Unveiling Sri Lanka’s agency: empowering infrastructural transformation in China-Sri Lanka relations

ABSTRACT

Sri Lanka’s relations with China have been under wide discussion since Beijing’s rapid engagement with the island nation in early 2000s. Recent studies of this bilateral relationship often explore the evolution of ties with surrounding economic and trade relations and provide economic and strategic explanations. This paper views China-Sri Lanka bilateral relations through the thematic lens of infrastructure finance in four cases of infrastructure investment: ports, energy, transport, and water and sanitation. It explores Sri Lanka’s agency vis-à-vis China, and the extent and forms of this factor in planning, negotiating and implementing infrastructure, and suggests that the agency exerted is interrelated and dependent upon specific economic, political, bureaucratic and international contexts.

KEYWORDS:

• China’s infrastructure investment
• political elite agency
• infrastructure

1. Introduction

Among the emergent actors engaged in overseas financing of infrastructure, China is identified as preeminent.¹ A growing body of literature has evaluated Beijing’s emerging role as an infrastructure financier. Most of this has evaluated China’s role from the donor perspective, exploring the motives, interests, politics and economics involved in decision-making regarding infrastructure investment in the global south. Over the years, China’s role as a major infrastructure financier has grown significantly in terms of assessing resources and securing infrastructure deals. In covering these changes the literature has focused on the elite-centric nature of China’s development cooperation and decision-making.

The existing literature on China’s role in infrastructure financing has mostly focused on the donors’ perspective. However, a growing body of literature has started examining the agency of small states in negotiating and implementing infrastructure projects with external actors. The present paper is situated within this growing body of literature and explores different forms of Sri Lanka’s agency in the context of Chinese infrastructure financing.

Sri Lanka’s relations with China have been the subject of intense international discussion since China’s rapid engagement with the island nation in the early 2000s. Despite having historical relations, Beijing was not a major trade partner, investment partner or creditor for Sri Lanka until after 2005. China’s growing engagement with Colombo in funding and constructing much-needed infrastructure during the post-conflict decade (2009–2019) has transformed the bilateral relationship between the two countries.

This paper views China-Sri Lanka bilateral relations through the thematic lens of infrastructure financing, concentrating on four cases of infrastructure investment: ports, energy, transport, and water and sanitation. It explores the extent and forms of Sri Lanka’s agency and suggests that the agency exerted is interrelated and contingent upon specific economic, political, bureaucratic and international contexts.

The rationale for studying Sri Lanka’s case through the infrastructure lens is many fold. First, even though Sri Lanka’s relations with China have been one of the most discussed topics in the recent international relations literature, the discourse is limited to the evolution of ties surrounding economic and trade relations. The limited literature on China’s infrastructure financing in Sri Lanka focuses on a few case studies such as the investment in Hambantota Port, the Colombo Port City project, and the new international Airport. They argue that Sri Lanka’s asymmetric power relationship with China has limited Colombo’s ability to negotiate in its favor. As a result, it is said that Sri Lanka is engulfed in a “debt trap.” The literature suggests that the relationship is predatory² and that Colombo has no control over its dealing with the Asian superpower.

However, an alternative narrative has emerged proving that the relationship between China and Sri Lanka is more layered and diverse than such narratives suggest, and that Sri Lanka has been able to exercise agency and intent in its dealings with China.³ To examine this situation this paper uses a qualitative case analysis and relies on semi-structured interviews conducted with bureaucrats and experts to determine the role played by political elites and bureaucrats in exercising agency. It also uses government reports, publicly available scholarly literature, and newspaper articles on China-financed transport, ports, energy, and water infrastructure projects to support this analysis.

2. Explaining small state agency vis-à-vis China

The concept of agency is understood as being both an interconnection and a constituent of structures where individuals and structures cannot act without accepting the influence and involvement from one another.⁴ This understanding of agency also applies to state actors, meaning that even states cannot be seen as separate entities that act independently of their broader social and structural contexts. Thus, state actors and institutions are deeply embedded in and interconnected with the larger structural frameworks and relationships at a regional or global level, which leads to the interdependency between state actors and the broader structures in which they operate.

Small state agency is defined as the state’s ability to shape interactions with external entities in ways that protect and promote its own interests and goals despite the asymmetry that might be observed in their power relationships.⁵ It is understood through the prism that it is not the states that act, but a specific set of politicians and state officials located in specific parts of the state system that do so.⁶ In this sense, political elites and bureaucratic officials in Sri Lanka are identified as key actors who exert agency vis-à-vis China when delivering infrastructure projects. Political elites play a pivotal role in defining and mediating a state’s interests vis-à-vis external actors, especially at an early stage.⁷

In general, Presidents, Prime Ministers and relevant top officials are the ones who set the political agenda in the infrastructure sector.⁸ For political elites, delivering infrastructure is a key means of gaining electoral support, consolidating political power, and achieving domestic political ambitions and political survival.⁹ They instrumentalize foreign funding and foreign-sponsored projects to demonstrate performance legitimacy and maintain this legitimacy through patronage.¹⁰ In some instances, political elites use infrastructure financing as a national integration tool and assert self-reliance and sovereignty vis-à-vis regional hegemons.¹¹ For this purpose, political elites use the most easily available option, China. Beijing is understood as a preferred option for its availability to provide rapidly dispensable, cheap, and condition-free loans and capable services.¹²

As seen in multiple cases in the global south, Cabinet Ministers and top officials are the ones who negotiate with Chinese counterparts and express their interest in seeking financial assistance for the development of infrastructure.¹³ Rulers in Africa, in particular, have been proven to play an active role in negotiating to extract the best deal by triangulating Chinese and Western offers.¹⁴

The role of bureaucrats in exercising agency is seen the control they have over the process and outcomes of negotiations with the donor.¹⁵ They use existing laws, standards, norms and procedures, and review calls for tenders, monitor execution and implementation of the projects. They exercise agency by applying procedural standards and bureaucratic norms. However, the extent to which the bureaucrats can exercise agency is determined by the political context and the influence of the political elites they report to.

The geopolitical competition between China and other global and regional powers has made a small state’s ability to negotiate easier. As a result, the small states can exert agency in deciding whether to accept aid from specific sources at a given time.¹⁶ Similarly, as it is seen in the case of Djibouti, a state’s geographical positioning and geopolitical status in the international system play a vital role in its ability to exercise agency.¹⁷

Overall, the extent and forms of state agencies exerted in infrastructure financing are closely interrelated with the specific institutional, economic, political, and bureaucratic contexts in which state actors operate. While external actors may have significant influence, small states still have some agency in deciding how to engage with and utilize infrastructure projects to achieve their domestic political goals.

3. China’s infrastructure financing in Sri Lanka

Sri Lanka’s experience with Chinese infrastructure investment dates back to 1973 with its financing of the iconic Bandaranaike Memorial International Conference Hall (BMICH) that emulated the design of the Great Hall of the People in Beijing.¹⁸ The revival of Chinese involvement in Sri Lanka’s infrastructure began in the early 2000s with a grant-based model for infrastructure-related investments. The noteworthy infrastructure constructed through this method include the Nelum Pokuna Performing Arts Theatre, a 9-story new wing at the Lady Ridgeway hospital, the renovation of the Supreme Court Complex in Colombo, and BMICH.

Following President Mahinda Rajapaksa’s infrastructure development drive post the end of the civil war in Sri Lanka in 2009, grant-based Chinese infrastructure investment was replaced and upgraded to a commercial model that utilized interest-bearing loans and infrastructure-related foreign direct investment (FDI). Multiple mega-projects in the transport, energy, telecommunication and ports sectors, including the coal-fired Nicholai power station in 2006, the Hambantota port in 2007, the Mattala International Airport in 2010, the Colombo International Container Terminal (CICT) at the Colombo port in 2011, and the Lotus Tower in 2012 were financed through this.

According to a Chatham House study, the cumulative value of Chinese investment in infrastructure in Sri Lanka amounted to US$12.1 billion between 2006 and 2019, or the equivalent of 14% of the 2018 GDP. And it had increased to about US$ 13 billion as of August 2020. Even so, this as a share of GDP is less than the figures for Pakistan and Laos PDR.¹⁹ Interestingly, there has been no significant increase in the number of investments made prior to the BRI or after. In 2014, the projects that could come under the BRI umbrella began with the Colombo Port City development project, followed by road and expressway projects and water and sanitation projects. The rest of the investments were made in existing projects, such as the revised Hambantota port deal in 2017.

