the advantages arising due to the free trade
agreement between Sri Lanka and India.

China in Gwadar and related Concerns

Just like Hambantota is set to become an essential element of Chinas Maritime

Silk Route, China intends to use Gwadar to develop on the China-Pakistan
partnership and strengthen maritime control over the sea-lanes used for oil/gas
supplies from West Asia.
The China-Pakistan Economic Corridor (CPEC) being developed by China in
Pakistan. It connects Chinas Xinjiang province to Gwadar through GilgitBaltistan. This region is a part of the Pakistan Occupied Kashmir which is
actually a part of Indias territory.
The CPEC is being developed with much more favourable financial conditions for
Pakistan and lacks transparency as well.

Challenges for China

Lack of clarity regarding the intended beneficiaries of CPEC. Baluchistan is

against the project because of people of the region are getting no benefits out of
the project.
Baluchistan is also unhappy with the returns that they will receive from the
investment by China in Saindak copper and gold mining projects.
Fear of outsiders coming into the province and putting immense pressure on the
resources is also prevelant as a result of the CPEC and the development of
Gwadar port.

Indias Concern

Chinese activities in Hambantota are of both strategic and economic interest to

India.
India has to be vocal about the fact that it does not accept Chinas growing control
in the region and the use of Hambantota for parking Chinese warships and
submarines.
Combined control and influence over Gwadar and Hambantota will give China
the chance to interdict vital oil supplies.
Increasing militarisation by China and threats to militarily equip Indias
neighbours is a major concern.
China and Pakistan together will be able to get easy access to the Gulf of Hormuz.
This will create obstacles in smooth movement of energy resources from West
Asia to India and put questions on energy security as well.