By Rohini Mohan

COLOMBO – Three Sri Lankan men arranged five types of soya sauce on the shelves of a new Chinese supermarket in Astoria Mall on R.A. De Mel Mawatha, a busy road lined with upmarket shops and popular eateries in Colombo, while Mary Song Fang jotted down the inventory in Chinese characters in her notebook.

With the help of her local translator-cum-shop manager,  Song instructed the staff to display a bottle of golden-brown light soya sauce with bags of jasmine rice in the storefront, to attract Chinese regulars and a growing number of Sri Lankan customers.

The 43-year-old woman from Guangzhou, the capital city of southern China’s Guangdong province, set off alone for Sri Lanka’s capital city 10 years ago to expand her family’s gems business. But after the COVID-19 pandemic began in 2020, followed by Sri Lanka declaring bankruptcy in 2022, she switched trades, running a hair salon before moving on to sell Chinese groceries.

“Food is always in demand, whoever (is in) government, whatever the season,” said Song, whose parents and sister joined her in Colombo in 2023, opening an Asian noodle and boba tea shop next door.

The Chinese family’s fortunes mirror Sri Lanka’s ties with China.

Sri Lanka leaned towards China during the heyday of politician-brothers Mahinda and Gotabaya Rajapaksa. Mahinda Rajapaksa served as president of Sri Lanka from 2005 to 2015, while his younger brother Gotabaya was president from 2019 until his resignation in July 2022.

The Songs came with a wave of Chinese families moving to the South Asian island nation in the last 15 years, as the Sri Lankan government under the Rajapaksas signed deals for dozens of Chinese infrastructure projects in the country.

However, Sri Lanka’s economy has taken a nose-dive since 2020 due to over-borrowing, corruption, and ill-advised policies, on top of the effects of the global pandemic. The island nation announced an unprecedented foreign debt default in 2022. A few months later, severe shortages of fuel and food sparked nationwide anti-corruption protests that ousted the Rajapaksas.

In September 2024, Sri Lankans elected 55-year-old leftist Anura Kumara Dissanayake as president. He won votes with his graft-fighting pledge and vows to fix the fragile economy. His victory was seen as a widespread rejection of the old political elite who are blamed for the country’s ongoing economic woes.

Voters wanted an end to the Rajapaksa-era white elephant projects that ballooned the country’s debt, mainly funded with Chinese money, like the US$ 209 million airport in the Rajapaksa stronghold of Hambantota on the southern coast about four hours from Colombo. The Mattala Rajapaksa International Airport, which has been dubbed the “world’s quietest airport” due to its low foot count, welcomes fewer than 10 passengers a day.

Wariness over China

The root cause of Sri Lanka’s economic problem is its debt-fuelled growth strategy.

In 2022 when Sri Lanka declared bankruptcy, it had a total outstanding debt of US$ 51 billion.

The island nation’s heaviest interest burden came from issuing international sovereign bonds to private creditors at high interest rates to invest in ports, energy and transportation projects. In 2021, these bonds accounted for 70% of the government’s annual interest payments.

China holds the biggest chunk of Sri Lanka’s external bilateral debt (19.6%), followed by Japan (9%) and India (2%).

Critics accused Sri Lanka of falling into a “Chinese debt trap”. Sri Lankan protesters also blamed Chinese loans for propping up now-languishing projects sanctioned by the Rajapaksas.

As Sri Lanka recovers slowly from its economic miasma, the China question haunts the new president.

Dissanayake said during his pre-election campaigns that he did not want the country “to be sandwiched, especially between (geopolitical rivals) China and India”, adding that he would “prioritize Sri Lanka’s needs”.

His Marxist party was historically pro-China in ideology, but since the 1970s has developed a leftist-nationalist character and, in recent years, turned more centrist in a bid to form the next government.

Dr Ganeshan Wignaraja, a visiting fellow at the London-based Overseas Development Institute think-tank, expects Dissanayake to be “balanced and practical” with regard to China, as he must revive the economy, expand manufacturing to create jobs, and resuscitate exports.

“Large inflows of commercial loans and private foreign investment from China are unlikely until Sri Lanka regains its credit rating and ability to borrow again,” he added.

Former Sri Lankan central bank deputy governor W.A. Wijewardena said: “Sri Lanka doesn’t have a choice today to align itself with only one or two world powers.” He said, “It cannot antagonise either China or India. If investment or loan money is coming from either India or China, it cannot say no.”

Indeed, India and China are expected to continue to compete for influence over Sri Lanka, say analysts.

“Dissanayake’s focus on national sovereignty and his emphasis on reducing Sri Lanka’s dependency on any single global power suggest a possible recalibration in foreign policy, where Sri Lanka might seek to diversify its partnerships. This could involve renegotiating the terms of Chinese infrastructure investments while simultaneously seeking deeper economic ties with India, Japan and Western countries,” said researchers Diotima Chattoraj and Roshni Kapur at the NUS Institute of South Asian Studies in an Oct 25 report.