Apart from the public investment from China’s state-owned agencies, there has been private investment, largely from Hong Kong, in the areas of luxury housing, tourism, real estate and telecommunications. As of 2015, Chinese private investments in Sri Lanka had reached US$338 million, or 35% of Sri Lanka’s total FDI.²⁰

Thus, there has been a significant increase in investments coming from China to Sri Lanka since 2011.²¹ China has emerged as a leading source of Official Development Assistance (ODA) and FDI in the island nation. ODA, which consists of loans and grants, had reached 19.6% of Sri Lanka’s public external debt by the end of 2022. This debt stock included the debt recorded in Central bank and the state-owned enterprises mentioned earlier.²²

This development also transformed the bilateral relations between the two countries. China not only became one of the key development partners, it also became the second largest trade partner of the island nation. Its cumulative financing also made China the largest bilateral creditor as of 2022. It is to be noted that not all projects discussed in this paper come under BRI umbrella. Moreover, there has been only a modest rise in China’s investment to Sri Lanka from pre-BRI period to BRI period. However, the relationship between the two countries have grown by leap and bounds due to this engagement.

To understand the impact of this investment financing, the present study looks into four sectors where China’s infrastructure financing has been critical for Sri Lanka, to explore Beijing’s pattern in infrastructure financing and Sri Lanka’s response.

3.1. Energy infrastructure

Energy infrastructure is one of the first sectors China got involved in infrastructure funding and implementation. In 2001, the Sri Lankan government obtained a loan of US$72 million from the China Exim Bank to build the Muthurajawela oil tank farm. This was a mixed credit loan with a maturity of 20 years and a grace period of five years. It was linked to the US$3.6 million grant received for the same project in 2000.²³ The project was implemented by China Huanqiu Contracting & Engineering Corporation (HQC), a construction subsidiary of the China National Petroleum Corporation specializing in constructing refineries and chemical fertilizer plants and mining plants and was completed in 2004. The outcome improved Sri Lanka’s storage capacity for finished petroleum products by 250,000 tonnes.

The most noteworthy high-profile investment in the energy sector is the Norochcholai Coal Power Plant. A loan was obtained in 2005, and construction began in 2006. The project was co-financed by three EXIM Bank China loans amounting to $1.4 billion, with the Sri Lankan government financing the rest. The China Machinery Engineering Corporation (CMEC) began construction in 2007 and built it in three phases – each with a 300-megawatt capacity – over a seven-year period. The loan consisted of multiple loans – preferential buyer’s credits and buyer’s credits. The outcome managed to solve the electricity shortage expected in 2011. The Norochcholai power station became the largest power station in the country, contributing approximately 33% of total Sri Lankan power generation.²⁴

This coal power plant has significantly contributed to low-cost power generation in the country.²⁵ It has the ability to provide consistent and reliable power supply, unlike solar or wind power, and has reduced household electricity bills by 25%.²⁶ It is commended for being able to contribute close to 50% of daily power generation.²⁷ Between 2015 and 2021, the Norochcholai power station contributed 34–37% of Sri Lanka’s net energy requirements. While it is designed with an overall availability factor of 86.78% the power plant achieved an availability factor of 77% between 2011 and 2022. The power plant has generated electricity at its maximum capacity 62–81% of the time between 2015–2022. In 2021, it recorded the lowest cost of power generation among all the CEB-owned power generation sources.²⁸

Following this, China has been involved in several other energy infrastructure projects in Sri Lanka – power sector projects in the Eastern, Northern and Uva provinces, hydropower projects, and tank farm and bunkering facilities in the Hambantota port.²⁹ Most of these projects have been financed with commercial loans at an interest rate of around 3.2% including 6-month LIBROR.³⁰ In addition, a Chinese state-owned enterprise has implemented and supplied equipment and material for the said projects each time.

China’s involvement from financing to implementation has attracted criticism and as a result, China-financed energy projects have been plagued with controversies. Some criticisms were leveled at the construction companies that were implementing the projects. Others involved comments on high cost, unreliability, and impact on environmental sustainability. In one controversy, for instance, CMEC has been surrounded by speculations of corruption in relation to an investment that it made to secure the deal.³⁰ Similarly, the China National Complete Plant Import & Export Corporation (COMPLANT), the implementation agency for power projects in the Northern province, has been accused of not providing the agreed material for a rural electrification project in the Northern province.³¹

The Norochcholai coal power plant project in particular has been criticized for poor environmental sustainability and unreliability. Since it started operation, the plant has had several breakdowns. In July 2012, it ceased operation due to a leak in one of the tubes carrying water between boilers, while In August a tripped powerline caused shut down. In 2013, the generation capacity of the power station exceeded its designed levels of 300 MW on 29 January 2013, causing a complete shutdown, and between December 2011 and December 2013 there were more than 20 breakdowns. As a result CMEC was accused of poor quality, negligence and sabotage, causing massive financial loss.³² However, CMEC rejected the allegations noting that the power breakdown was a result of over-usage of the plant.³³

However, emissions from the 900 MW coal power plant in the Kalpitiya peninsula have been revealed to be above permissible standards, possibly due to frequent breakdowns, intermittent operations, and the unexpected storage of fly-ash in open pits. The power plant also gives rise to a large amount of solid waste, heat waste and water pollution due to the release of heated water. This will have long term environmental impacts.³⁴ Finally, during the Sri Lankan economic crisis in 2022, which saw hours-long power cuts, criticisms of the power plant were resumed. Sri Lanka does not produce coal, so it has been importing coal to operate the power plant. Hence, it too became an unnecessarily costly affair.³⁵

3.2. Roads and expressways

China’s largest investment in Sri Lanka since 2009 has been in the transport sector. Of the roads and expressways constructed, China has been involved in over 60% of the length of constructed expressways.³⁶ Several road and expressway projects have benefited from their investment (Table 1).

Table 1. Roads and expressways built with loans from China.

	Road and Expressway Project	Approximate length in KM	Partner	Value (US$ Million)	Status
1.	Southern Expressway (Pinnaduwa to Galle)	31	China Exim Bank	138	Completed
1a.	Beliatta – Wetiya	26	China Exim Bank	360
1b.	Matara to Beliatta	30	China Exim Bank	683	Completed
1c.	Mattala to Hambantota	25	China Exim Bank	412	Completed
2.	Colombo Outer-Circular Highway (Kadawatha-Kerawalapitiya)	9.32	China Exim Bank	494	Completed
3.	Central Expressway (Kadawatha to Meerigama)	35.59	China Exim Bank	989	Under construction
4.	Colombo-Katunayake Expresway	25.8	China Exim Bank	248.2	Completed
5.	Northen Road Rehabilitation	399	China Exim Bank	424	Completed
6.	Rehabilitation of Priority Projects 3 – Phase I	270	China Development Bank	300	Completed
6a.	Rehabilitation of Priority Projects 3 – Phase II	129	China Development Bank	100	Completed
7.	Rehabilitation of priority roads projects 2	581	China Development Bank	500	Completed
8.	Rehabilitation of priority roads projects 1		China Development Bank	152.8	Completed

Source: Department of External Resources.

Initially, Chinese loans in constructing Sri Lanka’s expressways supplemented start-up loans provided by Asian Development Bank (ADB) and the Japan Bank for International Cooperation in the early 2000s in constructing the Southern Expressway.³⁷ Since then a mix of concessional loans, buyer credit loans and preferential buyer’s credit loans with an interest of 2–2.8% have been provided for road and expressways. A few grants were provided between 2005 and 2011 for small road infrastructure projects.³⁸ Multiple Chinese construction companies, including AVIC International Engineering Corporation (a subsidiary of the Aviation Industry Corporation of China), China State Construction Engineering Corporation (CSCEC or “China State Construction”), China Harbour Engineering Corporation (CHEC), and China Railway First Survey and Design Institute Group were involved in the implementation of these projects.

