{"id":69002,"date":"2017-08-17T16:25:20","date_gmt":"2017-08-17T23:25:20","guid":{"rendered":"http:\/\/www.lankaweb.com\/news\/items\/?p=69002"},"modified":"2017-10-09T14:31:18","modified_gmt":"2017-10-09T21:31:18","slug":"yahapalana-and-the-republic-of-china-part-5","status":"publish","type":"post","link":"https:\/\/www.lankaweb.com\/news\/items\/2017\/08\/17\/yahapalana-and-the-republic-of-china-part-5\/","title":{"rendered":"YAHAPALANA AND THE REPUBLIC OF CHINA Part 4"},"content":{"rendered":"

\u00a0KAMALIKA PIERIS<\/em><\/span><\/h2>\n

China values its relationship with Sri Lanka and takes China-Sri Lanka activities very seriously. Bandaranaike Centre for International Studies had a seminar on \u2018Contemporary China- Sri Lanka relations: current trends, future projections\u2019 in May 2017. For this half day seminar, China sent the President of the China Institute of International Studies (CIIS) and the Director, Department of Developing country Studies of the CIIS. The CIIS is China\u2019s leading think tank. The Director, CIIS opened the conference,\u00a0 stayed through the whole seminar, contributed \u00a0to the general\u00a0 discussion from \u00a0his seat in the audience and signed an MOU with the BCIS.<\/p>\n

Sri Lanka\u2019s Pathfinder Foundation has a China-Sri Lanka Cooperation Studies Centre. This Pathfinder Centre signed an MOU with China Center for Contemporary World Studies (CCCWS) which is \u00a0\u00a0affiliated to the Chinese Communist Party. China\u2019s CCCWS conducts exchanges and academic discussions with foreign political party think tanks and research institutes. It has a global network of academic exchanges and cooperation with foreign research institutes in the USA, UK, Germany, Russia, Japan, Brazil, India, South Africa, Israel etc. Sri Lanka became the latest country to be to be added to their extensive network of cooperation. Signing of the MOU was preceded by a round table discussion between the two institutions on several broad subjects.<\/p>\n

China is aware of Yahapalana\u2019s tilt towards US and does not hesitate to keep Yahapalana in its place. \u00a0The media said that Prime Minister Ranil Wickremesinghe\u00a0\u00a0 had a low key presence at the high-profile Belt and Road Forum in Beijing in May 2017. Nawaz Sharif then Prime Minister\u00a0\u00a0 of Pakistan, Russia\u2019s Putin and many other leaders spoke at the inaugural ceremony.\u00a0 The Sri Lankan leader reportedly only took part in the discussions at the Round table meeting later on.<\/p>\n

Ambassador Xian Liang strongly disputed\u00a0\u00a0 Finance minister Karunanayake\u2019s assertion that the previous government had obtained \u2018expensive loans\u2019 from China. Xinxiang responded, in November 2016, \u2018some Sri Lankan ministers and the media had talked about \u2018expensive loans\u2019 from China. I talked with Ravi [Karunanayake], the Minister of Finance. I asked him, if you don\u2019t like this one [loans from China] why have you spoken to me about getting another one? Analysts observed that \u00a0the Chinese envoy wouldn\u2019t have chided Karunanayake without consulting Beijing.<\/p>\n

Public relations have not been ignored. China has started student exchange links with Sri Lanka. Sri Lanka\u2018s National School of Business Management has started an exchange programme with Beijing Foreign Studies University. The first group of students came in May 2017. A group of NSBM students will visit China in return. Sri Lankan artist Anoma Wijewardene was invited to exhibit at the One Belt One Road\u00a0\u00a0 art exhibition\u00a0 organized by the Hong Kong Federation of Women \u00a0and \u00a0\u00a0\u00a0presented by Sotheby in Hong Kong\u00a0 in April 2017. Sri Lanka was the only country from South Asia at the exhibition.<\/p>\n

Chinese tourists are the second largest group to come into Sri Lanka. Chinese tourist arrivals have risen by 300% between 2013\u00a0\u00a0 and 2016. Chinese tourists may surpass those from India by 2019. Travel agencies are responding to this. The tourist magazine, Explore Sri Lanka <\/em>February 2017 issue carried an advertisement by Premadasa Jewelers which included information in Chinese.<\/p>\n

