Ever since the term "String of Pearls" was coined by a team of experts at United States-based consultancy Booz Allen in 2004, journalists and academics have overplayed China's supposedly malevolent involvement with countries along its Sea Lines of Communication (SLOC), which stretch from the South China Sea to the Indian Ocean.
For them it was easy to believe that China, a country once known more for its bloody Tiananmen Square crackdown in 1989 and one-child population control policy than its strategic might, had a hidden strategy to build military bases along its SLOC. Now, with the recent announcement that China plans to increase its military budget by 12.7% year-on-year, the "String of Pearls" strategy is expected to receive new critical attention and commentary.
There is still scant concrete evidence that China is currently or in the near
future planning to build and maintain military bases along its SLOC. Indeed, to date the controversial theory is based more on speculation than fact. According to the 2005 Washington Post article that galvanized the debate, the "String of Pearls" refers to China's supposed aim to leverage diplomatic and commercial ties to build strategic bases stretching from the Middle East to southern China in order to protect its energy interests as well as "broader security objectives".
A map taken from the original Booz Allen report shows that China is intimately involved with countries along its SLOC in the Indian Ocean, including Bangladesh, Pakistan, Myanmar and Sri Lanka. In the Washington Post article, China was said to be building a container port facility at Chittagong, Bangladesh but at the same time was "seeking much more extensive naval and commercial access".
In Myanmar, China was supposedly building naval bases and had established electronic intelligence gathering facilities on the nearby Coco islands in the Bay of Bengal . At Hainan Island, the supposed first in the chain of strategic pearls off the coast of China, the article said China was being allowed to "project air and sea power". Moreover, based on the Booz Allen map, China was said to be establishing a naval base and surveillance facilities in Pakistan.
Viewing a map of China's SLOC, there is certainly a correlation between China's relations with these countries and its energy security policy. Nearly 80% of China's fuel is imported, mostly from the Middle East and North Africa, and those shipments must travel through several strategic "choke points" along the way, including through the particularly narrow Strait of Malacca. But correlation does not always signify a causal effect.
The "String of Pearls" theory is based partially on the fact that China possesses one of the world's largest commercial shipping fleets and relies heavily on international maritime commerce. Energy imports carried on tankers from the Persian Gulf and Africa traverse often treacherous regions, including the threat of long-range pirates operating from Somalia. In accordance with those threats, China has developed diplomatic, economic and military relations with respective Indian Ocean countries. However, it is a large hypothetical leap to assert these relations are driven by a longer-term desire to construct actual military bases along its SLOC.
Ever since the publication of the Washington Post's alarmist article, journalists and researchers have hyped China's intentions in the Indian Ocean. For example, Commander Kamlesh Kumar Agnihotri, a research fellow at New Delhi's National Maritime Foundation, penned a paper in February 2010 entitled: "Chinese Quest for a Naval Base in the Indian Ocean - Possible Options for China" that weighs and outlines China's supposed "global power projection thinking". Retired Indian army Brigadier S K Chatterji painted a more threatening portrait of China's involvement with South Asian countries in his September 2010 article "Chinese String of Pearls could Choke India".
In analyzing China's supposed strategic "pearls", three key characteristics stand out. First and foremost, China does have some involvement in the identified ports. But with the exception of Sri Lanka's Hambantota and perhaps Myanmar's Sittwe, they are used not only by China and there are currently no signs whatsoever of any developments for future military purposes.
Second, while there is no denying that China has an interest in building relations with strategically located countries, it is important to understand the great power context these countries face. To openly side with China over other regional powers, including India and the United States, would be extremely risky diplomacy for these smaller countries.
Indeed, in today's globalized world, choosing one great power's side over another's unnecessarily limits countries' economic and political options. That's especially true for less-developed countries like Myanmar, Pakistan, Bangladesh, and Sri Lanka - all of which are reliant on foreign trade, aid and investment and for development purposes need all they can get. In the current geopolitical context, countries stand to gain the most by subtly playing great power off one another, rather than committing to one in particular.
Third, government officials in the respective "pearl" countries have openly repudiated reports they have given China any preferential treatment and that Beijing is quietly building and/or planning to build military bases in their sovereign territories.
Hainan Island, located off China's coast in the South China Sea and often referred to as the first pearl in the chain, has often been at the center of this debate. In 2008, the United Kingdom-based Daily Telegraph newspaper claimed that China had built a secret underground nuclear submarine base at Yulin Naval Base on the southern tip of Hainan.
The report followed on US estimates that China would have five operational nuclear submarines, each capable of carrying 12 JL-2 nuclear missiles, by 2010.  Because Hainan island is China's sovereign territory, there has been no denial that Beijing maintains a military base there. Whether or not the base is dedicated more to securing China's SLOC or asserting its territorial claims in the South China Sea is less clear.
Bangladesh's Chittagong port is the country's principal seaport, currently handling around 92% of its import-export trade. The cash-strapped government in Dhaka does not have the finances needed to modernize the port and China, a long standing ally, recently agreed to help fund upgrades.  Bangladeshi authorities along with their Chinese counterparts set out an $8.7 billion development plan to raise bulk cargo handling capacity to 100 million tons and containers handling of three million 20 feet equivalent unit containers annually by 2055.  The ambitious plan also involves the development of a deep sea port and a road connecting Bangladesh to China via Myanmar. 