Unlike many other China-financed projects, roads and expressways have some visible impact. They have significantly improved national road connectivity, enhanced road safety, reduced journey times, and opened up cities and provinces. The funding for priority road development offset the funding shortage that hindered maintenance of roads in Southern, Central, and Sabaragamuwa provinces. The Southern Expressway in particular linked Colombo with the southern major cities reducing the journey time to Galle from 3.5–4 hours to less than 90 minutes. The Colombo-Katunayake expressway provide fast access to Colombo city from the Bandaranaike International Airport and reduces traffic congestion between Negombo and Colombo. Apart from matching the quality of roads seen in other upper-middle-income economies, the expressways boosted the tourism industry.³⁹

However, road infrastructure projects too have attracted much criticism. While some agree that the highways are beneficial, they question if they were built with proper planning and at the right price.⁴⁰ Logistics and transport experts claim that building highways in Sri Lanka has become expensive due to lack of assessment of alternatives or their economic viability.⁴¹ It is noted that some contracts are being awarded without competitive bidding and, at times, at a higher price than general estimates, leading to high cost and speculations on corruption.⁴² Poor planning is predicted to lead to increased congestion.⁴³ And, despite reduced journey times and an indirect impact on the tourism boom, they appear to have failed to achieve economic development, the primary expectation when building the roads and highways.⁴⁴ Especially after the 2022 financial crisis, the importance of building roads and highways has become questionable since they contribute to rising public debt. Their existence has become problematical as the public cannot use them due to the fuel shortages created through the financial crisis resulting from the public debt that produced them.⁴⁵

3.3. Water and sanitation

Water and sanitation is the most recent infrastructure sector that China is financing. Even though the National Water Supply and Drainage Board (NWSDB), the government entity providing water and public sanitation infrastructure in Sri Lanka, has a history of taking loans from multilateral and bilateral entities to fulfill its capital requirement for infrastructure building, not until 2016 did it seek commercial loans from countries like China, India and Japan.⁴⁶ As low-interest loans from multilateral agencies became limited after the country graduated to middle income status, the GOSL was willing to accommodate commercial loans and even encouraged the NWSDB to seek commercial loans to finance water and sanitation projects.⁴⁷ China has become an important partner in providing the required capital for water and sanitation projects (Table 2).

Table 2. Chinese funded Water and sanitation projects.

Project	Partner	Value (US$ Million)	Status
Katana Water Supply Project	China Development Bank	54.8	Completed
Thambuttegama Water Supply Project	China Development Bank	102.5	Completed
Facility for priority water supply projects in Valachchenai Water Supply Project, and Bandarawela, Diyathalawa, Haputhale Water Supply Project	China Development Bank	242.6	Completed
Kandy North Pathadumbara Integrated Water Supply Project	China Exim Bank	245.5	Under construction
Greater Kurunegala Water Supply and Sanitation Project	China Exim Bank	77.0	Completed
Gampaha Attanagalla and Minuwangoda Integrated Water Supply Project	China Development Bank	195.0	Completed
Kattankudy Wastewater Displosal Project	China Exim Bank	67.0	Pledged
Hambantota Wastewater Disposal Project	China Development Bank	75.0	Pledged

Source: External Resource Department, Sri Lanka, National Water Supply and Drainage Board, Sri Lanka and China Aid Data.

The China Development Bank has been the primary stakeholder and has provided commercial loans with a 15–20 year maturity period, a 3 to 6 - year grace period, and an interest rate of between 2 and 3% in these projects.⁴⁸ Their finance has contributed to the NWSDB achieving its target as per its master plan and strategic investment plan to ensure pipe-born water for 78% of the country by 2025.⁴⁹

As with the road infrastructure there are direct beneficiaries when it comes to water and sanitation infrastructure, hence the positive outcome of these projects is visible to the public. For instance, after the Greater Kurunegala Water Supply and Sanitation Project was completed, water connections in the area have increased from 3,000 to 10,000. The sewage system has ensured cleanliness and health in Kurunegala city, making its land value increase, and attracting tourists.⁵⁰ The Kandy North-Pathadumbara Integrated Water Supply Project expects to increase water availability from 50,000 cubic meters to 100,000 cubic meters in that area.⁵¹ This project will provide a permanent solution to the lack of safe drinking water in the Kandy area.

However, not all projects have borne such fruit. For instance, the Gampaha-Attanagalla project was planned to provide clean drinking water to approximately 400,000 beneficiaries in Gampaha, Attanagalla, and Minuwangoda, where 300,000 people were to get new water connections, and 100,000 were to benefit from improvements to existing connections. However, the project is yet to be completed due to multiple delays resulting from poor planning and implementation, domestic political issues, and allegations of corruption.

According to a case study conducted by a Sri Lankan think-tank, the Gampaha-Attanagalla water project is immured in numerous allegations and investigations of its higher cost after the contract was awarded, poor progress in implementation, and the possible misappropriation of funds.⁵² The project is viewed as an example where Sri Lanka’s implementation of a special framework to accommodate unsolicited proposals for public-funded projects has led to multiple issues. The project was approved by the Standing Cabinet-Appointed Review Committee (SCARC) without calling for bidding as per the government’s procurement guidelines, and without approving the funding commitment and finalizing the terms and conditions of the loan as per the guidelines in the special framework. The contract agreement was signed in 2016, three years before the loan agreement was signed.⁵³ The contractor’s lack of experience in the water and sanitation sector meant that a 33.4% higher price was incurred than the original Total Cost Estimate, and this is a cause for concern.⁵⁴

3.4. Port infrastructure

Of the China-financed projects, ports and port related projects have garnered the most attention. Beijing’s involvement in the sector is in two projects; building a brand-new port just 10 nautical miles from the busiest sea route and investing in the existing Colombo port. China provided six loans of different types, between 2007 to 2013, amounting to approximately US$ 1.326 billion, from the EXIM Bank China to build Hambantota Port, which had been in the government’s national development plan for years.⁵⁵ Two Chinese state-owned enterprises (SOEs); China Harbour Engineering and Sinohydro Corporation constructed it. The Port is expected to become the country’s second-largest port after Colombo.

In 2011 China Merchant Ports Holdings (CM Port) made a second investment. This was by making an initial investment of US$500 million to build the fourth terminal at Colombo Port as part of its expansion project. The investment built the Colombo International Container Terminal (CICT), a joint venture between China Merchants Port Holdings and SLPA. It is the only state-of-the-art deep-water terminal in South Asia, and can handle ultra large container carriers (ULCC) or more than 20,000 twenty-foot-equivalent-unit (TEU) vessels.

Investments in Hambantota and Colombo have transformed the port industry in Sri Lanka. For instance, the CM Ports’ investment in Colombo port transformed Sri Lanka positioning in the global shipping industry. With the commencement of CICT operations in 2014, Sri Lanka’s capacity and ability to handle containerized cargo from mega container ships consolidated its position as a regional transhipment hub. With the geographical coverage of these services and the high frequency of mainline liner service connections, CICT has helped Colombo port become the 11th best-connected port in the world. In 2018, about 79% of Colombo port’s throughput was for transhipment purposes in response to demand from a rapidly growing Indian market. Chinese investment in Sri Lanka’s ports has enabled the island nation to leverage its strategic geographical location in the Indian Ocean and become a regional trading hub. Additionally, Chinese investment has been a catalyst in attracting investments from other countries like India.⁵⁶

Despite the loss incurred at the beginning, the Hambantota port has made tremendous progress after being leased to CM Ports for management under a 99-year lease. CM Ports have made investments to develop Hambantota port and the adjacent industrial zone and is also working to diversify the range of available port-related services such as ship repairing and bonded warehousing and distribution. The port is expected to double Sri Lanka’s container traffic to some 16 million TEUs, once it becomes fully operational. According to reports, even amidst Sri Lanka’s fuel and economic crisis in 2022, operations of the port services ran uninterrupted.⁵⁷ In the first half of that year it handled 1.14 million metric tonnes.⁵⁸

Yet China-financed ports have received the most criticism. Given how Chinese investments in ports is generally perceived globally, Hambantota Port has been associated with geopolitical narratives from Western observers such as “China’s string of pearls strategy” and “debt-trap diplomacy.”⁵⁹ The Sri Lankan government’s decision to lease the port for 99-years is being perceived as a debt-equity swap to Chinese debt,⁶⁰ as part of Beijing’s geopolitical strategy. The projects are also criticized for their feasibility and cost-effectiveness. After Hambantota Port failed to generate an income soon after it opened, and after the government had to lease it to CM Ports, the success of that Port City is also viewed with suspicion. Moreover, the projects are disparaged as infringing the sovereignty of the country.⁶¹

4. Drivers and determinants of Sri Lanka’s agency

The primary drivers of Sri Lanka’s agency vis-à-vis China has been the political elites. They not only determine the direction and political context for the bureaucrats to propose and plan for required infrastructure, they have also often been the initial negotiators with their Chinese counterparts. In some instances, they have gone to the extent of changing regulations and standards when the existing standards and regulations have hindered their ability to exercise their decision-making powers.