The Chinese Navy\u2019s hospital ship ‘Ark Peace\u2019 visited Sri Lanka in August 2017 and provided medical assistance to Sri Lankans free of charge. Ark Peace has been engaged in providing medical service, spreading friendship and love in many countries. In 2010 Ark Peace visited Djibouti, Kenya, Tanzania, Seychelles and Bangladesh. In 2011 Cuba\u00a0 Jamaica, Trinidad and Tobago, and Costa Rica, in 2013 Brunei, Maldives, Pakistan, India, Bangladesh, Myanmar Indonesia and Cambodia in 2014, Tonga, Fiji, Vanuatu, and Papua New Guinea 2015 Australia, French Polynesia, America, Mexico, Barbados, Grenada and Peru.<\/p>\n

\u2018Ark Peace\u2019 is a 4,000 square metre floating hospital, divided into five main areas designated as casualty transfer, triage, outpatient, inpatient and evacuation. It treats and evacuates casualties at sea during wartime, provides medical service to inhabitants and servicemen on islands during peacetime, participates in international humanitarian assistance, provides emergency medical aid in the event of major disasters and conducts medical exchanges and cooperation with other countries.<\/p>\n

China is currently the largest provider of financial assistance to Sri Lanka. \u00a0It is Sri Lanka\u2019s biggest lender. China has given loans on concessional and commercial terms. In 2016 Chinese government has given an outright loan of USD 77.2 million. In 2017, China gave 400 million Renminbi for development projects. China was giving 2 billion yuan to Sri Lanka for the period 2018 \u2013 2020, reported Sri Lanka\u2019s Ambassador to China Dr.Karunasena Kodituwakku. When the Bank of China sets up operation in Sri Lanka, the yuan will have the same status as US dollar and will be changeable in Sri Lanka.<\/p>\n

China has\u00a0\u00a0 emerged as Sri Lanka\u2019s main source for imports as well, replacing India. China became the export leader in 2016, accounting for 21.7 per cent of total expenditure on imports, according to Central Bank statistics. India has been pushed to second place, accounting for 19.7 per cent of total imports.<\/p>\n

Yahapalana says that thanks to the Rajapaksa government Sri Lanka has a huge debt with China. \u00a0Yahapalana has to get into a bigger debt now, to pay China off. Isn\u2019t there any other way to repay the Chinese loan, observers asked. Yes, said critics. We can renegotiate the terms of\u00a0 the loans and reduce the interest rates. We can also ask for more time to repay loans and then look at what we can sell fast and earn money from. We can repay the loans in 2-3 years. Right now we have to pay back USD 2 billion.\u00a0 Further, China had offered USD 1000 million at 2% interest, therefore Yahapalana \u00a0government need not have taken an IMF loan of USSD 15,000 million at 6%, said critics.<\/p>\n

At a time when Western investments are few in coming, China is willing and able to take up economic opportunities in Sri Lanka that may not be economically attractive to privately owned commercial enterprises but are viable to China\u2019s state enterprises. China is quick to offer complete packages on concessional terms. It is also quick to implement and disburse big amounts, noted analysts. If China supports the development of Sri Lanka, then there is little motivation for Sri Lanka to refuse economic support from China.<\/p>\n

All Chinese funded projects are back on track, the media reported in May 2016. There is a total of 28 projects amounting to USD 7.6. Billion. They are spread among power and energy road, transport, telecommunication, airport and aviation, port irrigation and water sectors. They include Puttalam coal power project, Moragahakanda project and greater Kurunegala water supply project. Ratnapura expressway will start with Chinese assistance \u00a0in 2016. The media also announced that the government has granted a project in Katunayake airport to a Chinese company.\u00a0\u00a0 China Development Bank has\u00a0\u00a0\u00a0\u00a0 given USD 500 million for a priority roads project.<\/p>\n

Sri Lanka and China have signed a Memorandum of Understanding in 2017 to construct a hospital for kidney patients in North Central Sri Lanka. China will also fund the new OPD complex in Colombo National Hospital. Chinese company Tidelion installed rainwater treatment technology services in the local primary school and three households at Kahatagasdigiliya There is the Gampaha-Attanagalla-Minuwangoda integrated water supply project funded by China Development Bank. This plant will benefit more than 600,000 people. Parliament received a consignment of computers from the Chinese embassy in Colombo. There were 225 computers for the MPs and40 more computers for the use of parliamentary staff. This was in response to a request made by Speaker Karu Jayasuriya.<\/p>\n

