China is recreating its Africa story in Sri Lanka. Little China enclaves are sprouting up in the Buddhist majority island nation in the Indian Ocean as President Mahinda Rajapaksa has spread the red carpet all the way from Colombo to Jaffna. Already he has ‘gifted’ projects worth US$ 6.9 billion in railways, ports, power plants and military cantonments by way of saying thanks to the ‘Comrade Capitalist’  flush with yuans and greenbacks for all the help provided in eliminating the LTTE scourge with over one billion worth arms on cash discounts, deferred payments and liberal credit.

Significantly, most of the Chinese works are located in the areas dominated by the Tamil Tiger guerrillas till they were wiped out in May last year.  These are high cost projects with interest rates above international norms, and inflated bills, which are hurting Lanka economy, according to Daily Mirror and Sunday Times, two Colombo publications.

Clashes, as witnessed in African countries, have begun in Sri Lanka between ‘imported’ semi-skilled and unskilled workers and local labourers. The entire Lanka project business is farmed out to four Chinese companies associated with relatives of senior leaders of the Communist regime.

China is the fourth largest trading partner of the island nation. Imports (to Lanka) have surged to $1.4 billion mark from a low base of 0.70 billion in 2004.  But exports are stagnating at $ 46.08 million thus tilting the trade balance heavily in favour of the new global ‘imperial’ trader on the block, as a Sri Lankan exporter remarked in Colombo on the sidelines of a business meet, while preferring to remain anonymous. ‘Ours is a quasi-police raj. We cannot afford to ruffle anyone’s feathers’, the businessman in his early fifties said, by way of elaboration for his preference.

A Special Economic Zone, a 1000-acre Tapioca farm, Hambantota port, 900 MW coal fired Norochcholai power plant, Colombo-Katunayake Expressway, Pallai-Kankasanthurai rail-line, Jaffna housing complex for army and a host of other projects make the Chinese portfolio envy of export economies in the meltdown.

Beijing is underwriting most of these ventures with liberal credit. The Axim Bank of China has agreed to provide a preferential credit facility of over $ 1 billion for roads and rail projects and construction of military housing projects in the predominantly Tamil speaking Northern Province where the Liberation Tigers of Tamil Eelam (LTTE) had held sway and conducted their bloody war for close to thirty years.

Sri Lanka’s north is separated from India’s Tamil speaking province in the south of the country by narrow Palk Straits. Ostensibly for this reason, India under Indira Gandhi, the Iron Lady, as she was known during her rein, had played the role of mid-wife at the time of LTTE’s birth in mid-seventies.

Real help to LTTE, however, came from China and Pakistan through gun running rackets and opium cartels. It continued even during the last phases of the war President Rajapaksa and his brothers successfully waged against Tamil Tiger chief Velupillai Prabhakaran. All this has been well documented. Yet, the Lanka President today is ignoring recent history. ‘Well, it is because unlike India, both countries helped him also materially and it tilted the scales in the War last year’, says a Colombo based foreign journalist.

IN IMPERIAL FOOTSTEPS

There is difference in help during war and after the war. While the war time supplies came with concessional prices or deferred payment facility, most of the Chinese projects for reconstructing the war ravaged economy are neither gratis nor liberally aided. ‘These are highly inflated commercial ventures’, the Daily Mirror reports. The outlay on a China project is sometimes twice the size of investment over similar projects undertaken by other countries. 

Here is an illustrative example.  China pegged the per kilometre cost of re-laying the rail track from Pallai to Kankasanthurai at more than four million American dollars. This is almost double the cost of similar projects being built elsewhere in the country mostly with local labourers.  In contrast, China is bringing its own labourers for building the 56- km long rail line with $ 245 million loan. This is not an exception but the norm.

China justifies ‘importing’ its own labourers. “Our workers are experienced; they are familiar with working processes; there is no language barrier”, said a Chinese manager on a rail project. He put the number of Chinese personnel on duty at various sites at around 25,000. ‘It is not a significant number. Look at our work volume’. 

 Analysts are not convinced though.  A parallel is drawn between the Chinese practice and the indentured labour system practiced European powers particularly the British in the 18th and 19th centuries.  Most Indians found today in Africa and Far East were transported between 1834 and 1920 to provide labour for the (mainly sugar) plantations, under the indenture system.

There are already fears in Sri Lanka that China is implementing the communist version of the indentured system. Many analysts aver that the imported Chinese labourers would not return home as a case would be made out on their continued relevance to a project in its implementation stage. Like it happened at the 36 MW power plant at Chunnakam in Jaffna. More than 50 Chinese personnel who were brought there did not go back. They along with their families are still living at the complex, ‘as their presence is needed to run the power plant’. 

Mirigama Special Economic Zone is a China venture dedicated to Chinese investors.  China is the sole authority to decide who will be allowed to set up their units in the zone. So far 29 Chinese manufacturers received the green signal to bring their investment, machinery and blue-collar workers. 

Another project for China made in Sri Lanka is a Tapioca Farm spread over 1000 acres. It will come up either in central or northern province depending on the final site selection.  The farm is backward integration for Chinese chip makers. Tapioca will be taken to mainland China where it will be made into chips and brought back for sale at stores in Sri Lanka. 

Chinese farmers cultivate Tapioca in Sri Lanka. Their compatriots make the chips at home. And Chinese companies laugh all the way to their bank as Lanka consumer feasts on the Chinese chips. Like in the good old days of East India Company registered in the British Isles with limited liability. 

In the entire chain, Lanka stands to gain a pittance – its land is taken on long term concessional lease; its labourers are engaged in low paid peripheral jobs; and its exchequer loses customs revenue as the tapioca export and chips import are allowed at concessional duty.

CHINA INSENSTIVE

China’s greed and insensitivity to local concerns is at full display at HambantotaPort, which serves its strategic maritime and security interests. Two companies, China Harbour Engineering Company and Sino-Hydro Corporation are pumping life at a cost of a $1 billion into the port, which Sri Lanka hopes will give a boost to its earnings from merchant navies passing through the Indian Ocean. For Chinese navy, it will be useful as a refuelling and docking station.

When completed in three phases (first phase will be ready by November 2010) it will be the biggest port in South Asia with facilities for ship-building, ship-repair and warehousing. As many as 33 vessels will be able to get berth at any given time.

It is stated that over 400 Chinese prisoners are brought to work as semi-skilled and unskilled workers at the Port site. They are being paid half the normal wages.   For them the only hope is the promise of ‘freedom’ once the work is over.  The port site is also witness to frequent labour unrest as the demands of local Sri Lankan workers for increase in lunch time and over time allowances are not accepted.

Two cantonments are coming up in Killinochi and Mullaitivu, both in Northern Sri Lanka under an agreement signed by Basil Rajapaksa, head of Presidential Task Force for reconstruction with China. About 500 acres have been acquired for the purpose.  China will also take up a housing project, costing $ 110 million, for about 60,000 families of armed services personnel in Jaffna, Kankesanthurai, Mullaitivu and Pooneryn.   Chinese Defence Ministry has offered a loan of $ 20 million loan for purchasing equipment needed for building military related installations, again in North Sri Lanka.

There is no official word on urgency of beefing up military installations in North Sri Lanka. And on the continued involvement of China in the war like preparations in the post-war period so close to the Indian shores. The war with the LTTE has ended and there is no danger of another LTTE clone appearing on the scene in the foreseeable future. 

Talk of a `sweet’ revenge against India for its initial support to the LTTE is a short sighted venture. It ignores the long term problems from increased presence of Chinese work force with their families.  And it is a refusal to read the writing on the wall when the African experience is there to see.

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