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Asian Tribune is published by World Institute For Asian Studies|Powered by WIAS Vol. 12 No. 2556

What the Chinese Want?: A Prelude to Understanding China’s growing relations with Sri Lanka

By Bandu de Silva

The question what the Chinese want came to my mind when I entered China 58 years ago. That was when I was posted to Sri Lanka’s pioneering diplomatic mission in Beijing 1957 under Wilmot A Perera. I continued to ask that question for near four years I spent there.

My assignment in the Embassy was administration and also negotiating annual rice contracts under the bilateral agreements of 1952 and 1957 as well as cultural/media relations. These functions gave me access to a wide range of varied contacts though under normal circumstances such contacts were not easy to establish in China at that time. When the Chinese officials understood that I was sympathetic, the opportunity for observation became more open. My official reports sent from there were filled with answers to this major question.

These boiled down to the three basic needs of human society which we learned in our school days, namely, food, clothing and shelter. These had to be elaborated, however, for purposes of my reports explaining the nomenclatures and popular slogans used by the Chinese in their usual traditional way and citing examples of how the country was meeting these challenges. After the long civil war and earlier, centuries of foreign exploitation, at times subjected to rapacity, the Chinese needed the basic requirements in abundance. Four years later, when I left China the answers remained the same, the problems of food, clothing and shelter, having worsened despite the great hardships the Chinese went through for four one full post-revolution decade, and the great sacrifices they made, had not rewarded under Mao dze –Dong’s rule as Party Chairman.

All Mao’s innovations during that decade carried under the slogan of “Great Leap Forward” and finally leading to the establishment of Communes, which shocked even the East-bloc Communists, could not lead China to the Communist Utopia that he dreamed of. The final Cultural Revolution signified the total failure by trying to deviate attention in another direction.

Despite the changes which China has undergone in the decades intervening the 1949 Revolution, I find that in the final analysis, the needs of the Chinese remain the same as in any other country, but expressed in different terminology.

The present article is an attempt to look at the same question “What Chinese Want?” raised by a modern day head of a Services Company which has established close relations with China since 1987 which employs nearly 13,000 Chinese in its staff. Tom Doctoroff, the CEO of the Company Walter Thompson who writes with nine year long association with China with his Company’s business in China grown to be larger than that of all other international marketing services groups, combined, in his new book entitled “What Chinese Want?” ,2013, (Palgrave Macmillan, USA), conceives that what the Chinese want today is to be “more than a volume producer of low-priced generic goods but to acquire more services and be able to produce internationally recognized brand names of luxury goods…. They are now producing for the local market but are ambitious and diligent and will compete in developed markets”. That is for the internal market with some exports to back the industry.

I found during my three months stay in Australia very recently, that practically every item sold in Australian quality shops is a product of Chinese industry. These include even very high-priced shoes with brand names. The Australian products I found were meat and other food products and wines and beverages. Even fruits, I was not too sure as these were Winter and early Spring months when local fruits had reached the market.

The global Scene: Chinese investments

Globally speaking, Doctor-off sees the Chinese looking for investments in foreign countries. The most recent AFP report says China’s investment in US doubled in US to US$ 14 billion and Chines firms accounted for 70,000 full time jobs in the US.(Ceylon Today, FT, 8 Jan, 2014). That is despite the recession facing the US economy. Perhaps, the recession is seen by the Chinese as opportunity to acquire investments. In respect of India, another up-coming economic giant in Asia, when the Indian Prime Minister Manmohan Singh signed eight agreements with China during his visit to Beijing October last year, seven of them pertained to economic affairs and one only on easing relations over border affairs.(Border Defence Cooperation Agreement –BDEA). China’s growing international role as an internationally highly-rated investor, though generally escaped attention, India recognizing China’s potential, the Indian Prime Minister in his speech made in the Great Hall of Beijing invited Chinese investment in her US $ 3 Ttrillion investment plan in infrastructure development. It was this inevitable partnership between China and India that made Doctoroff to identify China- India growing relations as a “Match made in Heaven”.

It was Deng Xiao-Ping’s economic revolution which put China on a path of recovery from total collapse and paved the way for what one calls modernization. Though Maoism was ditched, as Jonathan Fenby observed (The Penguin History of Modern China, Revised edition, 2013, p.582), the Four Cardinal Principles Mao had put in place as the guiding light for the future were present under the new dispensation. This curious relic from the past, which Fenby calls an ‘uninspiring mix’ which is at odds with new economic reforms, meant that when challenges came, the only answer could be the resort to force, as so often in Chinese history.

