To be fair, the Hambantota port will make it easier for India to trade with Sri Lanka. But it could also be used as a naval station for China should the two countries ever engage in a full-scale war.
Meanwhile, China’s growing presence in Sri Lanka undermines India’s efforts to influence the foreign policy of the country.
That could explain India’s efforts to contain China’s Indian Ocean agenda by forming alliances with US and Japan, and by performing a joint naval exercise in the Malabar in the Bay of Bengal last July.
Still, the prospect of a Pakistan debt problem or an open confrontation between India and China are very unlikely, at least for the time being. That’s why investors in the region have chosen to focus more on market fundamentals rather than on the geopolitics of the region, driving shares in all three country markets higher recently.
But that could change, if tensions between China and India’s new allies, America and Japan, continue to flare.
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