A 70-member high profile delegation, led by Peng Qinghua, Secretary, Communist Party of Guangxi Zhuang Autonomous Region came in May 2017, to attend the Guangxi, China-Sri Lanka Economic & Trade Cooperation Forum. The purpose was to promote economic and trade cooperation between Sri Lanka and Guangxi autonomous region of the Peoples Republic of China.<\/p>\n

Zhong Tian Construction Company\u00a0 of China plans to invest over US$ one billion in real estate and leisure sectors in Sri Lanka. It will invest over US$ 70 million in the Millennium Park to develop it into an international entertainment hub, with Browns Leisure. This will\u00a0 comprise a 200 room four star hotel, apartments, shopping mall and a mini amusement park. Zhong Tian will invest over US$ 250 million for the Horton Place twin tower project,\u00a0 expected to be one of the biggest twin towers in the region. Zhong Tian\u00a0\u00a0 also taken Palm Beach Hotel, Mount Lavinia on a 10 year lease, as well as Palms Colombo in Kolluptiya and has purchased land in Sooriyaweva Kanda\u00a0 for\u00a0 villa type luxury bungalows.They are now looking in\u00a0 Galle and Kandy, they want to invest in \u00a0<\/em>two hotels under 80 rooms. .<\/p>\n

China arouses both positive and negative attitudes in Sri Lanka. China is seen by some citizens of this country as a good friend and a centuries-old trading partner, who poses no threat to Sri Lanka\u2019s \u00a0sovereignty and proved its unstinting support during the critical phase of \u00a0Eelam War IV, said China supporters. Hambantota Port construction commenced in January, 2008,\u00a0 while\u00a0 the Sri Lanka army was at the Vanni liberating LTTE- held Kilinochchi.<\/p>\n

China steadfastly backed Sri Lanka throughout the\u00a0 Eelam war. The\u00a0 Rajapakse government received continued Chinese backing at the Geneva-based United Nations Human Rights Council (UNHRC) as the US-led coalition, including India, vigorously pursued Sri Lanka at the UNHRC. China and Russia have been our friends in Security Council, China\u00a0 has not made any unseemly\u00a0 demands from Sri Lanka, they added. Yahapalana\u00a0 government seems have finally\u00a0 realized that even at the risk of antagonizing India, the dominant position of China as an emerging world power cannot be ignored. She is a superpower in the region, said Don Manu.<\/p>\n

However, many view Chinese involvement in Sri Lanka with unease. They point out that when China acquires control over critical\u00a0 assets in Sri Lanka for long periods, it \u00a0will result\u00a0 in the erosion of Sri Lanka\u2019s sovereignty. \u00a0Also, transferring a lot of property to China would incense India and India will want to counterbalance it . Strong negative attitudes towards China are now emerging , together with a tendency to demonize China. The\u00a0 demonizing of China, which started with the Hambantota issue,\u00a0 could be considered a part of the anti -China strategy\u00a0 in Sri Lanka.<\/p>\n

Here are four negative assessments of China\u2019s\u00a0 assistance to Sri Lanka . \u00a0\u00a0When told that China would set up 2,500 industries to make Sri Lanka an industrialised country,\u00a0 critics wanted to know, what are the\u00a0 industries they are going to set up? Are they \u00a0the dirty industries that have polluted\u00a0 cities China and therefore need to be shifted elsewhere?<\/p>\n

Several multimillion dollar development projects in Polonnaruwa district are to be given on a single bid to China without tender procedure, complained observers. The\u00a0 projects are drinking water supply, agri based industries, Maduru oya right bank development,\u00a0\u00a0 road network extensions and \u00a0railway extensions from\u00a0 Kurunegala to Habarana.\u00a0 These were included in the\u00a0 MOU signed between China and Sri Lanka in April 2016. China Harbor Engineering Co is now conducting \u00a0a feasibility study\u00a0 in towns east of Polonnaruwa\u00a0 for the water supply project, and China State Construction Engineering Corporation is doing a\u00a0 feasibility study on rail track and railway stations from Maho to Batticaloa, Gal oya to Trincomalee\u00a0 free of charge, they reported.<\/p>\n

