China – friend or foe of Sri Lanka


A certain term has been used more frequently in recent times to describe the desperate dependence of some developing countries on large global lending institutions such as the World Bank, the IMF and others with similar portfolios.

Even economically powerful nations such as China and some Western countries had been labeled the same after granting loan facilities to some developing countries.

International credit institutions and economic powers such as China, which facilitate loans to countries in need, are often accused of unleashing a deadly debt threat for those countries, although these countries only voluntarily accept such loans. financial – and not without having been asked for guarantees. . Loans are always given in exchange for the repayment of the loan principal plus interest. Some electronic and mainstream print media focus heavily on these loan portfolios, describing them as:

The debt trap?

The term “debt trap” refers to negativity. This supposes that one owes an enormous sum of money to various institutions with less and no plan to settle it one day. Or in economic terms – a situation where the debtor will not be able to repay the debt incurred. Taking a closer look at Sri Lanka’s bilateral economic ties with China, the following graph gives an overview of the scale of projects in which the two countries had been linked.

The two main Chinese-funded projects, Port City and Southern Express Way, alone consumed US $ 3 billion as loan or investment components, equivalent to nearly 4% of annual gross domestic product. Sri Lanka in 2020 with 81 billion US dollars.

Port City is owned by CHEC Port City Colombo (Pvt) Ltd, which is a 100% subsidiary of China Harbor Engineering Company (CHEC). PC will emerge as a whole new urban development combined with a financial city as a special economic zone and international financial center.

Both projects have a positive negative impact on Sri Lanka’s infrastructure and can place Sri Lanka in a favorable position as an international business center.

The land on which PC is built was virtually created on water by reclamation and again this part was also funded by the Chinese government.

Tourism, retail and leisure activities are estimated to generate up to 1.8 billion in direct economic value per year and provide 39,000 direct employment opportunities.

The indirect contribution of this sector is estimated at 850 million USD per year through local supply chains.

A detailed comparison of local / foreign employment quotas was researched by PWC in 2020 and details the stages of land reclamation, construction and operation as shown below.

Equally important are the benefits of the Southern Expressway.

Reduced travel time between Colombo and Mattala Airport, reduced congestion on the Colombo-Matara road with significant relief for the local community residing next to the old Colombo-Matara main road. Incentives for a new tourist development currently confined to the coastal belts and valuation of land and properties in the region.

Sri Lanka and China have enjoyed a close and cordial relationship for many decades, not only in economic sectors, but also on the global political agenda.

Sri Lanka was seen as a steadfast and reliable friend, not an enemy, especially at a time when the UN came together on issues related to alleged human rights violations in China. Sri Lanka’s support for China has always been welcomed by Chinese governments in the past and today.

(The author is a sociologist and an expert in the tourism sector)


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