China’s influence in South and Central Asia: Competition in the Indian Ocean and China’s engagement with Sri Lanka and the Maldives

Economic opportunity is routinely cited as an explanation for what attracts countries to engage with the People’s Republic of China (PRC). Political leaders see infrastructure as the gateway to economic growth for their countries and increasingly view the PRC as a lender of first resort. Citizens and private sector leaders see the PRC as important to their livelihood prospects—creating jobs, offering capital, and generating revenues from tourism or trade. But these economic ties can also constrict autonomy of action for smaller countries like Sri Lanka and the Maldives, creating obligations to back Beijing’s preferred policies, avoid criticism of its actions, and grant political or security concessions.

This brief describes how Beijing was able to position itself as an indispensable economic partner to Sri Lanka and the Maldives by being responsive to domestic shocks that created an opening, opportunistic to befriend leaders isolated by international criticism, and flexible to adapt its tools to align with the priorities of its counterparts. Second, the brief assesses the extent to which Beijing has been able to exploit its superior economic clout to advance its economic, security, and geopolitical objectives in these two South Asian countries. Third, it discusses how the PRC’s engagement in Sri Lanka and the Maldives has changed their relations with India and other development partners. The brief concludes with six recommendations for the U.S.-China Economic and Security Review Commission to consider moving forward. The analysis reflects the author’s views alone and does not represent the official position of AidData, a research lab at William & Mary’s Global Research Institute, or any of its funders.