Sri Lanka has asked China for assistance with trade, investment, and tourism in order to grow in a sustainable manner. On Monday, Colombo’s envoy to Beijing stated that Sri Lanka had asked China for assistance in trade, investment, and tourism in order to grow in a sustainable manner.
After running out of foreign reserves, the island nation of 22 million people is experiencing its worst economic crisis since its independence in 1948. Protesters enraged by fuel, food, and medicine shortages overthrew the Rajapaksa regime.
The emphasis on China by Sri Lankan Ambassador Palitha Kohona as a key to Sri Lanka’s economic recovery reflects Beijing’s status as one of Sri Lanka’s two largest foreign creditors, alongside Japan. China also holds roughly 10% of Sri Lanka’s external debt.
Kohona told Reuters at Sri Lanka’s Beijing embassy that Colombo wants China to ask its companies to buy more Sri Lankan black tea, sapphire, spices, and garments, as well as to make Chinese import rules more transparent and easier to navigate.
He added that Beijing could assist by increasing investment in massive China-backed port projects in Colombo and Hambantota. Major Chinese investment plans had not materialized as a result of the COVID-19 pandemic, according to Kohona.
Furthermore, Sri Lanka would like to see more Chinese tourists, whose numbers dropped from 265,000 in 2018 to nearly zero following the 2019 suicide attacks and pandemic.
Kohona stated that the new Sri Lankan President Ranil Wickremesinghe intends to visit China to discuss cooperation in areas such as trade, investment, and tourism.
Wickremesinghe is not unfamiliar with China. A photograph of him shaking hands with Chinese President Xi Jinping when he visited Beijing as prime minister in 2016 hangs in the embassy hallway where Reuters interviews Kohona.
Kohona predicted that the new government’s policy toward China would not change fundamentally.
He acknowledged that China is finding it difficult to act quickly to assist Sri Lanka because, as a major global creditor, it is also financially exposed to many other countries in financial distress. “Perhaps if it had only been Sri Lanka, the decision-making would have been much easier.”
Sri Lanka had been in talks with China for several months about a $4 billion aid package, which would include a $1 billion loan to repay a roughly equivalent amount of Chinese debt due this year.
It is also requesting a $1.5 billion credit line to cover Chinese imports. These imports, according to Kohona, are mostly inputs for his country’s lucrative garment industry, such as buttons and zippers.
Sri Lanka is also hoping to persuade China to implement a $1.5 billion bilateral currency swap.
Kohona stated that talks on financial assistance with China are still ongoing, but no date for the next meeting has been set.
This month, the Chinese Foreign Ministry stated that Beijing is willing to collaborate with other countries and international financial institutions to “play a positive role” in assisting Sri Lanka.
Aside from financial assistance, Sri Lanka hopes that China will assist it in purchasing fuel, fertilizer, and other critical supplies.
China pledged 500 million yuan ($74.09 million) in emergency aid to Sri Lanka in April and May. “We need a lot more,” said Kohona.
(Source Reuters )