Protesters gather near the presidential palace in Colombo, Sri Lanka on July 9, 2022. Photo: IC

As political leaders of Sri Lanka discussed the way forward for the country following the announced resignation of both the country's president and prime minister amid the worst economic crisis in decades in the country, Chinese observers called on global financial organizations to coordinate creditors to speed up debt restructuring, avoid putting politics first and establish an emergency response mechanism to prevent more sovereign debt defaults as countries like Zimbabwe and Argentina may follow Sri Lanka into economic crisis. 

Sri Lanka's economy is highly dependent on foreign trade with limited resilience to shocks. The pandemic, the Russia-Ukraine conflict as well as US' unilateral sanctions against Russia have combined to precipitate a crisis, observers stressed. They said it was not directly related to China-funded infrastructure investment, and blaming China's projects is purely driven by malicious geopolitical motives. 

Sri Lankan President Gotabaya Rajapaksa officially informed Prime Minister Ranil Wickremesinghe that he will continue with his resignation on Wednesday as previously announced, the Prime Minister's Office said Monday after protesters stormed the residences of the two leaders, Xinhua News Agency reported on Monday. 

A senior government official told Xinhua that Wickremesinghe called for an urgent meeting with his cabinet on Monday and will also meet leaders of all political parties  to discuss the way forward. Wickremesinghe has also agreed to resign. 

Wang Wenbin, spokesperson of China's Foreign Ministry, said at Monday's routine media briefing that China is closely following the latest developments in Sri Lanka. As a friendly neighbor and cooperation partner, we sincerely hope that all sectors in Sri Lanka could bear in mind the fundamental interests of their country and people and work together in solidarity to overcome the current difficulties and strive to restore stability, revitalize the economy and improve people's livelihoods at an early date,Wang said.

China has provided emergency humanitarian assistance to Sri Lanka in the past months, and would continue to provide support and assistance to Sri Lanka within its capacity to help the country's economic recovery and ordinary people, but Chinese observers said professional finance organizations, such as the International Monetary Fund (IMF) and World Bank, should be largely responsible for addressing the crisis based on effective coordination with all creditors, as commercial creditors and multilateral financial institutions are the major lenders behind Sri Lanka's foreign debt.  

Meanwhile, although the US dominates the current global financial safety net, it conducts financial assistance more in its own interests than in the interests of the world. Some US-led small groups have constrained the effectiveness of global governance and the functioning of international organizations, which has exacerbated the Sri Lanka crisis, observes said. 

Some major powers, in pursuit of their own interests, have formed small groups based on the so-called common values, used global governance as a tool for geopolitical games, and downplayed the real value of global governance, Xu Liping, a research fellow on Southeast Asian studies at the Chinese Academy of Social Sciences in Beijing, told the Global Times on Monday. 

For instance, the Quad, in the name of setting up a foreign aid group to jointly respond to the Sri Lanka crisis, actually has the true purpose of taking advantage of the crisis to exclude China and contain China's role in Sri Lanka, according to Xu.

Xu suggested major countries and international organizations establish an emergency response mechanism to prevent more countries from facing a catastrophic debt crisis like Sri Lanka. 

He said Sri Lanka's crisis was mainly due to a foreign exchange shortage - a result of many external reasons including the impact of the coronavirus, the Russia-Ukraine conflict, and a single economic structure which makes it more fragile in the face of external shocks. Xu reiterated that the crisis was not directly related to China-funded infrastructure investment in Sri Lanka. 

Under the impact, all its pillar industries, such as tourism, textile and tea planting, are incapable of "making money" and thus leading to severe consequences, Xu said.

Thus, the ongoing Sri Lanka crisis reflects a common challenge faced by many developing economies, especially those which have a single economic structure and are deeply affected by the Russia-Ukraine conflict, and other South Asian countries like Nepal and Maldives should be on the alert, observers noted. They also warned that globally African countries like Zimbabwe and Latin American countries like Argentina and Brazil all at risk of following Sri Lanka into major economic crisis. 

While for Sri Lanka, external assistance can only provide temporary help, and the South Asian nation must follow through on radical reforms if it wants to really get out of the crisis, Long Xingchun, president of the Chengdu Institute of World Affairs, told the Global Times on Monday. 

Sri Lanka's crisis reflects the mismatch between the country's development strategy and actual economic capacity, and between its long-term goals and the reality on the ground, according to Long. He said it is necessary for Sri Lanka to formulate a development strategy suitable for its national conditions based on its own situation rather than copying Western modes. 

Indian media smear the BRI 

As a close neighbor of Sri Lanka, India has beefed up surveillance along the Sri Lankan maritime borders by deploying additional hovercrafts and patrol boats to prevent an influx of illegal immigrants, India Today reported on Sunday. 

Hu Zhiyong, a research fellow at the Institute of International Relations at the Shanghai Academy of Social Sciences, told the Global Times on Monday that India may help Sri Lanka although the assistance may not be significant due to its own economic situation, as India needs to ensure that possible refugee issue of Sri Lanka would not result in security risks for India. 

But aside from protecting its own safety, some Indian media outlets have largely seen Sri Lankan crisis as a geopolitical tool to counter China's influence. 

The Times of India run an article entitled  "How India hopes to counter China with 'unprecedented' support to crisis-hit Sri Lanka," and the Print, another Indian media, smeared the China-proposed Belt and Road Initiative (BRI) by claiming that more South Asian countries, which borrowed from China for infrastructure projects,  "face balance of payments challenges."

Qian Feng, director of the research department at the National Strategy Institute at Tsinghua University, told the Global Times on Monday that that the deteriorating China-India relations over the last two years have created more spaces for the Indian media to smear and attack China, and Indian media outlets have grabbed the opportunity of the current Sri Lanka crisis to try to influence Indian government decisions so that India may one day dominate South Asia. 

Meanwhile India often takes a strong hand on Sri Lankan issues with a long-standing condescending attitude, which can only cause negative response in Sri Lanka, analysts said. 

In comparison, the BRI projects such as Hambantota Port has developed into an important comprehensive port for the region, and it is China's loans and participation that have helped Sri Lanka revitalize its important assets, provided an key driving force for the sustainable development of Sri Lanka, analysts said.

Maya Majueran, who's currently serving as a director of Belt&Road Initiative Sri Lanka (BRISL), a Sri Lanka-based organization that specializes in BRI cooperation, refuted the so-called debt-trap diplomacy hyped by some in the US and Indian media. 

"Someone's hyping that Sri Lanka's debt burden was a result of BRI projects like Hambantota Port. However, there is no evidence supporting the claim. Furthermost Chinese loans are concessional and taken for infrastructure and eco-social development," Majueran told the Global Times on Monday.

In fact, in partnership with BRI, Sri Lanka commenced a series of developmental projects, leading to a huge overhaul of Sri Lankan infrastructure which had been lagging behind for generations. Improving infrastructure and creating jobs have immensely benefited the Sri Lankan people, Majueran said.

However, political and economic turmoil in Sri Lanka will definitely have an impact on the progress of some large-scale BRI projects such as Hambantota Port and Colombo City, but the impact is short-term, Zhou Yuyuan, senior research fellow at the Center for West Asian and African Studies under the Shanghai Institutes for International Studies, told the Global Times on Monday.

In the long run, these projects are actually important developments that were and will be critical in contributing to the economic construction of Sri Lanka. The Sri Lankan government is also fully aware of this and also attaches great importance to the BRI, Zhou said.