Sri Lanka to tie up with China further

The two presidents discussed, among a host of other matters, the Port City as part of the advancement of cooperation under the Belt and Road Initiative (BRI)

The 2015 change of the Government had an impact on the project, and the new Government proceeded with some amendments to the original agreement

India’s Serum Institute, the manufacture of AstraZeneca vaccine, suspended exports over the rising local demand. This led Sri Lanka to turn to other manufacturers

1 April 2021

President Gotabaya Rajapaksa had a telephone conversation with Chinese President Xi Jinping on Monday. It should not be viewed as just another regular telephone conversation between the two leaders because of the background that preceded it.  The telephone dialogue has been timed in a context where China supported the Sri Lankan Government’s position on the UNHRC resolution on Sri Lanka.  The phone conversation followed the introduction of the bill to regulate the economic affairs of the Colombo Port City which is a US $ 1.4 billion investment by China and COVID-19 vaccine diplomacy.

According to reports, the two presidents discussed, among a host of other matters, the Port City as part of the advancement of cooperation under the Belt and Road Initiative (BRI). Ground breaking for the project was done in 2014 at an event attended by President Xi. The 2015 change of the Government had an impact on the project, and the new Government proceeded with some amendments to the original agreement. 

The Colombo Port City Economic Commission Bill, which provides for regulation and operation of activities in the special economic zone to be established in the landmass reclaimed from the sea under the Port City project, has now been gazetted. It is expected to be passed into law by Parliament  soon.   The enactment is assured because the present Government enjoys a clear-cut majority in the House. 

The Bill, if enacted into Act, will provide for the establishment of a Commission called the Colombo Port City Economic Commission to be entrusted with authority to administer, regulate and operate the activities of the economic zone.  The bill was a product of a long drawn process, initiated first during the time of the previous government. The legislative process could not be completed at that time. Now the legal infrastructure is slated to be set up laying the groundwork for the kick-off of investment activities.    It is a commercial project, but with a strategic component attached to it. The western nations and India are not obviously happy with Sri Lanka nurturing its ties further with China because of their competing interests in the region in terms of geopolitical aspects.

However, any country’s relations with another depends on mutual interests. Recent developments on the world stage, as far as Sri Lanka is concerned,    have left scope for it to tie up China. The Sri Lankan Government tried unsuccessfully to thwart the adoption on a resolution by the UNHRC. The resolution has now been adopted spelling out further challenges for the Government in the international arena.   Likewise, China is also facing critical challenges at the international fora.  Practically, the two countries will seek to cooperate with each other, and it is more than obvious by what transpired during the latest highest level telephone conversation between the presidents of the two countries. 

A statement issued by the Chinese Foreign Ministry after the phone call said, “China will never forget Sri Lanka’s valuable support for the restoration of its lawful seat in the United Nations, and is willing to make continuous joint efforts with Sri Lanka to firmly support each other on issues concerning respective core interests, defend our legitimate rights, promote international equity and justice, and safeguard the common interests of developing countries,”

COVID-19 vaccine diplomacy is also at work in the background to the telephone conversation.  The demand is much higher than supply for global rollout of vaccines against the pandemic. Circumstances have prevailed upon the countries across the globe depend on    the goodwill towards each other to secure jabs from manufacturers. Sri Lanka received a consignment of vaccines as a gift from India first.  Likewise, China also gifted a dispatch 600,000 doses its Sinopharm vaccine. The vaccine manufacturers are struggling to meet the increasing demand.  India’s Serum Institute, the manufacture of AstraZeneca vaccine, suspended exports over the rising local demand. This led Sri Lanka to turn to other    manufacturers. Already, an order has been placed with Russia to purchase 700,000 vaccines.  Likewise, Sri Lanka will seek more cooperation from the Chinese authorities to secure sufficient vaccines.  

Mention is made in this regard in the statement issued by the Chinese Foreign Ministry  
“Xi Jinping pointed out that since the onset of the COVID-19 pandemic, China and Sri Lanka have pulled together and helped each other, writing a new chapter of China-Sri Lanka friendship. China attaches great importance to the development of bilateral ties, and stands ready to work with Sri Lanka to determine the strategic direction and achieve steady growth of the relationship. China will continue to provide as much assistance as its capacity allows for Sri Lanka’s fight against COVID-19, and seek to gradually carry out cooperation in fields like aviation and education while keeping pandemic control measures in place, and continuously explore new channels and areas of collaboration. China stands ready to steadily push forward major projects like the Colombo Port City and the Hambantota Port, and promote high-quality Belt and Road cooperation, providing robust impetus for Sri Lanka’s post-pandemic economic recovery and sustainable development,” the statement said.

President Xi said that China and Sri Lanka are strategic cooperative partners that enjoy sincere mutual assistance and ever-lasting friendship. 

According to the statement, President Rajapaksa warmly congratulated the Communist Party of China (CPC) on its 100th anniversary and highly appreciated the historic achievements made by the CPC. President Xi also greeted his counterpart for Sinhala New Year. 

Currently, Sri Lanka is economically on a weak footing.  It is saddled with a high component of debt. The government has limited option for further burrowing except it is for the repayment of loan instalments. 

According to reports, the presidents of Sri Lanka and China discussed, among a host of other matters, the Port City as part of the advancement of cooperation under the Belt and Road Initiative (BRI)

Secretary to the President Dr. P. B. Jayasundara said Sri Lanka got used to bilateral, unsolicited, expensive loans, and some looked very attractive because of low interest rates. However, he said such loans are extended in the currencies of the respective countries, and the currency conversion cost will result in higher costs in servicing them. He, in a recent function, said the government scrapped such projects based on such loan arrangements be they from China, India or Western or Eastern  European countries . Instead, he said Sri Lanka would look for non-conventional instruments to boost economic growth. 

The policy line of the present government and the practical global realities will result in Sri Lanka engaging further with China for economic revival in the post-pandemic era.