4.1. Agency of political elites and the bureaucracy

4.1.1. Political elites

Given the importance of infrastructure, it is always a central theme in an election campaign. Political parties and elites will either promise new infrastructure or criticize the infrastructure initiatives of the government in power. Thus, infrastructure is used as a tool for political gain. When there is no information on the rationale or reasoning behind identifying the sectoral priorities by political parties, it is possible that they take their cue from feasibility studies undertaken by their predecessors to identify and implement priorities. For instance, development of port infrastructure and expressways were initially proposed and identified by donor agencies prior to Mahinda Rajapaksa coming to power.⁶² This is apparent from the few differences seen in election manifestos in terms of the infrastructure priorities of different rulers.⁶³

Almost all the projects that are discussed in this paper were born out of the priorities set forth by the election manifestos of a ruling party.⁶⁴ These election manifestos, which later became the government’s policy plan, have become the basis for project planning and implementation, and have become the guiding document for bureaucrats in identifying priority projects. For instance, Mahinda Rajapaksa’s election manifesto in 2005 had a list of priorities to provide basic infrastructure such as water, electricity, and housing for each village and the details went on to promising building 125 houses per village within five years.⁶⁵ It also had particular reference to mega development projects such as Hambantota port.⁶⁶ Similarly, his election manifesto in 2010 listed several hydraulic power projects such as the second stage of Kerawalapitiya Combined Cycle Power Plant, the Upper Kotmale Hydro Power Station, and the Uma Oya Hydropower station as projects to be undertaken under his future government to provide electricity to the community. These projects later appeared in the government’s policy documents.⁶⁷

For political elites, delivering economic development and social welfare correlates with their political survival and consolidating power. Mega-infrastructure projects are considered occasions to nourish the patronage networks that connect the ruling elite to wider society.⁶⁸ They have also become tools for the rulers to demonstrate their performance legitimacy and sustain the patronage networks crucial to their power. As a result, political elites since 2005 have been strategically using Chinese loans to advance their ambitious development-through-infrastructure political agenda. For this purpose, political elites prioritize the projects that seemingly have more visibility in their electorate. Thus, prioritizing the extension of the Southern Expressway from Matara to Hambantota instead of constructing the Central Expressway was determined by political interest rather than actual need.⁶⁹

Moreover, these projects are proposed and negotiated with Chinese counterparts by either the President’s office or the Cabinet of Ministers to demonstrate the administration’s delivery effectiveness and performance legitimacy. In this way political elites can alter existing standards and procedures so that foreign finance can be attracted within a short period of time.

For this political purpose, between 2005 and 2010 the Sri Lankan ruling elites encouraged unsolicited proposals for implementing public infrastructure projects, deviating from the standard Government Procurement Guidelines of 2006 and Part II of the Guidelines on Government Tender Procedures of 1998.⁷⁰ The government introduced a special framework to facilitate implementing public sector infrastructure projects between 2010 and 2016. This Special Regulatory Framework (SRF) was introduced to assist government agencies to access concessional financing such as export credits that originated as assurances of funding from lending institutions for unsolicited proposals submitted by contractors.

Export credit loans typically have low-interest rates and a higher maturity period than commercial credit, but they require the borrower to purchase goods and services and this can include contractors from the lender’s country. China preferred this lending method, which makes the process much more convenient for the borrower. As such, the financing from the Exim Bank of China would originate as a letter of intent backing unsolicited proposals developed by Chinese state-owned enterprises. While this meant that there would be no competitive bidding to identify appropriate contractors to implement the projects, it also meant that the government could secure the necessary financing for public infrastructure within a short period of time, facilitating the completion of projects within an electoral cycle.

This framework can be seen to be successful from the amount of financing Sri Lanka could attract during the period the SRF was in place.⁷¹ Among the cases discussed in this paper, the Hambantota port and the Gampaha-Attanagalla water project were projects implemented through unsolicited proposals in this way,⁷² while the Central Expressway is an example where construction has been commenced by a contractor even before the loan has been negotiated and an EIA conducted.

However, this framework has also led to numerous issues and problems. This framework provided room for the bureaucratic system to deviate from the normal procurement process without having to conduct an evaluation. This led the political elites to misuse the system. This has proven to be the case with the Gampaha-Attanagalla Water Project. The government has not demanded a rigorous evaluation process due to the relaxed application of the criteria in the SRF, and it has failed to conduct the minimum due diligence required before awarding the contract.⁷³ In fact, there had been allegations against the then Economic Development Minister for pushing that the project should be awarded to CMEC when the contractor was alleged to have failed to make the Norochcholai power plant a success.⁷⁴

Additionally, the bureaucrats’ role and agency in planning public infrastructure is, to some extent, undermined by these activities. It also resulted in the emergence of vanity projects to meet political elites’ interests and political will, and allegations of corruption in implementing infrastructure development projects.

4.1.2. Bureaucracy

In Sri Lanka, bureaucrats at various governance levels are responsible for official planning, coordinating, negotiating, implementing and manage infrastructure projects. Since the establishment of State-owned Enterprises (SOEs), they have acted as key infrastructure providers for the country. The cases discussed in this paper prove that, in theory, they have successfully exercised agency vis-à-vis China-funded projects. RDA, NWSDB, Sri Lanka Ports Authority (SLPA) and Ceylon Electricity Board have exercised agency in identifying and implementing the required projects. For instance, the SLPA identified the Colombo Port expansion and development of Hambantota port as part of its national port development strategy. The 2002 Sri Lankan government’s national action plan, Regaining Sri Lanka, emphasized the need to make the Hambantota harbor into a port to strengthen the country’s transport industry, to be followed by developing Trincomalee port.⁷⁵ The Sri Lankan government did conduct two feasibility studies on these projects, the first by SNC-Lavalin, a Canadian engineering firm in 2003, and the second by Ramboll, a Danish consulting firm, in 2005.⁷⁶

Similarly, the road and highway projects that have been implemented through Chinese financing were identified by the Planning Unit of the Road Development Authority (RDA) of the Ministry of Highways. As the implementation body of the Ministry of Highways, RDA conducts a need analysis to understand the country’s connectivity requirements. At times, the donor agencies like ADB, JICA, and the World Bank have provided technical assistance, in accordance with their respective country partnership strategies, to the Ministry in preparing strategic plans and identifying the need for a project.⁷⁷ In addition, the policy document of the government that has assumed power provides direction and guidance as to what aspects of Sri Lanka’s transport requirements are to be prioritized.

Since 2002 ADB and the RDA have been collaborating on enhancing the road networks in the country. Having identified where the roads are of poor quality the ADB has collaborated with the Ministry of Transport, Highways and Civil Aviation (MTHCA) and the Ministry of Home Affairs, Provincial Councils and Local Government (MHAPCLG) to establish a policy and institutional framework to improve overall sector performance. Following this, the ADB has provided technical assistance to RDA to update the investment plan and issue an annual maintenance plan. Thus, through a series of interventions from the ADB, the need for priority road improvement and the building of highways has been identified. Subsequently, the RDA has developed National Road Master Plans identifying priority areas for road development.

Similarly, the National Water Supply and Drainage Board (NWSDB) has been the primary stakeholder in identifying water and sanitation project requirements. The NWSDB produces master plans, strategic plans, and corporate plans to reflect the government’s current policy on ensuring safe water and sanitation for the community. They conduct feasibility studies from time to time to identify the water requirements, available water resources, and the quality of water resources in an area. Once the feasibility report is prepared, it is evaluated by a Project Appreciation Committee (PAC). The approved proposal is then sent to the National Planning Department via the Ministry to secure funding and implementation.

