Sri Lanka and China to strengthen economic relationships for future cooperation

Sri Lanka and China to strengthen economic relationships for future cooperation

After high-level meetings between President Gotabaya Rajapaksa and Chinese Special Envoy Wu Jianghao, China and Sri Lanka agreed yesterday to speed up the implementation of large-scale projects and draw up a "new blueprint" for future cooperation. Besides, the major projects will concentrate on the Colombo Port City project and the Hambantota Port venture. A Chinese mission headed by former Chinese Ambassador to Sri Lanka, Wu Jianghao, as State Councillor and Foreign Minister Wang Yi's representative, as well as other embassy officials called on President Rajapaksa.

He also met yesterday with Prime Minister Mahinda Rajapaksa as well as with Speaker Karu Jayasuriya, Chief Ranil Wickremesinghe of the United National Party (UNP) and Foreign Minister Dinesh Gunawardena. Following the meeting with President Rajapaksa, in a statement, the Chinese embassy said both parties agreed to further deepen the "robust confidence" between the two countries.

Sri Lanka and China agreed to improve their practical cooperation.

The embassy also expressed the intent to implement the following:

             1.        "Speed up the implementation of major economic projects, including Colombo Port City and Hambantota Port, according to established consensus.”

             2.       “Draw up a new blueprint for future cooperation on that basis.”

Hot on the heels of the victory of President Rajapaksa, China invited to visit Beijing. A spokesman for the embassy said that Chinese Ambassador Cheng Xueyuan extended his invitation to travel to China at "a mutually convenient and mature time."

The visit comes days after President Rajapaksa told an Indian journalist in an interview that he was going to renegotiate the lease agreement for Hambantota Port, call it a "mistake" and call on the Chinese firm to be open to the change.

President Rajapaksa said that while China was a good friend, he was not afraid to say that the former government's inked joint venture was a mistake. He further pointed out that public sentiment was against the agreement. President Rajapaksa thought that it was not necessary to hand over control of a valuable asset of economic importance, such as a port.

In 2017, Sri Lanka and China signed a $1.1 billion contract that paved the way for a Chinese company to lease the port for the business activity for 99 years. The Port Authority of Sri Lanka (SLPA) and the Port Holdings of China Merchants signed the agreement. Under the contract, a 70% stake in a joint venture with SLPA is retained by the Chinese company to operate the port for commercial purposes for 99 years. The Chinese company has spent an additional $600 million to run the terminal.

OSL Take: Sri Lanka and China will gain access to most markets of the world with very competitive pricing through close collaboration. According to current market predictions, China’s economy is likely to grow in the coming years, and the Sri Lankan economy can leverage this for growth as well. China being one of the largest markets both in production and consumption, will allow Sri Lankan products to reach a much-expanded clientele. Such market exposure would thus bring a considerable amount of revenue.

VBS/AT/20200106/Z_TB3