As China-India tensions escalate, can Sri Lanka avoid becoming a pawn in a big power game?

What with last year’s Easter Sunday terrorist attacks scaring away tourists and then the coronavirus pandemic disrupting travel all across the world, Sri Lanka’s economy has taken a battering recently – leaving it turning to powerful neighbours such as China for help.

The South Asian nation’s economy grew 2.3 per cent in 2019, but this year it is forecast to shrink by as much as 3 per cent, prompting the government in Colombo to ask Beijing for a US$500 million loan from the state-owned China Development Bank in March, with a further US$128.6 million in “coronavirus support” being approved by the World Bank in April.

Sri Lanka’s appeals to India for help, meanwhile, seem to have been met with a cooler response, even as New Delhi has seen its historical influence over Colombo diminish in the face of increased investment from Beijing.

Since 2003, India has poured more than US$1.2 billion into its southern neighbour, funding projects ranging from housing developments to new schools across the island. It has also emphasised the two nations’ shared Buddhist heritage, in response to China’s apparent attempts to do the same as part of its soft power manoeuvres. The landmark US$104 million Lotus Tower in capital Colombo, for instance – inspired by the Lotus Sutra, one of the most important and influential Buddhist scriptures – was paid for with loans from the state-run Export-Import Bank of China.