The bureaucracy’s ability to exercise agency in accordance with these systems have both succeeded and failed in implementing projects. While the Greater Kurunegala Water Project is an example of how bureaucracy successfully achieved the required outcome, Norochcholai coal power plant is a case of failure. While both projects were implemented by China Machinery Engineering Corporation (CMEC), the impression of their involvement and the outcome has been different. In implementing the Norochcholai power project, CMEC and CEB have been engulfed in numerous conflicts. The CMEC alleged that using poor equipment led to the constant breakdown of the power plant. In turn, it was accused of not facilitating technological transfer, making the operation of the power plant a challenge for the CEB. However, the implementation of the Kurunegala water project has been smooth and successful.⁷⁸

The success or failure in exerting agency in the implementation process depends on how the bureaucratic agency negotiates details when signing the tender agreement and the level of intervention from political elites. The NWSDB includes every requirement in the tender agreement in detail at the time of signing, which helps them get the service from the contractor to their satisfaction.⁷⁹ However, in instances where political elite intervention is high, a bureaucrat’s ability to negotiate the terms to such details are diminished.⁸⁰

In the case of roads and expressways, the bureaucracy has had only limited room for negotiation due to extensive political elite intervention in these projects. As a result, implementation of road and expressway projects through unsolicited proposals have generated higher costs.⁸¹ In addition, political intervention has also led some projects to commence prior to securing financing and completing administrative procedures such as environmental and feasibility assessments. For instance, the Central Expressway, which was in discussion at the time, was commenced and agreed upon via an MOU in 2015, even before the finance was disbursed.⁸² At the time of commencing the project, neither the environmental impact assessment nor the land acquisition had been completed. Similarly, the Norochcholai power plant project has been implemented without an environmental license.⁸³

Moreover, even at times when bureaucrats have exercised agency for economic reasons projects have been criticized as they have been subjectively seen to advance the political interests of the political elites. For instance, port infrastructure development has been identified as a key priority by the state bureaucracy for decades. However, expediting the port infrastructure development in Hambantota and connecting Hambantota with the rest of the countries is now perceived as a Rajapaksa administration vanity project. Such criticisms are validated not only by vanity projects such as the Cricket Stadium and the new international airport in Hambantota, but also by the fact that they have been implemented without a competent planning service, which has been removed from the system due to generations of politicization in the institution.⁸⁴ As a result of this, the bureaucrats role is mostly viewed as nominal in terms of exercising agency in the development of infrastructure.

4.2. Domestic economic and political determinants

Infrastructure development has experienced a political renaissance in Sri Lanka since the beginning of the 21^st century following the end of the protracted civil conflict in 2009. According to the Asian Development Bank, as of 2005 Sri Lanka had a significant deficit in infrastructure, including limited access to electricity, water and roads.⁸⁵ Power and transportation and access to water, particularly in the North and East, were identified as critical bottlenecks for business growth and expansion.⁸⁶ Ongoing war, changes in the political and economic climate internationally and regionally, and the Sri Lankan government’s relations with the international community provided limited options for the country to obtain funding to fulfill the infrastructure gap.

According to the Central Bank of Sri Lanka, the government investment in social and economic infrastructure in 2000 was LKR71.1 billion (USD867.29 million).⁸⁷ The 2005 Annual Report of the Central Bank of Sri Lanka states that even though infrastructure facilities have been expanding in the country, they have not been adequate or competitive. Lack of connectivity between the provinces has hindered fast growth in business development. For instance, the Colombo-centric business western province contributes 45% of total GDP output. Access to telecommunication facilities and electricity has similar challenges.

Following the end of the civil conflict in May 2009 Sri Lanka experienced rapid GDP growth at a yearly average of 5.3%, becoming a middle income status country in January 2010.⁸⁸ Believing the importance of investment and development of infrastructure in maintaining positive economic growth, and attracting investors and improving the business environment, the government launched an ambitious public investment program to overcome the infrastructure backlog through an ambitious public investment program. ⁸⁹ Consequently, Sri Lanka experienced a boom in public investment in infrastructure as shown in Table 3.

Table 3. Government investment in economic and social infrastructure (2005–2022).

Year	Economic Services		Social Services		Total
	Amount LKR billion	% of GDP	Amount LKR billion	% of GDP	Amount LKR billion	% of GDP
2005	77.5	3.2	60.4	2.5	137.9	5.7
2007	141.2	3.9	55.0	1.5	196.2	5.5
2009	256.4	5.3	53.9	1.1	310.3	6.4
2011	326.0	3.8	63.4	0.7	389.4	4.5
2013	369.4	4.3	77.6	0.9	447.0	5.2
2014	330.1	3.2	112.3	1.1	442.5	4.2
2016	424.0	3.5	117.0	1.0	541.3	4.5
2018	437.9	3.3	133.2	1.0	571.1	4.3

Source: Central Bank of Sri Lanka Annual Reports.

It is estimated that Sri Lanka requires a total annual investment ranging from USD 2.27 billion to USD 4.08 billion per year between 2010 and 2020, which is between 3.8–6.9% of GDP, to achieve the target of the Mahinda Chinthana plan (Table 4).⁹⁰

Table 4. Estimated investment need per year by sector 2010–2020.

Sector	Annual Investment need in USD Millions	Annual Investment Need as an average of GDP (Percentage)
Transport	1,471–2,463	2.49–4.16
Energy	698–1,285	1.18–2.17
Water and Sanitation	75.5–154	0.13–0.26
Solid waste	25–182	0.04–40.31

Source: Estimations by Biller and Nabi, Investing in Infrastructure, to meet the goals of Mahinda Chinthana.

However, there was no concessional financing available for the country post-2010 from multilateral and bilateral agencies such as the ADB, World Bank and JICA, as Colombo was graduating from being a lower-income country.⁹¹ Moreover, there had only been limited involvement by bilateral partners from Europe or elsewhere in infrastructure development and financing in Sri Lanka for decades.⁹² Thus, the Sri Lankan government had little option but to reach out to available sources, which included raising external funding in the capital market via international sovereign bonds and obtaining aid and investments from available bilateral donors such as India and China.⁹³ This helped China grow into a major player in financing Sri Lanka’s infrastructure.⁹⁴

Apart from the availability of financing, China was an attractive partner for Sri Lanka for several other reasons. China’s financing process and implementation projects were faster than that of other agencies. China operates as a unique player among bilateral lenders, employing its own rules and methods. It provide finance with less rigorous protocols than others. According to bureaucrats and analysts interviewed, the documentation required by Chinese lending agencies is not different to that of others,⁹⁵ but, unlike members of the Paris Club such as Japan, China does not perform its own due diligence prior to granting sovereign credits, making the finance available for any type of project. This approach has enabled Sri Lanka to secure loans and allocate them toward various endeavors. Without China, Sri Lanka may have not been able to finance a coal power plant, no matter how grave the need was, due to environmental impact.

For the political elites, the less rigorous process involving China has helped them achieve their political agendas and objectives without difficulty. Political elites often strive to differentiate themselves from their predecessors.⁹⁶ While infrastructure is crucial for shaping the quality of life for individuals, with social, economic, and environmental outcomes directly impacted by its development, the public often fails to recognize the long process involved in planning, implementing, and completing infrastructure projects, focusing solely on the end result. Given that infrastructure can bring about positive changes that are readily experienced by the public it has become a benchmark for measuring the success of a government and its ability to improve the lives of its constituents. This creates a sense of urgency for politicians to complete infrastructure projects within their electoral cycle to ensure they receive the credit for their accomplishments.

Thus, China’s rapid response to financial requests and its efficient implementation of projects has allowed the ruling elites in Sri Lanka to ensure the completion of infrastructure projects within their governing period and geographical location, solidifying their legacy and contributing to their political survival. A prime example is how the Rajapaksa administration embarked on ambitious infrastructure development to demonstrate their ability to improve upon the work of previous governments and consolidate their power and ensure their political survival. It was Mahinda Rajapaksa’s performance post 2005 that elevated him to power for over a decade and ensured political stability for his entire family. The Rajapaksa brotherhood led key infrastructure development projects throughout the years they were in power. Hambantota district was given special consideration as it was their original electoral constituency. This transformation allowed the Rajapaksas to cement their political dominance in the district, with Mahinda’s son Namal winning the highest number of votes in his first election campaign. Gotabaya Rajapaksa’s reputation as a competent authority in implementing beautification and infrastructure projects during his tenure as Secretary was a crucial factor in his successful bid for the presidency in 2019.