Growing Economic Giant vs Growing military power

As Doctoroff observes, a recent list has recorded the presence of 270 billionaires In China, not counting those who do not wish to be in limelight. This growing and already grown economic miracle which Doctoroff sees from his close association in a marketing field is not what others see in their chanceries. They see China’s growing military power, with a defence budget approaching US$ 80 billion, her nuclear capabilities, missile development which can now reach ships 900 miles away, space technology, her expanding blue water capacity, addition to aircraft career capacity, though so far they have only a recently fitted old Soviet ship used for training, much behind India in that respect, as threatening their vested interest. That is to ignore the more important development in China as a country approaching the status of the largest economic power in terms of GDP growth by the year 2019. It is already the largest oil consuming country in the world, and the second-largest economy, “soaring from industry neophyte in the mid-1990s to manufacturing powerhouse today.” It is today the largest auto market, an unbelievable situation from the single taxi, a pre WWII vintage Czech Tetra run on foul-smelling petrol, which ran errands in Beijing from 1957 to 1960 when I was there. That was so for more years I suppose.

As Doctoroff asks, naturally, with 1.3 billion population, couldn’t China herself to be expected to be heard in global politics? Already, that is happening with her growing share in the World Trade Organisation (WTO), International Monetary Fund (IMF) and G20. In the IMF, though China along with India have no voting power yet, she holds an increasing share to the relief of original members. The Shanghai Cooperation which is attracting even the interests of the US is China’s own initiative.

China’s military budget, which as Doctoroff observes, is only a fraction (one eighth) of that of the US’s, China is seen expanding when the rest of Europe is cutting down. He sees that America will continue to underpin geopolitical clout, even as the country’s status as an 800 pound gorilla diminishes in a multipolar world. He also thinks that American values –as opposed to political system – will have appeal for generations. he also thinks China will not invade other countries though she may seem militarily provocative over outlandish territorial claims in the South Sea, and vilification of Hilary Clinton when she had the temerity to challenge them, confrontation on the high seas with Japan and Philippines, and having installations of over 1000 ballistic weapons aimed at Taiwan.

This veteran CEO argues that China and the West have inherently different strengths and weaknesses and –if America accepts that it will no longer be the only tiger on the mountain – we can happily coexist. China will always need partners, and so will we, he says. He does not see the Chinese economy and the Chinese people as threat to eclipse Western counterparts because he thinks that as the nation races towards super power status, it will remain quintessentially Chinese –ambitious yet cautious at the core….China’s social structure and cosmological orientation yield strengths and weaknesses that compliment rather than debase our own Western worldview.”

China in Sri Lanka

Two countries where China’s growing presence in Sri Lanka are being discussed are neighboring India and the US. That perspective for US arises because despite all remonstrations to the contrary, she has not totally lost interest in the island as a strategically important country. Even if earlier priorities may have changed for the US, still the consideration of the island’s proximity to oil shipping routes in the Indian Ocean predominates her thinking.

For India, it is a different question. India has been obsessed with two trends of thoughts. The one which did not lose its relevance was India’s interest to inherit Britain’s earlier imperial role as the regional power in the Indian Ocean. That may be more of a military concept which was earlier kept under close wrap but has since emerged out of hibernation into the forefront of Indian policy making, sending the country’s thoughts on Non-Alignment and Indian Ocean Peace Zone into the back-burner. The other is India’s own problem of seeing China in adversarial terms since the eruption of border problems with China which led to a border war in which India was badly disadvantaged. Consequently, it has become customary in Indian circles as much as in some Sri Lankan circles influenced by indo- US strategic regimes, to look at China’s growing role in Sri Lanka very much from a security point of view.

This is despite India’s political and economic relations with China having taken a turn to the better in the new millennium. This new trend of improving India’s relations with China was demonstrated by the five day official visit of the Chinese Premier Zia Ronge in January 2002 which was followed by President Hu Jin Tao’s four day official visit to New Delhi in November 2006. These visits not only eased the tension that had marked relations between the two countries since the latter half of 1950s and the final border war but they were a pointer that there was a change of heart in China towards relations with India. The economically resurgent China was now looking at India differently, as much as other countries, in terms of prospective complementary economic partnership. India too began to respond positively and in the resultant mutual understanding that the two countries are two rising economic powers in the region and have much to benefit from mutual cooperation.

This became manifest in the eight agreements which were signed during Premier Manmohan Singh’s official visit to Beijing in October 2013. These were signed against the backdrop of realization of the economic growth achieved by the two countries, China in the field of manufacture and India in the service sector. Consequently, it was seen that there was great potential for the two countries to benefit from each other’s economy in a complementary partnership. Seven of the agreements signed in 2013 pertained to cooperation in mutually beneficial fields. One agreement alone as observed initially, pertained to Border Defence Cooperation (BDCA).It was significant that India agreed to the Actual Line of Control in this agreement which sent the old dispute over the border to the backburner. What was emphasised during Indian Prime Minister’s visit was that a stable global environment and a peaceful periphery were required for the two countries to promote the other economic related objectives. In any case, India was the looser on the border issue which she inherited from the British Raj. Strategically she was disadvantageously placed in relation to China which had the advantage of geography in her favour. Both countries could not be found carrying the old border-war baggage for ever.

