By: Staff Writer
November 30, Colombo (LNW): China and Sri Lanka maintain a robust partnership underpinned by historical ties, economic cooperation, and forward-looking trade and investment initiatives. This relationship has evolved with mutual benefits, despite global challenges and critical scrutiny.
Economic Cooperation and Investments
After a dip in 2022, Chinese imports to Sri Lanka surged in 2024, with key imports including yarn, fabric, electrical items, household goods, and coal. Although China has refrained from offering new loans since 2021, Chinese State-Owned Enterprises (SOEs) have been active in Sri Lanka. Notable examples include Sinopec’s distribution of fuel and its $4.5 billion oil refinery project in Hambantota, awarded by the Sri Lankan government.
China remains one of Sri Lanka’s largest creditors, with $4.7 billion in loans, $4 billion of which is managed by the Export-Import Bank of China (EXIM).
Landmark Projects and Their Impact
Chinese investments have driven several large-scale infrastructure projects in Sri Lanka, such as the Colombo Port City, Hambantota Port Development, and the Colombo Lotus Tower. Chinese Ambassador Qi Zhenhong highlighted that these initiatives, often criticized as “white elephants,” were executed at the request of Sri Lankan governments. While some projects faced inefficiencies in operation, others, like the Lotus Tower, have turned profitable and become iconic landmarks.
The Ambassador also noted that ports like Hambantota and Colombo are poised to contribute significantly to government revenue. The Colombo Port City project, entirely funded by China, incurred no cost to Sri Lanka, exemplifying mutual trust and collaboration.
Addressing Concerns and Future Prospects
Ambassador Qi dismissed allegations of a Chinese “debt trap,” stating that investments were driven by longstanding friendship, not ulterior motives. He emphasized China’s role in aiding Sri Lanka during the United Nations Human Rights Council sessions, the COVID-19 pandemic, and economic crises.
Delays in signing a Free Trade Agreement (FTA) between the two nations were attributed to concerns about market dominance. The Ambassador reassured that Sri Lanka could revise the FTA if unfavorable conditions arose, underscoring China’s flexibility and commitment to equitable partnership.
A Strengthened Relationship Ahead
In a joint statement in March 2024, both nations reaffirmed their dedication to sovereignty and nonaligned foreign policies. Ambassador Qi expressed optimism about future collaborations under the current Sri Lankan administration, envisioning a new phase of strengthened ties, mutual prosperity, and respect.
China’s enduring support, exemplified through infrastructure development and financial aid, cements its position as a reliable ally of Sri Lanka, fostering long-term economic and strategic growth.