However, in Sri Lanka’s case, the rapid financing from China for infrastructure has also led to the undermining of the performance legitimacy and political survival of the ruling elites. The loans for infrastructure have led to the dramatic expansion of Sri Lanka’s debt to China.⁹⁷ China’s debt in Sri Lanka moved from 0.3% to 16% of total loans between 2000 and 2016. As at the end of 2022, China’s debt stock in Sri Lanka was approximately US$7.3 billion, amounting to 19.6% of Colombo’s public external debt. It is a legitimate question to ask if the value and economic impact of the projects compensates for the debt incurred. This coupled with corruption charges led to the downfall of the Rajapaksa administration in 2015 and 2022.

4.3. Regional and global geopolitics

The rationale for China’s entry into Sri Lanka’s infrastructure comes from both domestic and international political developments. Internationally, China was emerging as the world’s largest investor. Beijing has one of the fastest-growing countries since the beginning of the 21st century, with an average annual growth rate of 10%. The Chinese government had a growing surplus in its economy. Its economic model was gradually changing from an export-led to a domestic consumer-led one. The government was looking at new markets abroad to invest in and was encouraging its companies to go abroad.

Additionally, China’s growing role in Sri Lanka is also derived from its political and strategic ambitions in the Indian Ocean region. Unarguably, Indian Ocean region is emerging as the economic and geopolitical center of gravity in the 21^st century. According geopolitical strategist Robert Kaplan, China’s aim is to become a “two ocean power,” expanding its influence vertically, reaching toward the Indian Ocean.⁹⁸ While the objective of this Two-Ocean Strategy is seemingly military expansion, it also had economic and domestic political objectives.⁹⁹ Indian Ocean region is home to vital sea-lanes that are critical for China’s energy imports and trade with Europe, Africa, and the Middle East. China’s Belt and Road Initiative (BRI) aims to build infrastructure, including ports and naval bases, in the region to facilitate its trade and economic interests. For this purpose, China has increased its presence and engagement in Indian Ocean countries, constructing ports and naval bases in countries like Sri Lanka, Pakistan, and Djibouti.¹⁰⁰ Given Sri Lanka’s strategic geographic location, it became a key partner for China in the region.

As such, Sri Lanka’s geographic location was a key determinant in Colombo’s ability to exert agency. Sri Lanka, being strategically located in the middle of the competitive ocean space where China is seeking to enhance its influence determines the extent to which Colombo can exert agency in its infrastructure investment.

However, as was discussed previously, lack of alternative funding has also led Sri Lanka to heavily rely on China for its financing needs. Despite offering investment opportunities for infrastructure development to different powers, such as China, Japan, and Korea in the early years of the 2000s, other than from China there was little interest, for projects such as port development and energy infrastructure For instance, Sri Lanka first offered Hambantota Port development to India in 2005. After this was rejected by India, China came forward to finance and build the port. Later, it became the port operator through a 99-year US$ 1.12 billion worth risk-sharing lease agreement.¹⁰¹ Similarly, Norochcholai Coal Power plant project has been offered to multiple development partners, yet it was only China that responded positively.¹⁰² Several reasons may have led for the other partners to show limited interest in these projects. For India’s part, it is possible that it did not have an investor willing and capable of undertaking a port development project at the time. Even though India signed its first MOU to develop the first overseas port in Chabahar, Iran in 2002, it did not realize due to on-going sanctions, not until 2016 that India’s first investment to the Iranian port was made. Its second overseas port investment was made to Sittwe Port in Myanmar, after replacing China, who also offered investing for years.¹⁰³ For partners like Japan, it is possible that their commitment and policy for clean energy may have prevented them in funding nonrenewable energy projects in Sri Lanka. Moreover, the Rajapaksa government of the time had an unfavorable relationship with the West and its allies for ending the its war against the LTTE terrorists through military means As a result, this period saw limited investment and development support from these countries.¹⁰⁴

Even though China was the only available option at the time, it has not seemed to hinder the ability of political elites negotiating projects to realize their political will and agendas. In later years, China’s presence has allowed Sri Lanka to exercise agency vis-à-vis other powers such as India.¹⁰⁵ India views China’s presence as a challenge to its traditional dominance and is skeptical of China’s intentions, particularly given the ongoing border dispute between the two countries. Furthermore, other regional powers, including the United States, are concerned about China’s military expansion in the region, particularly through the construction of ports and naval bases. As a result, India later showed increasing interest in sectors where it was not traditionally active before.¹⁰⁶

5. Discussion

Sri Lanka’s infrastructure investment relations with China have been a topic of much discussion and debate in recent years. It is been argued that while the investments in infrastructure such as energy and transport have contributed significantly to the local communities and boosting growth in Sri Lanka they have also led to increasing debt in the country. Until the early 2000s, China’s involvement as a creditor in Sri Lanka was minimal. In the mid-1970s, China contributed to about 10.1% of the country’s public debt, but its lending activities significantly decreased in the subsequent years. Consequently, by the late 1990s, China’s share in Sri Lanka’s debt was a mere 0.3%.¹⁰⁷ The official aid loans offered by China were interest-free, accompanied by extended maturity periods and generous grace periods. However, there has been a significant transformation in China’s role since then.¹⁰⁸ Presently, China stands as Colombo’s primary lender and development partner. Between 2000 and 2016, China’s share in Sri Lanka’s debt escalated from 0.3% to 16%. By the conclusion of 2022, China’s debt investment in Sri Lanka had surged to approximately US$7.3 billion, constituting 19.6% of Colombo’s public external debt. These numbers encompass debts recorded in both the Central Bank and state-owned enterprises (SOEs).¹⁰⁹

However, this does not mean that Sri Lanka has been a passive recipient of Chinese investment. Evidence suggests that Sri Lanka, in particular its political elites, have in fact been exercising agency in planning and implementing these projects.

As discussed in this paper all infrastructure projects in Sri Lanka have been planned and prioritized by the political elites. Political elites are an extremely important stakeholder in policy planning. Their personal likes and interests play into prioritizing and implementing of projects. Mega-infrastructure projects serve as costly and visible symbols of state power and economic development and are often utilized by political leaders to display their legitimacy and maintain their support networks. These projects are often associated with election timelines, with politicians using them to demonstrate their administration’s effectiveness, responsibility, and legitimacy to their constituents. Hence, infrastructure projects have become a tool for political leaders to showcase their performance and maintain their hold on power.

The emergence of non-traditional creditors such as China, who are less interested in imposing political and economic conditions than Western counterparts, has provided Sri Lankan rulers with the agency of choice. The relationship between the political elites and global and regional geopolitics have created an environment in which Sri Lanka can exercise its agency to gain an outcome that benefit them despite having asymmetric power relations with China.

However, it is to be noted that political elites have sometimes undermined the agency of the bureaucracy in infrastructure investment relations with China. Despite having administrative protocols and standards, the bureaucracy has limited legitimacy in planning and implementation of the infrastructure projects. Political elites’ interest and agendas often hinder their ability to exert agency when and where necessary. They even alter context and standards to fit their political will. As a result, there is a risk of promoting infrastructure projects that lack rationale or reasoning. In instances where they do have room of maneuver, the bureaucracy has managed to exercise agency to gain required end result from the infrastructure projects, as it is seen with the Kurunegala Water Supply project.

Additionally, there are other important stakeholders such as the business community, the civil society and the media who also exercise agency at various times and degrees, in most instances ad-hoc and uneven. For instance, civil society’s exercise of agency has been with regard to environmental issues and human rights.¹¹⁰ But, there has been no adequate conversation on the impact on the economy or questions about the regulatory framework.¹¹¹ Even so there are criticisms with regard to the agency of political elites in planning and implementing infrastructure projects with Chinese financing, as they have not been able to change or divert such decisions. The business community has been rather positive of China’s involvement as long as such involvement provides them opportunities and benefits. Most importantly, there is no adequate information in the public on the agency of the civil society, the business community and the media; hence the author suggests this is an important focus for future research.