China National Machinery Import and Export Corporation \u00a0(CMC)\u00a0 was given the contract to extend the railway line from Matara to Beliatta . Central Engineering Consultancy Bureau (CECB) was appointed as project consultant. This project was an unsolicited proposal approved under the previous administration CECB charged. \u00a0The choice of CMC for the project was questionable from the start, \u00a0they said. Exim Bank of China told the Sri Lankan Government In 2012 that \u00a0CMC did not have the relevant experience to execute the project. \u00a0The contract was overpriced at USD \u00a0278.2m and the estimates given by CMC for both materials and manpower were highly inflated.<\/p>\n

CECB\u00a0 repeatedly found serious shortcomings in\u00a0 CMC\u2019s work. CMC\u00a0\u00a0 had used substandard materials and construction methods. Concrete was diluted beyond acceptable levels. The company had tampered with a concrete beam to be used in a bridge, even shearing off iron rods that were essential to guarantee the strength of the beam. When cracks appeared in the Wewurukannala Bridge, the contractor tried to cover them up with a cement mix. The contractor on several occasions disregarded CECB instructions to maintain acceptable standards in the construction of stone walls. However, the CECB team forced the company to rectify the faults. CMC practices and standards would seriously endanger the lives of those who will travel on that track, said\u00a0 CECB engineers.<\/p>\n

As the contractor did not use suitable methods and machinery, certain works had to be performed over and again, leading to prolonged delays. The Government should have claimed substantial compensation for these delays. Instead, the Transport Ministry extended the deadline for handing over the track, even against CECB recommendations. Chinese workers on several occasions threatened the CECB team, even prompting fears over their physical safety, the union said. This sort of thing\u00a0 gives the Chinese Government a bad name the CECB added. CMC rejected the allegations. They said \u00a0that they have constructed railway lines all over the world, they know what they are doing and they will not compromise on quality or safety.\u00a0 It is the CECB that is responsible for approving materials, methods and monitor every step of the work.<\/p>\n

Transport Ministry is now set to award another USD 15 million project to CMC to install signals at four stations on the extended line,\u00a0 a job the company has no experience to carry out, complained engineers. Tenders have not been called for this contract.\u00a0 An offer by the Railway Department\u2019s own engineers to execute the project at Rs 250m has been ignored in favour of the Chinese offer of USD 15 billion.\u00a0 Priyalal de Silva, former GM\u00a0 Railways said The colour light system at railwassy was always done by the local engineers. They ensure compatibility of new lights and do the maintnenace as well.\u00a0 It is not necessary to give this to\u00a0 China.<\/p>\n

A China – Sri Lanka Free Trade Agreement, first mooted in 2015\u00a0 will, it is hoped, be finalized by the end of 2017. Industrialists have strongly opposed this FTA. They particulalyr object to two clauses, reducing the Sri Lanka Negative list to 10% and\u00a0 phasing out the import Cess to zero within five years after implementation of the proposed FTA.<\/p>\n

Phasing out the Cess \u2018will sound the death knell for local industry\u2019, \u00a0they said. At a time where the world\u2019s most developed countries are considering to impose tariff\/tax for imports from China, it is imprudent for our country to relax safeguards for our industries. It is\u00a0 also essential to enact legislations on anti-dumping and protective measures to safeguard local industries against unfair trading practices and a surge in cheaper Chinese imports they added.<\/p>\n

Association of Laminated Flexible Packaging Manufacturers, a body of local entrepreneurs representing the packaging industry, stated in a media release, that if implemented, the proposed agreement will have an adverse impact on the domestic industrialists leading to the collapse of a large number of industries.<\/p>\n

A statement issued by the Ceylon National Chamber of Commerce (CNCI)\u00a0 opposing the China-Sri Lanka\u00a0 FTA was reproduced in full in Daily News<\/em> Business supplement of 11.8.17. Daily News<\/em> did not run a similar supplement on ECTA. The CNCI said in their statement, that it was the consensus amongst all present that they were \u2018not in agreement to this FTA at all.\u2019 Sri Lanka will face serious consequences if this FTA is signed.\u00a0 The end objective of any FTA should be the growth of Sri Lanka\u2019s economy.<\/p>\n

