On the southern coast of Sri Lanka, ten miles from one of the world’s busiest shipping routes, a vast construction site is engulfing the once sleepy fishing town of Hambantota.

This poor community of 21,000 people is about as far as one can get on the island from the fighting between the army and the Tamil Tiger rebels on the northeastern coast. The sudden spurt of construction helps, however, to explain why the army is poised to defeat the Tigers and why Western governments are so powerless to negotiate a ceasefire to help civilians trapped on the front line.

This is where China is building a $1 billion port that it plans to use as a refuelling and docking station for its navy, as it patrols the Indian Ocean and protects China’s supplies of Saudi oil. Ever since Sri Lanka agreed to the plan, in March 2007, China has given it all the aid, arms and diplomatic support it needs to defeat the Tigers, without worrying about the West.

Even India, Sri Lanka’s long-time ally and the traditionally dominant power in South Asia, has found itself sidelined in the past two years — to its obvious irritation. “China is fishing in troubled waters,” Palaniappan Chidambaram, India’s Home Minister, warned last week.

The Chinese say that Hambantota is a purely commercial venture, but many US and Indian military planners regard it as part of a “string of pearls” strategy under which China is also building or upgrading ports at Gwadar in Pakistan, Chittagong in Bangladesh and Sittwe in Burma.

The strategy was outlined in a paper by Lieutenant-Colonel Christopher J. Pehrson, of the Pentagon’s Air Staff, in 2006, and again in a report by the US Joint Forces Command in November. “For China, Hambantota is a commercial venture, but it’s also an asset for future use in a very strategic location,” Major-General (Retd) Dipankar Banerjee of the Institute of Peace and Conflict Studies in Delhi said.

The British Navy used the Sri Lankan port of Trincomalee as its main regional base until 1957 and still shares a naval base with the US on the nearby island of Diego Garcia. China has no immediate plans for a fully fledged naval base but wants a similar foothold in the Indian Ocean to protect its oil supplies from piracy or blockade by a foreign power, analysts say.

Beijing sent three ships on an unprecedented anti-piracy mission to the Gulf of Aden in December, and in January a Chinese defence White Paper said that the navy was “developing capabilities of conducting co-operation in distant waters . . .”

China has cultivated ties with Sri Lanka for decades and became its biggest arms supplier in the 1990s, when India and Western governments refused to sell weapons to Colombo for use in the civil war. Beijing appears to have increased arms sales significantly to Sri Lanka since 2007, when the US suspended military aid over human rights issues.

Many of the arms have been bought through Lanka Logistics & Technologies, co-headed by Gotabhaya Rajapksa, the Defence Secretary, who is also the President’s brother.

In April 2007 Sri Lanka signed a classified $37.6 million (£25 million) deal to buy Chinese ammunition and ordnance for its army and navy, according to Jane’s Defence Weekly.

China gave Sri Lanka — apparently free of charge — six F7 jet fighters last year, according to the Stockholm International Peace Research Institute, after a daring raid by the Tigers’ air wing destroyed ten military aircraft in 2007. One of the Chinese fighters shot down one of the Tigers’ aircraft a year later.

“China’s arms sales have been the decisive factor in ending the military stalemate,” Brahma Chellaney, of the Centre for Policy Research in Delhi, said. “There seems to have been a deal linked to Hambantota.”

Since 2007 China has encouraged Pakistan to sell weapons to Sri Lanka and to train Sri Lankan pilots to fly the Chinese fighters, according to Indian security sources.

China has also provided crucial diplomatic support in the UN Security Council, blocking efforts to put Sri Lanka on the agenda. It has also boosted financial aid to Sri Lanka, even as Western countries have reduced their contributions.

China’s aid to Sri Lanka jumped from a few million dollars in 2005 to almost $1 billion last year, replacing Japan as the biggest foreign donor. By comparison, the United States gave $7.4 million last year, and Britain just £1.25 million.

“That’s why Sri Lanka has been so dismissive of international criticism,” said B. Raman of the Chennai Centre for China Studies. “It knows it can rely on support from China.”

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