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Game of Thrones: India Woos Sri Lanka from China's Embrace


India signed an agreement in Sri Lanka’s capital on Monday to construct a $500 million coal-powered plant. The move seems designed to counter China’s increased influence in the island nation just off India’s coast. The Wall Street Journal reports:

India, a traditional political and economic ally of its southern neighbor, is worried about increasing Chinese investment in the island nation, and this is prompting India expand its economic cooperation with Sri Lanka, according to foreign-policy experts.

China’s moves in Sri Lanka to date include increased bilateral trade, a potential free trade agreement, and support for Mahinda Rajapaksa’s government against its Tamil insurgency in 2009. India’s response, meanwhile, has come much later but is perhaps well timed: a Chinese-made power plant broke down in 2011, causing widespread blackouts and damaging the “Made in China” brand.

The Indian power plant proposal was considered in 2006 but shelved. As Bharat Karnad of the New Delhi think tank Centre for Policy Research told the WSJ, the revived project is a sign of “awakening within the India government” of China’s chumminess with Pakistan, Myanmar, and now Sri Lanka.

Coming on the heels of an electricity deal with Bangladesh last week, this news shows that India clearly is looking to remain the preeminent force in a region it has long dominated.

The race is on.

[Manmohan Singh photo courtesy of Shutterstock]

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  • AD_Rtr_OS

    Another customer for Wyoming coal, transported to Los Angeles by the Union Pacific RR, and shipped from the Port of Long Beach/Los Angeles.
    Keep those jobs coming, Thank You very much.

    • Andrew Allison

      Good thought and, given the replacement of coal by natural gas and Administration’s war on coal, an opportunity. But the world’s largest, by far, coal producer (China) is much closer to India than LA.

      • f1b0nacc1

        Call me when the Chinese and Indians start doing that sort of business in volume.
        Mind you distance isn’t that big a deal either. The cost of shipping over water (particularly for a bulk substance like coal) is very, very low, and not at all sensitive to distance. For China to take advantage of its proximity to India, it would have to use rail, and there are these minor impediments called “The Himalayas” that might complicate that

        • Andrew Allison

          A pleasure as always. The issue is not the shipping cost, but the cost of getting it onto the ship.
          Last time I checked, China had a rather extensive sea coast, which makes the Himalayas (in this context) irrelevant. The geopolitical relationships between India and the US and China are equally fraught.
          The real argument is that China is an importer of coal but, given its enormous shale deposits, the likelihood of a reduction in the demand for coal there could change that. Regards.

          • cubanbob

            Ever do business in China? Things aren’t what they appear on paper.

          • f1b0nacc1

            Ah, but you were the one who raised the issue of distance in the first place, which was in fact the point of my reply.
            As for the Chinese shipping coal via sea, while they have a very long coastline, they lack the port capacity (at this time, things can always change) to move unstructured bulk cargos in the quantities that we are discussing. The US, on the other hand, has more than sufficient port capacity to handle this (though much of that would require some upgrading to do so efficiently), as well as a far more efficient cargo rail network to move the coal in the first place.
            Thus we are back again to the question of why India would willingly buy coal from China? They have ‘troubled’ relations with the Chinese, yet they are quite friendly with us, and we can offer coal at a considerably lower price.

      • Kevin

        The competitor for US coal exports is Australia, (among others) not China. China will remain a net importer for the foreseeable future.

        • Andrew Allison

          Agreed. Australia is not only closer than LA but is already a major exporter to China, and has the infrastructure in place. I should have used it as my example rather than the largest producer (and consumer) of coal in the World. Thank you.

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