Xi’s Chequebook Won’t Relieve Colombo Crisis, Beijing Eyes New Delhi’s ‘Support’

Xi Jinping is not ready to bail out Sri Lanka. Sri Lanka is crippled due to an economic crisis due to lack of long pending economic reforms and sticking to traditional exports. It is also coupled with the loans Sri Lanka has taken in the form of international sovereign bonds(ISBs) as well as borrowing of large loans from China.

China, however, is suffering from crippling lockdowns which has brought its major city Shanghai to a standstill. Rising number of Covid-19 cases due to the Omicron variant has crippled industrial activity not only in Shanghai but also in other cities like Changchun – a city which is one of the largest industrial cities of China.

China has realised, according to Raffaello Pantucci, a senior fellow at the S. Rajaratnam School of International Studies at Nanyang Technological University, that ‘they were carrying a lot of debt with countries whose prospects of paying back were quite limited’. Pantucci while speaking to news agency Bloomberg also pointed out China due to its own economic difficulties owing to Covid-19 is avoiding ‘throwing money around wantonly’.

However, China indirectly wants India to help. Despite being aggressive towards its neighbour which is south Asia’s largest economy and persistently delaying solving the border dispute, China now believes that India and China must work together to bring economic stability to the region. While no one doubts that the dragon and the elephant can dominate the world, the dragon has always been aggressive in its posture.

“Development in South Asia needs India as much as it needs China. It is in the interests of all parties to strengthen cooperation to help Sri Lanka tackle the debt crisis,” news agency Global Times said in a report titled ‘Sri Lanka crisis shows risk of US sanctions to developing nations’ where it also blamed the US for sanctioning Russia which may have exacerbated the crisis in Colombo.

In a separate report, the Chinese state-run daily said that ‘concerted efforts from China, India and all other countries in the region are needed’ to bring economic growth in the region. The piece said that ‘India, as the largest South Asian economy, cannot spare itself from the bleak regional environment’. It urged New Delhi to  help other economies in the region out of their hardships as soon as possible to help stabilise and promote the economic recovery of South Asia, including that of India. It reiterated that joint efforts from China, India and all regional countries are necessary to help these nations from spiralling into further crisis.

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