China: Emerging ‘qibla’ for struggling Sri Lanka

The scale and speed of this transformation bears valuable lessons for struggling economies like Sri Lanka’s

“China is a sleeping giant (dragon), when she wakes (up) she will shake the world”.

The above quote is popularly attributed to Napoleon Bonaparte although there is no hard evidence to show that he said so. Yet, since the 19th century there was a fear about China especially among spokespersons for the British Empire, and the two Opium Wars, one fought between China and Britain (1839-42) and the other between China and France (1856-60), over opium trade were in a sense intended to keep China drugged so that it would continue to sleep. 

But China has been awakened and is now shaking the American Empire and the so-called rules based International Order set up after the Second World War. Two ongoing wars in the Middle East and Europe and the desperate measures President Donald Trump and his economic advisors are resorting to protect the economic and monetary might of US are clear symptoms of this collapse. 

China is showing a new direction (qibla) to follow for economies suffocating under a US-led capitalist order. China’s Belt and Road Initiative aka One Belt One Road (OBOR) or New Silk Road, which passes through Sri Lanka’s Hambantota, had by early 2024 connected 140 countries via road, rail, sea, energy and digital infrastructure. OBOR is a family of nations headed by China that accounts for 75% of world population generating more than one half of world GDP and is expected to increase that GDP by $ 7.1 trillion per annum by 2040. With countries in BRICS China is trying to create a common currency as medium of international transactions to destroy the hegemony of US dollar. Donald Trump in desperation has announced that he would resort to prohibitive tariffs against BRICS were that to happen.

Net loser would be US consumers and not China

In Trump’s “Liberation Day” tariff war the net loser would be US consumers and not China. Already, Walmart and other major retail chains had announced increase in their prices and Walmart is planning to cut down 1,500 corporate jobs. More bad news expected to follow soon. In short, whether World War III eventuates or not the economic war against rising giant China is well under way. 

To its credit China had successfully uplifted nearly 800 million of its citizens from abject poverty during the last four decades while Trump’s measures to protect the wealth and assets of his oligarchs are set to impoverish the working poor in his own country. His desperation became even more acute when he announced his wishes to annex Canada as the 51st state of US, acquire Greenland from Denmark either peacefully or militarily, rename Gulf of Mexico as Gulf of America through an executive order and acquiring through BlackRock-led acquisition two key ports along the Panama Canal. Finally, his recent trip to Saudi Arabia, UAE and Qatar crowned with a gift of a $ 400 million worth luxury Jet aircraft from Qatar was more in search of investments and markets than to bring peace to the Middle East. 

That trip exhibited how despondent US has become economically to survive as a superpower. With UK and EU negotiating measures to counter US tariff attack and Canada remaining steadfast in remaining independent, crack in the Western alliance has begun to widen, and it is time the baton of world leadership passed to the East.

It is in this global context of a cracking and collapsing so-called rules based international order, fractured by economic crises, financial bankruptcies, resource depletion and institutional incapacitation as blatantly demonstrated in the case of UN Aid Agencies’ inability to get those thousands of aid-carrying trucks blocked by Israel to enter Gaza that struggling economies like Sri Lanka should look towards the East for economic opportunities and leadership. The recent visit by Chinese investors to meet Sri Lankan President AKD is a welcoming sign, and China’s roadmap to deepen its economic relations with Sri Lanka should receive positive reception in political circles. 

Learning from China’s miraculous economic transformation

To Sri Lankan political leaders, intellectuals and university pedagogues and undergraduates there are several lessons to learn from China’s miraculous economic transformation. It was a transformation from an outback economy with millions of poverty-stricken families depending for survival on subsistence farming and small industries to an industrial powerhouse within a period of little over five decades. The scale and speed of this transformation bears valuable lessons for struggling economies like Sri Lanka’s. From the time of independence Sri Lankan policy makers most of whom were products of Western education institutions looked towards the West for economic leadership and inspiration. It is time the country turns its qibla towards the East. 

The most important lesson that China’s transformation teaches is not to give up economic planning, a concept and strategy came into ridicule in the writings of neo-liberal economists and free market advocates after the Cold War. To their surprise China has successfully demonstrated that long-term planning with five yearly stocktaking of progress made is the panacea for economic stability with sustainable growth without sacrificing market mechanism altogether. Freedom of the market is constrained no doubt and Chen Yun, a member of the Communist Party who played a key role in planning, dubbed the Chinese model a bird-cage economy in which the market was the bird and cage the plan. The 15th five-year plan is currently under way, and that tradition is set to continue. 

When the so-called open market economies were experiencing stagflation or simultaneous rise in inflation and unemployment in the 1980s and 1990s, it was China that came to their rescue by opening its doors to foreign investors. But investors were told where and on what to invest. Attracted by China’s cheap labour and industrial discipline foreign investors flocked there, partnered with Chinese entrepreneurs, produced intermediate as well as final products and exported them back to their home countries. It is against such imports that Donald Trump has raised tariffs to “liberate” his country. 

With shared profit from joint ventures the Chinese government spent massively on infrastructure development and research. Universities and research institutions were funded generously by the government and in 2025 for example, Tsinghua University and Peking University ranked 12th and 13th respectively in the world. According to the open-access database for journals, which covers a total of 2,000 entries, 600 are Chinese. In 2020 alone China spent 2.4 trillion yuan or $ 370 billion on research, ranking second in the world. If there is one lesson that Sri Lanka could learn from this is that the country’s university academics should be assessed for promotions, not simply on their seniority of tenure but on quality of research and publications output. 

China’s Special Economic Zones

The role of China’s Special Economic Zones (SEZ), described as “social and economic laboratories where foreign technology and managerial skills could be observed”, is another model to adopt. Initiated by Deng Xiaoping there were a total of 45 SEZs by 2020s spread all over China. The success of this model has attracted countries in Africa to imitate China’s experiment with China’s assistance. SEZs have become the halting points of China’s OBOR highway. The Colombo Port City is SL’s first SEZ and there is huge potential to open a few more particularly in the North and East if the current Government could give priority to ethnic reconciliation. The Sinhala-Tamil ethnic issue is the bane of the island. 

China put peoples’ interest first and not those of lobbyists or business leaders. Wide consultation with people and entertaining their suggestions, recommendations and even criticisms has won popular support for government projects. After all people are the stakeholders in development. It was this approach that made poverty reduction, affordable education and public healthcare to receive priority in China’s government projects. In Sri Lanka, where public hospitals and public health have been neglected for long, China’s Basic Medical Insurance (BMI) scheme, which by 2020 had covered more than 95% of the population, is a model worth considering for adoption. 

However, China is not a perfect model to replicate. There are aspects such as media control, surveillance and other restrictions on democratic values and freedom that need to be avoided. But as far as Sri Lanka is concerned an eastern direction opens the gateway to a huge market of complimentary economies to gain access to the island’s exports. Reliance on the West for domestic growth and prosperity is no more a sound option with Trump’s economic disorder. 

(The writer is a retired economist, W. Australia.)