US blacklisting of Chinese contractor to impact Colombo Port City

The United States’ blacklisting of the Chinese contractor at the centre of Beijing’s island-building activity in the disputed South China Sea could have a disruptive ripple effect across Asia, diplomatic observers have said, pointing to the firm’s extensive presence from Sri Lanka to the Philippines, the South China Morning Post reported.

Malaysia’s US$10.5 billion East Coast Rail Link, the US$1.4 billion Port City Colombo in Sri Lanka and a new US$10 billion airport outside the Philippine capital of Manila are among China Communications Construction Company (CCCC) marquee overseas projects.

Given the scale of the Chinese firm’s regional presence, observers predicted multiple governments as well as local corporate entities that had partnered with CCCC and its subsidiaries would be scrambling in the coming days to figure out just how the sanctions worked.

CCCC is embedded in Asian economies partly because of their participation in the Belt and Road Initiative, Beijing’s multibillion-dollar infrastructure programme.

Political risk consultancy Eurasia Group in a note said the company was currently involved in 923 projects in 157 countries.

CCCC’s presence in Sri Lanka has in the past invoked controversy, with The New York Times reporting in 2018 that some US$7.6 million from the firm’s subsidiary China Harbour Engineering Company was dispensed to the campaign of then president Mahinda Rajapaksa in 2015’s presidential election.

Rajapaksa lost that vote, but his brother Gotabaya Rajapaksa won last year’s election.

CCCC and the Rajapaksas deny The New York Times’ allegations. Apart from the Port City project, China Harbour also built a port in the Rajapaksas’ stronghold city of Hambantota.

That port heavily indebted Sri Lanka, and is seen by the belt and road strategy’s Western critics as the finest example of how the infrastructure-building programme is part of China “debt-trap diplomacy”, aimed at creating a network of pliant debtor states. Beijing has vigorously rejected such assertions.

Five CCCC subsidiaries were among 24 Chinese companies that the US Commerce Department on Wednesday added to its so-called entity list, which bans the companies from receiving US imports without a licence. (Colombo Gazette)