China’s growing international role as an internationally highly-rated investor generally escapes attention in this assessment. India herself invited Chinese investment in her US $ 3 Trillion investment plan in infrastructure development.

Number One Infrastructure- builder and Investor

China has become the number one infrastructure- builder and investor in Sri Lanka during the last half decade. In foreign aid terms, China has now outstripped Japan which held that honor earlier on account of Japan now facing slow growth rate in her economy while the Chinese economy is rising. China’s investments in Sri Lanka fall into place against the above mentioned perspective of her global performance. These are but only a fraction of China’s global engagement in infrastructural building and investment but in Sri Lanka’s own context as a small country, and with India’s view of seeing China’s intrusion here as a big challenge to her in what she considers a legitimate area of her influence next door, the Chinese investments here may be seen as very ambitious and exceeding proportions. That sort of ambitious nature in Chinese business deals was something that Doctoroff recognised as being present in all Chinese global engagements, and consequently, can be considered not unique to Sri Lanka’ situation.

Looking at the global context, already, over 800,000 Chinese are living and working in Africa alone working on projects associated with infrastructure development and investment. There are others further afield in the Mediterranean central Europe. As Doctoroff points, Beijing is also on a global acquisition spree including Swedish car companies, Greek infrastructure, an oil firm in Canada, a mining company with assets in Central Africa –all snapped by China in the past few years. A Chinese businessman and poet, Huang Nubo, Doctoroff claims, has offered $ 9 million for 300 sq kilometers of wilderness in Iceland which is 0.3 per cent of the country, to build a tourist facility (a $ 100 million hotel) but here some suspect ulterior motives

Indian View of China’s relations with Sri Lanka

India looking at Sri Lanka’s growing relations ’s with China commenced only after the eruption of the border war with China. Premier Jawaharlal Nehru’s remonstration against Prime Minister Kotalawale in Bandung in 1956 for upsetting the atmosphere created by China’s willingness to join other Asian nations in a spirit of co-operation giving up the earlier much suspected interference in Asia, pointed the extent Indo-Chinese relations were then moving. Earlier, Prime Minister Zhou –en Lai undertook a round of diplomatic visits to China’s neighboring states like Myanmar and India during which India and China signed a pact based on Pancassela, the five principles on which Chinese-Indian relations were to be governed. That included peaceful settlement of disputes. Later ramifications in bi-lateral relations which began to manifest first after the eruption of the Tibetan issue over which India tried to intercede on behalf of Nepali businessmen claiming they were Indian citizens and more so over what India considered as a buffer state coming under strict control of Beijng, and India finding that the Chinese had built a road link with Ladak passing over territory which India had considered its own, which finally/ sparked off the border war.

The events that followed led to the hardening of the situation on both sides, coming down to people’s level mobilizing popular sentiments against each other. It had some effects on both countries. In China, it helped to deviate attention from non-performance in the economic field under the new economic policies while in India it helped to create a new feeling of nationalism and suppress growing centrifugal tendencies at state level.

In conclusion

China entering into relationship with Sri Lanka is not new. It goes back to early 1950s when the two countries signed the first Trade and Payments Agreement of 1952. In recent times, China made great strides during the latter part of the Eelam war when Sri Lanka looked to her for military hardware. These were followed by Chinese participation in a number of infrastructure building projects like Norachaolai coal power project, the Hambantota port project, Mattala International Airport project, Colombo-Katunayake Highway project, construction of a section of the northern railway, the A 9 road development project, and the reclamation of the sea in front of Galle Face Green and building infrastructure on that property, to mention some. Other investment projects envisaged include the seven star Shangri-La Hotel Project at Galle Face which is Chinese investment.

Considered against Doctoroff’s assessment of Chinese investment overseas, then China’s participation in infrastructural projects in Sri Lanka as well as investment projects need not be looked at as security related ones.

Despite these realities of improving relations between China and India, yet geo-politics being what they are, it is difficult to think that the alternative perspective of security considerations will altogether disappear from Indian mind, particularly in its security establishment.

Besides, India’s growing security partnership with the US is keeping the security aspect alive. India’s increasing partnership in the Indian Ocean security arrangements especially in guarding the Malay Strait and more recently over the piratical activities in the East African coastal areas point to Indo-US collaboration in the security measures in the Indian Ocean area. China’s entry to the Blue Waters even to safeguard her shipping interests off the African coast came to be viewed suspiciously.

Within Sri Lanka, sections of the media and pro-Indo-US lobbies have been active in presenting the gloomy side of the picture of increasing Chinese engagements in the island by placing emphasis on such slogan like the ‘string of pearls’ harbours China has developed from Myanmar to Bangladesh, Sri Lanka and Pakistan and others as any directed as a threat to India’s security.

The writer who was Sri Lanka’s senior Ambassador in Europe is the only remaining member of the Sri Lanka’s first diplomatic team sent to China.

- Asian Tribune -

What the Chinese Want?:  A Prelude to Understanding China’s growing relations with Sri Lanka
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