“India’s geopolitical and diplomatic influence” especially on minority issues in Sri Lanka, development in Tamil-dominated areas in the north and east and maritime security issues with China “may prompt Dissanayake to adopt a more assertive stance in protecting Sri Lankan interests”, but as the nearest neighbour, he will need India’s cooperation to improve tourism, manufacturing and information technology, they wrote in the report.

Meanwhile, “China will continue to woo Sri Lanka to further its interests in the Indian Ocean”, but having won the election with promises of accountability and transparency, Dissanayake will have to tread carefully with a country that has vast resources but is also known to have “exploited systemic loopholes, promoting corruption and opaque loans”, they added.

But political analyst Kusal Perera said the government is unlikely to touch on “any major economic or political issues till the (Nov 14) parliamentary election is over”.

 ‘Get better together’ 

With the ouster of the pro-China Rajapaksas, many upcoming Chinese projects that were part of the Belt and Road Initiative to build global infrastructure were suspended, except for the flagship Port City Colombo special economic zone with an estimated investment of US$20 billion.

During the Rajapaksa era, many businesses catering to the Chinese community sprung up, such as restaurants, supermarkets, hair salons and real estate services.

Currently, there are a few thousand Chinese families living in Sri Lanka, around 80% of them in Colombo. Officials in the Sri Lankan government did not respond to queries for official numbers.

As economic opportunities fizzled out along with the economy over the past five years, many Chinese nationals left Sri Lanka, but some like the Songs have remained not only for business reasons but also because they have set down roots in their adopted home.

The Chinese community in Sri Lanka is all too aware of the geopolitical undercurrents and by and large steers clear of commenting on politics publicly. Many requested anonymity in order to speak freely on a sensitive issue.

Those who migrated to Sri Lanka much earlier, in the 1930s, have integrated well into the larger society – marrying locals, speaking fluent Sinhala, and running a myriad of businesses ranging from textile shops to dental clinics.

But the more recent migrants “keep a low profile”, said a member of a Chinese cultural association.

“We are more comfortable with our own. Most of us speak only Mandarin and not Sinhala or Tamil. Although locals are nothing but polite to us, we also sense from the media reports that there is some public blame on China as a major creditor for the economic crisis,” he added.

An accountant from Shanghai in his mid-30s who moved to Sri Lanka six years ago to work for a Chinese construction firm said: “The Sri Lankan perception of big, bad China doesn’t feel great. But we don’t feel unsafe here.”

Just a short drive from Astoria Mall, over on Alfred Place Avenue, in a bustling neighbourhood in Colombo, is a huge Asian supermarket called China Way with banners screaming discounts in large font.

Owner Judy Cai Jing, who is in her 40s, has lived in Colombo for 24 years.

While Cai says she has more Sri Lankan than Chinese friends, she “tends to spend more time with family than friends”.

Eateries, like We Ai Family restaurant on the first floor of Astoria Mall, are filled with more Sri Lankans than Chinese at lunchtime these days.

“They serve the best dumplings here,” said Dilani Keerthisena, a Sri Lankan interior designer, deftly using chopsticks to place the pork chilli oil dumplings on her boyfriend’s plate.

We Ai Family founder Annie Cai Xin Xin, 43, moved from Yiwu City in east China to Colombo in 2017 after quitting an investment banking career and getting divorced.

“I wanted to change my life. I tried New Zealand and Vietnam, but I found that Sri Lankans are so smiley. I loved it. I came as a tourist and returned for business,” said Cai, who has since opened an adjoining bakery and learnt to bake Chinese-style cakes, mochi and bread for Chinese embassy functions.

Today, Colombo residents craving Chinese food head to Astoria Mall for the We Ai Family restaurant, the Song family’s noodle shop and the Emperor’s Den fine-dining restaurant, all of which opened only two years ago.

The mixed-use development’s luxury condominium above the eateries is predominantly occupied by Chinese families, with a few Koreans and Japanese. But Astoria is even more Chinese than it appears.

Built by China State Construction Engineering Corporation, Astoria is owned by the Aviation Industry Corporation of China (AVIC), a state-owned conglomerate involved in several construction projects in Sri Lanka, including the Katana drinking water supply project.

AVIC’s Katana project to lay water pipelines to 45 village divisions and an industrial park near the Colombo airport was funded through a US$ 400 million loan to the Sri Lankan government from the China Development Bank that is repayable by 2033.

Undeterred by political undercurrents, Haru Ye, 35, is enjoying the social media buzz his nine-month-old Lanzhou beef noodle restaurant on Charles Drive in the city centre is generating. The goji berry farmer’s son from Qinghai province in north-western China moved to Colombo in January 2024 with his wife, toddler, brother and sister-in-law to fulfil his overseas aspirations.

Using a translation app, Ye said 70% of its customers are Chinese, but local Muslims also enjoy the food, which is halal, or in keeping with Muslim dietary requirements.

“I am in Sri Lanka because I wanted to get out there and see the world and experience doing business abroad,” said Ye, whose parents are raising his older son in Qinghai province.

As Sri Lanka recovers from its economic slump, an optimistic Ye said: “We will get more customers. We will get better together.”

-straitstimes.com