China’s Economic Diplomacy



  • G.S. Paper 2,3
  • China’s diplomatic relations with Srilanka, Mayanmar and Pakistan


  • In recent years, China has expanded its global and regional economic footprint. Through new institutions, such as the Asian Infrastructure Investment Bank (AIIB) and the One Belt, One Road initiative, Beijing seeks to carve out a leadership position within the global economy.

What is china’s economic diplomacy doing with srilanks?

  • SRI LANKA – Investments – China seems to have taken trade advantage in Sri Lanka by exploiting its economic vulnerabilities.
  • Evidently, China has heavily financed some projects including the Hambantota port, power plant, airport, industrial park, sports complex, etc.
  • Debt – The investments made have proved largely uneconomical.
  • Most of the projects remain unutilised or under-utilised and hardly make any substantial returns.

What is china’s economic diplomacy doing with Myanmar?

  • MYANMAR – China’s belt and road initiative in Myanmar is primarily concentrated on developing the Bay of Bengal port of Kyaukpyu.
  • And connecting the port to neighbouring Yunnan province by oil and gas pipelines, and road and rail networks.
  • But Myanmar is wary of over-dependence on China.
  • This is because of China’s environmentally damaging energy projects and its yearning for access to precious metals and stones.

What is china’s economic diplomacy doing with Pakistan?

  • PAKISTAN – China’s ‘all- weather friend’ Pakistan is facing problems in implementing the China-Pakistan Economic Corridor (CPEC).
  • Pakistan has some reservations with agreeing to the financial terms set by the Chinese.
  • Notably, there is very little transfer of technology and know-how, and minimal local participation in Chinese construction projects.
  • Evidently, China is only aiming at making use of its own surplus labour force and construction machinery and materials abroad.
  • This is given the fact that its unprecedented domestic construction projects at home are completed.
  • Pakistan is also concerned of the whereabouts of the resources to repay the debt that will accrue from the CPEC projects.
  • Moreover, Pakistan will soon be unable to credibly claim sovereignty.
  • This is because places like the Gwadar port are becoming more a Chinese-run military base, close to the strategic Straits of Hormuz.

How is India responding to the diplomatic, economic challenge of CHINA?

  • India – By expressing its concerns over the Chinese presence, India has made Sri Lanka retain the operational control of Hambantota port.
  • This is to ensure that Chinese submarines and warships do not freely berth in the port.
  • Some pre-emptive action has also been taken to prevent the Chinese from developing Trincomalee as the next port of interest for its strategic ambitions.
  • The Indian Oil Corporation has established a business presence in Sri Lanka.
  • This is particularly for a progressive involvement in the use of Trincomalee for import and processing of petroleum products.
  • Myanmar – Myanmar seeks the support of India, Japan, South Korea, the US, the EU and neighbouring ASEAN countries to resist the Chinese pressure.
  • Indonesia – Indonesia has ensured that it responds cautiously to Chinese inducements and avoids getting closely drawn into a Chinese tactical web.
  • In all, other countries should have a coordinated effort to strengthen the economic relations among themselves, to potentially tackle China’s exploitative trade relations.



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