What Money Can’t Buy: The Security Externalities of Chinese Economic Statecraft in Post-War Sri Lanka

ABSTRACT China’s growing trade, investment, and aid links are commonly believed to constitute a potent instrument of statecraft, generating important security externalities. Yet there is insufficient research tracing the precise mechanisms linking economic relationships between a “sender” and “target” state to actual influence in the security domain. We offer three contributions. First, we map out the theoretical mechanisms of influence in a sender–target relationship. Second, we empirically investigate these mechanisms through a case study of China’s economic influence in Sri Lanka since 2009. Third, we use our findings to generate new insights on the mechanisms of influence in the economic statecraft literature and the dynamics of great-power competition in South Asia. Beijing’s ability to convert its considerable economic resources into strategic influence in Sri Lanka is currently hampered by the poor planning and implementation of infrastructure projects, domestic politics, and Sri Lanka’s relationship with India, a regional competitor and rising power.