Business Strategies: what do you do with an incalculable surplus of cash?

Speaking at a meeting of South American leaders in the early 1960s, US President John F Kennedy made a grandiose promise: he was trying to distance the rest of the continent from Cuba and to prove that capitalism was good and that Communism would lead to desperation and poverty.The USA would, he said, contribute USD50,000 million to the improvement of economies with the aim of eradicating poverty by creating jobs. Half-a-century on, history is the judge of the success of that plan.

Today, it's a (largely former) Communist nation that is pushing its money out across the world - but not attaching an ideology to it.

Yesterday, China's Export-Import Bank (ExIm) signed the third major deal between Chinese government owned finance groups and the government of Sri Lanka. But although it is not pumping ideology, China has some self-interest at heart - and it's not just the interest earned on loans.

Early last year, India became upset with China alleging that China was aggravating the hostilities in Sri Lanka with money and arms. But China was not arming and funding the LTTE rebels: it was aiding the incumbent government. LTTE is named by many countries and international bodies as a terrorist organisation. Yet India expressed disgust and dismay when China expressed its support for the Sri Lanka government.

The Times of India, a pro-government newspaper, said, in April last year "China's declaration of support for the Sri Lankan government against the LTTE, apart from sticking out like a sore thumb in the eyes of the world, has further fuelled India's mortal distrust of its largest and most powerful neighbour. While India has a much more nuanced position over the issue owing to its domestic compulsions, an unfettered China is supporting Colombo and, in the process, authenticating India's fear about Beijing extending its influence in the Indian Ocean."

But that's not what's really causing the ire, the paper said. "According to government sources, Beijing's support to Colombo cannot be viewed in isolation because it follows a series of initiatives aimed at influencing the Sri Lankan government. These include selling huge quantities of arms to Colombo last year and boosting aid almost five times to USD1,000 million. In fact, China is now the largest donor to Lanka. Its Jian-7 fighter jets, anti-aircraft guns and JY-11 3D air surveillance radars played a key role in the Sri Lankan military successes. "China came to rescue of Colombo after the US stopped direct aid to Sri Lanka because of its dismal human rights record. What's worse, said strategic affairs expert Brahma Chellaney, Beijing has also roped in its ally Pakistan for providing military assistance to Lanka."

China's involvement in Sri Lanka is immense: it is providing funding for major infrastructure projects the length and breadth of the country from a new international airport (only the second after Colombo), a large container port, two power plants and roads. For China there are both strategic advantages - including co-ownership of some of the projects - and that Chinese construction firms, with Chinese workers, do the work.

China is doing nothing different to the aid projects put in place by other major governments but its actions are viewed with suspicion and fear. But a study of aid from e.g. the UK and the USA will see that it is almost always tied to, for example, construction or military contracts.

But Sri Lanka hopes that its links with China will also see an increase in tourism. According to figures from the National Tourism Administration of China, overseas trips in 2010 will rise by 7% as against last year bringing the total number up to 51 million. Macau and Singapore hope to grab a slug of that with their casinos - with some USD42,000 million spent by travelling Chinese, the country has leapt into the top five spending travelling nations, according to the United Nation's World Tourism Organisation.

Countries are battling for a slice of that money: India may have a deep distrust of the Chinese but it wants their money and so it has launched a marketing campaign aimed at Chinese travellers called "Incredible India." China has responded by naming 2010 a year of cultural exchange with India.