Because Chittagong port handles the majority of the country's trade, the scheme would appear to make rational business sense from China's perspective and the planned new connecting roadway. In 2010, India, Nepal and Bhutan also received Bangladesh's approval to use the port for trade. Bangladesh Foreign Minister Dipu Mani said in March last year he had tried to woo China into a similar agreement, but as of 2011 there has not been any development suggesting China will use the port for its trade.  The strengthening of Sino-Bangladeshi relations is a matter of strategic concern for both India and the US. Mani has stated publicly that China's involvement in building a deep sea port was only for economic purposes. He said that Bangladesh was acting as a "bridge" between China and India and would never let its territory be used for military attacks.  Prime Minister Sheikh Hasina said that the plans were part of her government's strategy to connect Bangladesh to the greater Asian region in order to develop its markets and promote economic growth "in the interest of the people of this country." 
Myanmar's Sittwe port, a small facility considered another of China's "pearl", is situated approximately 265 kilometers south of Chittagong. However, it was India - not China - that agreed to a contract with Myanmar in April 2009 for the development of the so-called Kaladan Transport Project, which includes plans for the development of the Sittwe port. The Indian company Essar Projects is currently building a coastal port at Sittwe and a river jetty at Paletwa.
As part of the same project, an additional 120 kilometers of road will be built in Myanmar from the river terminal in Paletwa to the India-Myanmar border in the northeast. The project is scheduled for completion in three years at a cost of between $75-$120 million, which will be financed entirely by New Delhi.
Both countries hope that the project will boost trade links between ports on India's eastern seaboard and Myanmar's western Arakan (Rakhine) State. From there, goods will be shipped along the Kaladan River from its confluence near Sittwe to Paletwa in Myanmar's Chin State and by road to India's Mizoram State, which will provide an alternative route for the transport of goods to India's landlocked northeast.
China is using the current port at Sittwe but its main interest is in the Kyaukphyu port in Rakine state and its access to the Bay of Bengal in order to pipe oil and gas from the Middle East and Africa to its land-locked southern and western hinterlands. Beijing is currently building two parallel oil and gas pipelines that will connect Kyaukphyu port to the Chinese city of Kunming in southern Yunnan province.
The oil pipeline will terminate in the city of Kunming, while the 2,806-kilometer natural gas pipeline will extend to China's Guizhou and Guangxi provinces.  It will allow Chinese oil tankers from Africa and the Middle East to pipe their fuel loads directly to China, therefore avoiding the potential strategic choke point of the Malacca Strait. The estimated construction cost of both pipelines is $3.5 billion, in addition to the development of an offshore gas field worth $3 billion, both of which will be financed largely by China. 
Myanmar's Coco Islands, another supposed "pearl", have been allegedly used by China to gather signal Intelligence (SIGINT) and electronic Intelligence (ELINT) in the east Indian Ocean. News reports have claimed China intends to build naval bases on the islands in order to observe Indian naval and missile launch facilities in the Andaman and Nicobar Islands to
the south and movements of the Indian navy and other navies throughout the eastern Indian Ocean. 
Because of the controversy, China and Myanmar invited Indian officers to visit the contentious premises. In 2006, Indian naval delegations were unable to find any evidence to confirm these intelligence-gathering suspicions. The radars they inspected on the islands were characterized as "rudimentary". In September 2009, Vice Admiral Anup Singh, flag officer commanding-in-chief of India's Eastern Naval Command, stated that up until then there had been no signs of Chinese naval movements in the region. 
A 2008 report entitled "Burma's Coco Islands: Rumours and Realities in the Indian Ocean" written by Myanmar security expert Andrew Selth argued that the lack of verifiable data regarding China's involvement in the Coco Islands had complicated the issue. He wrote that "credulous" media reporting, often pushed by individuals with their own agendas, led to the "myth" of a Chinese military base on the Coco Islands.  As of late 2009, there was no tangible evidence of China's military presence in the region and its supposed use of the Sittwe port for present or future military activities.
Sri Lanka's Hambantota port, yet another alleged "pearl", was previously a small fishing harbor on the country's southern coast and is located on the primary sea route connecting Europe to Asia. Sri Lanka has proposed to build a modern port facility near the existing harbor and first pitched the idea in 2005 to India, which had already refurbished the World War II-vintage oil-tank farm at Trincomalee. New Delhi was not interested in the project and China later agreed to fill the financing gap. In February 2007, Sri Lankan President Mahinda Rajapaksa signed eight agreements, including the Hambantota project, during an official visit to Beijing.
By 2023, Hambantota is projected to have a liquefied natural gas refinery, aviation fuel storage facilities, three separate docks to give the port a transshipment capacity and dry docks for ship repairs and construction. The project also envisages that the port will serve as a base for bunkering and refueling.  The Hambantota project is part of a larger $6 billion post-war infrastructure revitalization drive and China is among many countries now actively investing in the country. 
Priyath Wickrama of Sri Lanka's Ports