6. Conclusion

The popular belief in western scholarship is that China’s relations with small countries is domineering, leaving no room for the small state to maneuver, and that the small states are powerless victims of China’s debt-trap diplomacy and neo-colonialist approaches. However, more recent literature notes that bilateral relations are an agglomeration of push and pull between China and its small state partners.¹¹² Various factors including domestic politics, economy, regional geopolitics, global geopolitics, and peace and security in their geographic region play a prominent role in determining how small states engage with China and realize their domestic and international objectives. Small states have been proactive in their engagement, actively involved, participating, and negotiating their demands and expectations.¹¹³

This paper notes that domestic politics, economy and global and regional geopolitics were the push and pull factors in determining China’s engagement in Sri Lanka’s infrastructure and Sri Lanka’s ability to exercise agency. The post-conflict economic conditions and global and regional geopolitics have made Sri Lanka an important location for China’s Belt and Road Initiative. Sri Lanka’s positioning at the center of Indian Ocean shipping lanes and its proximity to India – China’s competitor in the South Asian region, made Beijing view Sri Lanka as an important partner. In the meantime, for Sri Lanka, China was important for it possessed the required funds to achieve Sri Lanka’s domestic political and economic objectives. These factors have acted as push and pull influences in strengthening bilateral relations between Sri Lanka and China.

Overall, this paper challenges the popular narrative that Sri Lanka has been a passive recipient of Chinese investment in infrastructure. Instead, it argues that Sri Lanka has been actively involved in shaping these relations and has exercised agency in the planning and implementation of infrastructure projects. By understanding the various factors that have contributed to China’s growing involvement in Sri Lanka’s infrastructure investment, we can better understand the dynamics of these relationships and Sri Lanka’s role in shaping them.

Acknowledgments

The author would like to acknowledge the research and editorial assistance given and the assistance given by the interviewers in collecting data and information.

Disclosure statement

In accordance with Taylor & Francis policy and my ethical obligation as a researcher, I am reporting that the research was funded by JICA Ogata Research Institute for Peace and Development.

Additional information

Funding

This work was funded by JICA Ogata Research Institute for Peace and Development.

Notes on contributors

Chulanee Attanayake

Chulanee Attanayke is a Non-Resident Research Fellow at the Institute of South Asian Studies, National University of Singapore.

Notes

1. Mohan and Tan-Mullins, “The Geopolitics of South – South Infrastructure Development.”

2. Chansoria, “From Sri Lanka to South Africa, China’s Predatory Practices Damage Developing Countries.”

3. Pal, “China’s Influence in South Asia Vulnerabilities and Resilience in Four Countries.”

4. Wight, Agents, Structures and International Relations, 281; Sewell, “A Theory of Structure..”

5. Chiyemura, Gambino, and Zajontz, “Infrastructure and the Politics of African State Agency.”

6. Jessop, State Theory.

7. Brown, “A Question of Agency;” Soulé, “‘Africa +1’ Summit Diplomacy and the ‘New Scramble’ Narrative.”

8. Chiyemura, Gambino, and Zajontz, “Infrastructure and the Politics of African State Agency.”

9. Soulé, “‘Africa +1’ Summit Diplomacy and the ‘New Scramble’ Narrative;” Mohan and Tan-Mullins, “The Geopolitics of South – South Infrastructure Development;” Wang, “Presidential Extraversion.”

10. White, “Economic Performance and Communist Legitimacy;” Beresford, “Power, Patronage, and Gatekeeper Politics in South Africa.”

11. Paudel and Rankin, “Himalayan Geopolitical Competition and the Agency of the Infrastructure State in Nepal.”

12. Wang, “Presidential Extraversion;” Wignaraja et al., “Chinese Investment and the BRI in Sri Lanka.”

13. Chiyemura, Gambino, and Zajontz, “Infrastructure and the Politics of African State Agency;” Paudel and Rankin, “Himalayan Geopolitical Competition and the Agency of the Infrastructure State in Nepal;” Jayasundara-Smits, An Uneasy Hegemony.

14. Wang, “Presidential Extraversion;” Peiffer and Englebert, “Extraversion, Vulnerability to Donors, and Political Liberalization in Africa;” Humphrey and Michaelowa, “Shopping for Development.”

15. Soulé, “‘Africa +1’ Summit Diplomacy and the ‘New Scramble’ Narrative.”

16. Tull, “Weak States and Successful Elites – Extraversion Strategies in Africa.”

17. Cabestan, “African Agency and Chinese Power;” Barton, “Agency and Autonomy in the Maritime Silk Road Initiative.”

18. Asirwatham, “Overview of Sri Lanka-China Relations;” Wignaraja, “Grappling with Great Power Rivalries.”

19. Wignaraja, “Sri Lanka in a Post COVID-19 World.”

20. Bhatia et al., “Chinese Investments in Sri Lanka.”

21. Mishra and Mishra, “China’s Belt and Road Initiatives.”

22. Moramudali and Panduwawala, “Evolution of Chinese Lending to Sri Lanka Since the Mid-2000s – Separating Myth from Reality,” 2022.

23. Institute of Policy Studies, “Sri Lanka: State of the Economy 2001;” “Global Chinese Development Finance Dataset;” Moramudali and Panduwawala, “Evolution of Chinese Lending to Sri Lanka Since the Mid-2000s – Separating Myth from Reality,” 2022.

24. Ceylon Electricity Board, “Annual Report 2018.”

25. Group Interview, External Resources Department of Sri Lanka, interview; Rathnasekara, “ගල් අඟුරු කියන තරම් කළුද.? පරිසරය රකිමු. තුලිතව බලමු [Is Coal that bad?].”

26. Rathnasekara, “ගල් අඟුරු කියන තරම් කළුද.? පරිසරය රකිමු. තුලිතව බලමු [Is Coal that bad?].”

27. Rathnasekara, “විදුලියෙන් රටක් දික්විජය කළ හැටි. දැනටමත් හතර ගුණයක ඉතිරියක් [How Electricity Efficiency Was Achieved. Cost of Generating Electricity Is Saved by Four Times].”

28. Ceylon Electricity Board, “Statistical Digest 2022.”

29. EconomyNext, “Sri Lankan Hydropower Project Covered by China Export Insurance Corp;” Daily FT, “Sinopec Wins Bid to Operate Tank Farm at Hambantota Port | Daily FT.”

30. Wijedasa, “Coal Power Chaos.”

31. “Global Chinese Development Finance Dataset.”

32. Sirimanna, “Norochcholai Power Plant Shutdown Triggers Massive Loss;” Fernando, “Norochcholai Power Station.”

33. “Chinese Blame CEB.”

34. “Norochcholai Coal Power Plant.”

35. bugsbunny, “The Faulty Chinese Giant Norochcholai Causes Enormous Financial Losses to Cash-Strapped Sri Lanka.;” Rathnasabapathy, “The Coal-Fired Power Plant You Can’t Get Coal to;” Francisco, “Spotlight on Norochcholai Coal Power Plant Ongoing Power Cuts.”

36. Wignaraja et al., “Chinese Investment and the BRI in Sri Lanka.”

37. Asian Development Bank, “The Asian Development Bank’s Support for the Transport Sector in Sri Lanka.”

38. “Global Chinese Development Finance Dataset.”

39. Fernando, interview.

40. Abeysinghe and Arangala, interview, December 2, 2022; Kumarage, “Expressways.”

41. Kumarage, “The Cost & Benefits Of Expressway Building;” Kumarage, “Road Building or Rip-Off?.”

42. Kumarage, “Expressways;” Kumarage, “The Cost & Benefits Of Expressway Building;” Colombo Telegraph, “Someone In The Regime Made Rs.1Billion Per Km Off Katunayake Expressway..”

43. Wijedasa, “Central Expressway Will Worsen Kandy Congestion, Warn Transport Experts.”

44. Kumarage, “Road Building or Rip-Off?;” Director of Ministry of Transport and Highways, interview.

45. Kamardeen, interview.

46. General Manager of National Water Supply and Drainage Board and Additional General Manager of Policy and Strategy of National Water Supply and Drainage Board, interview.

47. Abeysinghe and Arangala, interview, December 2, 2022.

48. “Global Chinese Development Finance Dataset;” General Manager of National Water Supply and Drainage Board and Additional General Manager of Policy and Strategy of National Water Supply and Drainage Board, interview.

49. General Manager of the National Water Supply and Drainage Board and Additional General Manager of Policy and Strategy for the National Water Supply and Drainage Board, interview.

50. Deputy General Manager (Wayamba) of National Water Supply and Drainage Board, interview.

51. Project Engineers, Kandy North Pathadumbara Integrated Water Supply Project, interview.

52. The Economics and Legal Research Team, “The Lure of Chinese Loans.”

53. Chamara, “How Chinese Projects Lured SL Away from Procurement Guidelines.”

54. Chamara; The Economics and Legal Research Team, “The Lure of Chinese Loans;” Abeysinghe and Arangala, interview, December 2, 2022.