CNCI pointed out that Sri Lankan industries find it\u00a0 difficult to compete with countries doing mass scale production due to the\u00a0 high cost of production, high interest rates, low productivity and other factors, such as\u00a0 rupee depreciation.\u00a0 The majority of the local industrialists have funded their investments, with borrowed funds,\u00a0 using their personal assets as security.\u00a0 Their indebtedness on loans and overdrafts run into millions, depending on the size of the company. If they are not safeguarded sufficiently, it will lead to disastrous economic consequences.<\/p>\n

We understand that under Multilateral Trading Rules it is possible for small developing countries like Sri Lanka to negotiate under Enabling Clause that offer more flexibilities, said CNCI. Negotiations of FTA between China and Sri Lanka are not conducted under this clause, whereas Sri Lanka\u2019s FTAs with India and Pakistan were concluded under this clause. China too concluded its FTA with ASEAN under Enabling Clause. Aren\u2019t the Sri Lankan negotiators aware of this basic principal? Sri Lanka has also\u00a0 failed to include a time bound review clause as done in n the China- Pakistan FTA-This review clause was \u2018put to the Chinese negotiators again and again during the past negotiations,\u2019 CNCI said.<\/p>\n

Why \u00a0is China \u00a0asking for 90% trade liberalization at this early stage with an unequal comparatively small trading partner as Sri Lanka, CNCI asked. Sri Lanka has agreed to 10% negative list as requested by the Chinese, but there is no hard and fast rule that Sri Lanka should go in for a 10% negative list. The WTO has not defined substantial coverage under Article 24 of the GATT to mean 10%. It is left for the countries to adopt a comfortable percentage as befits their economic and development level. It is pity that Sri Lankan negotiators have accepted the Chinese stance at the loss of Sri Lanka\u2019s economic interest.<\/p>\n

The CNCI also\u00a0 strongly opposed the removal of the import\u00a0 Cess. The only \u2018safety net\u2019 that local industrialists have is the Cess levy, CNCI said. The Sri Lankan industrial sector is dominated by SMEs which accounts for 52% of the total GDP and is also accountable for 45% of total employment and accountable for 75% of enterprises.Removal of tariff protection such as Cess will adversely affect these SMEs, both directly and indirectly which will lead to their non-competitiveness and closing down, creating unemployment and adversely affecting the economy.<\/p>\n

Further, removal of CESS against imports will deprive the nation of valuable funding for local industries. Cess levy nurtured local industry and helped it\u00a0 to advance further after serving the local market successfully. Many local industries reached great heights due to the CESS levy.<\/p>\n

It is a common knowledge that Chinese systems are not transparent in its rules and regulations and business practices. Also, the competitiveness of Chinese goods internationally is largely due to their vast economies of scale, political and labor structure. Sri Lanka\u00a0 does not have mechanisms that could overcome dumping of inferior quality and substandard goods and unethical business practices. \u00a0<\/em>\u00a0\u00a0<\/em>Unlike in Sri Lanka in China there is no strict adherence to ILO labor conventions. This gives China a huge advantage over Sri Lankan products.<\/p>\n

The CNCI gave specific examples of the difficulties of doing trade with China. In other countries, exports of shrimp requires an antibiotic test report only for one pond in the farm but in case of China antibiotic reports have to be provided for every pond in a farm. Obtaining quarantine requirements for fruits and vegetables are also extremely cumbersome and time consuming. It was\u00a0 subject to a long approval process. In the case of textiles, apparels exporters complain of the stringent testing and specific requirements in China. These require more detailed test reports compared to other export destinations and Sri Lanka lacks sufficient facilities to undertake such testing. The Pakistan-China FTA of 2006 was more beneficial for China than Pakistan, declared CNCI.<\/p>\n","protected":false},"excerpt":{"rendered":"

\u00a0KAMALIKA PIERIS China values its relationship with Sri Lanka and takes China-Sri Lanka activities very seriously. Bandaranaike Centre for International Studies had a seminar on \u2018Contemporary China- Sri Lanka relations: current trends, future projections\u2019 in May 2017. For this half day seminar, China sent the President of the China Institute of International Studies (CIIS) and […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[104],"tags":[],"class_list":["post-69002","post","type-post","status-publish","format-standard","hentry","category-kamalika-pieris"],"_links":{"self":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts\/69002","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/comments?post=69002"}],"version-history":[{"count":0,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts\/69002\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/media?parent=69002"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/categories?post=69002"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/tags?post=69002"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}