55. Government of Sri Lanka, “Regaining Sri Lanka;” “මහින්ද චින්තන: අළුත් ශ්රී ලංකාවක් 2005 මැතිවරණ ප්රකාශය (Mahinda Chinthana: New Sri Lanka 2005 Election Manifesto;” Moramudali and Panduwawala, “Evolution of Chinese Lending to Sri Lanka Since the Mid-2000s – Separating Myth from Reality,” 2022.

56. Attanayake, “India’s Answer to China’s Ports in Sri Lanka.”

57. “Sri Lanka: ‘Business as Usual’ at Hambantota Port despite Crisis.”

58. Ibid.

59. Khurana, “China’s ‘String of Pearls’ in the Indian Ocean and Its Security Implications”; Butt, Kharal, and Bhatti, “String of Pearls;” Himmer and Rod, “Chinese Debt Trap Diplomacy”.

60. Hillman, “Game of Loans;” Abi-Habit, “How China got Sri Lanka to Cough Up a Port.;.”

61. Carrai, “China’s Malleable Sovereignty Along the Belt and Road Initiative: The Case of the 99-Year Chinese Lease of Hambantota Port.”

62. Abeysinghe and Arangala, interview, December 2, 2022.

63. A comparison across the election manifestos of Mahinda Rajapaksa (2005, 2010 and 2015), Maithripala Sirisena (2015), Gotabaya Rajapaksa (2019), and Sajith Premadasa (2019) reveal that all the political leaders were pledging to prioritize electricity, housing, water and sanitation and road connectivity.

64. Presenting the winning political party’s election manifesto as the government’s national policy framework determining the policy directions has become a common practice in Sri Lanka. For instance, Mahinda Rajapaksa’s election manifesto in 2005, popularly known as “Mahinda Chinthana, the Ministry of Finance and Planning published a discussion paper titled “Mahinda Chinthana: Vision for New Sri Lanka” as a ten-year development framework for the period of 2006–2016. His election manifesto in 2010, when the government changed in 2015, the election manifesto of Maithripala Sirisena became the policy document guiding the country. In 2019, then President Gotabaya Rajapaksa’s election manifesto became the National Policy Framework.

65. “Mahinda Chinthana 2005 Election Manifesto,” 23–24.

66. “Mahinda Chinthana 2005 Election Manifesto,” 58.

67. Department of National Planning, The Development Policy Framework 2010, Government of Sri Lanka.

68. Wang, “Presidential Extraversion.”

69. Fernando, interview.

70. The Economics and Legal Research Team, “The Lure of Chinese Loans.”

71. The Economics and Legal Research Team.

72. The Economics and Legal Research Team; Abeysinghe and Arangala, interview, December 2, 2022.

73. The Economics and Legal Research Team, “The Lure of Chinese Loans;” Abeysinghe and Arangala, interview, December 2, 2022.

74. Colombo Telegraph, “Always Breakdown Norochchalai Chinese Firm To Build Massive Water Plant In Basil’s Base.”

75. Government of Sri Lanka, “Regaining Sri Lanka.”

76. The feasibility report was rejected by the Ministerial task force on the grounds that it was not bankable and was incomplete since the study overlooked the port’s potential impact on Colombo Port. The report by Ramboll adopted a more optimistic view of the potential of Hambantota Port. It projected that dry and bulk cargo would constitute the main traffic for the port until 2030. Hambantota Port was expected to handle approximately 20 million twenty-foot equivalent units by 2040.

77. ADB Road Sector Development Project Plan, 2002.

78. Project Manager, Greater Kurunegala Water and Sanitation Project and Project Engineer, Greater Kurunegala Water and Sanitation Project, interview; Deputy General Manager (Wayamba) of National Water Supply and Drainage Board, interview.

79. Project Manager, Greater Kurunegala Water and Sanitation Project and Project Engineer, Greater Kurunegala Water and Sanitation Project, interview; Chief Engineer, Kandy North Water Project, interview; Deputy General Manager (Wayamba) of the National Water Supply and Drainage Board, interview.

80. Kumarage, “The Cost and Benefits of Expressway Building.”

81. Kumarage, “Road Building or Rip-Off?” Kumarage, “Expressways; Kumarage, “The Cost and Benefits of Expressway Building.”

82. Senior Project Engineer, Central Expressway Project, interview.

83. Abeysinghe and Arangala, interview, December 2, 2022.

84. Member, Colombo Port City Economic Commission, interview.

85. Nataraj, “Infrastructure Challenges in South Asia.”

86. The World Bank and Asian Development Bank, Sri Lanka: Improving the Rural and Urban Investment Climate.

87. The amount is calculated according to the exchange rate in December 2000.

88. The World Bank, “Sri Lanka: Systematic Country Diagnostic Update.”

89. Fernando, interview; Straub, Infrastructure and Growth In Developing Countries; Yoshino, Domestic Constraints, Firm Characteristics, And Geographical Diversification Of Firm-Level Manufacturing Exports In Africa; Calderón and Servén, The Effects of Infrastructure Development on Growth and Income Distribution; Biller and Nabi, Investing in Infrastructure, 2013.

90. Biller and Nabi, Investing in Infrastructure, 2013, 16.

91. Shiran Fernando, Chief Economist, Chamber of Commerce Sri Lanka, interview; Abesinghe and Arangala, interview, December 2, 2022.

92. Senior Official of Planning and Monitoring, Ministry of Transport and Highways, interview.

93. Shiran Fernando, Chief Economist, Chamber of Commerce Sri Lanka, interview.

94. Abeysinghe and Arangala, interview, December 2, 2022; Naazima Kamardee, Senior Lecturer, University of Colombo, interview.

95. Group Interview, External Resources Department of Sri Lanka, interview.

96. Jones, B. F. and B. A. Olken. “Do Leaders Matter? National Leadership and Growth Since World War II.” Quarterly Journal of Economics, 120, (2005).:835–864. Jones, B. F. and B. A. Olken. “Hit or Miss? The Effect of Assassinations on Institutions and War.” American Economic Journal: Macroeconomics, 1, (2009):55–87.

97. Attanayake and Atmakuri, “Sri Lanka: Navigating Sino-Indian Rivalry.”

98. Kaplan, Monsoon : The Indian Ocean and the Battle for Supremacy in the 21st Century; Kaplan, “Center Stage for the Twenty-First Century: Power Plays in the Indian Ocean..”

99. Sun and Payette, “China’s Two Ocean Strategy: Controlling Waterways and the New Silk Road.”

100. White, “China’s Indian Ocean Ambition: Investment, Influence, and Military Advantage;” Dravid, “China’s Rise And Indian Ocean Ambitions.”

101. Moramudali, “The Hambantota Port Deal: Myths and Realities;” Brautigam and Rithmire, “The Chinese ‘Debt Trap’ Is a Myth.”

102. Group Interview, External Resources Department of Sri Lanka, interview.

103. Sinha, “China-Myanmar Energy Engagement: Challenges and Opportunities for India;” Sharma, “China’s Interests in the Indian Ocean RIM Countries and India’s Maritime Security;” Pant, “India-Iran Cooperation at Chabahar Port.”

104. “SRI LANKA: RECHARTING U.S. STRATEGY AFTER THE WAR.”

105. Attanayake and Atmakuri, “Navigating the Sino-Indian Power Struggle in the Indian Ocean: The Case of Sri Lanka.”

106. Attanayake, “India’s Answer to China’s Ports in Sri Lanka.”

107. Attanayake, China in Sri Lanka.

108. Attanayake and Atmakuri, “Navigating the Sino-Indian Power Struggle in the Indian Ocean: The Case of Sri Lanka.”

109. Moramudali and Panduwawala, “Evolution of Chinese Lending to Sri Lanka Since the Mid-2000s – Separating Myth from Reality,” 2022.

110. Environmental Justice Atlas, “Norocholai Coal Power Station, Sri Lanka.”

111. Abeysinghe and Arangala, interview, December 2, 2022.

112. Takahara, “Introduction to the Special Issue on the Comparative Study of Asian Countries’ Bilateral Relations with China”.

113. Oh, “Power Asymmetry and Threat Points.”