China to develop strategic airport, seaport in Sri Lanka: PM Gunawardena

Nine new agreements between China and Sri Lanka were signed on Tuesday

Digital Desk: Following negotiations with his counterpart in Beijing, Sri Lanka's prime minister announced on Wednesday that China has agreed to construct the island nation's crucial deep-sea port and the capital's airport.

Gunawardena stated Beijing had offered "assistance to develop" Colombo International Airport and Hambantota port, the assertion added, without giving additional details.

Li Qiang stated that China and Sri Lanka are key cooperating partners with genuine mutual support and enduring friendship. Since the beginning of diplomatic ties 67 years ago, the two countries have consistently demonstrated mutual respect, equality, and benefit, as well as a strong tradition of mutual aid through thick and thin, as reported by Za China.

Prime Minister Dinesh Gunawardena stated that China, the island's largest bilateral creditor, would "assist" Sri Lanka in restructuring its external debt, which is a key condition for sustaining the $2.9 billion IMF bailout.

Nine new agreements between China and Sri Lanka were signed on Tuesday under the aegis of Chinese Prime Minister Li Qiang and Prime Minister Dinesh Gunawardena.

Sri Lankan Prime Minister Dinesh Gunawardena arrived on Monday for a six-day official visit. 

Is Sri Lanka entering a debt trap again?

In 2022, Sri Lanka ran out of foreign cash to cover basic imports and announced a sovereign default on its $46 billion international debt.

Months of protests forced then-President Gotabaya Rajapaksa out of office.

As the country struggled in the midst of the crisis, India provided multi-pronged assistance of approximately $4 billion to it last year through numerous credit lines and currency support, in accordance with India's 'Neighbourhood First' policy.

More than a year after Sri Lanka dropped into an economic crisis, it reached an agreement with the Export-Import (EXIM) Bank of China to cover about $4.2 billion of its outstanding debt, according to a statement from its finance ministry on October 11, 2023.

India is also involved in the process of negotiating the debt Sri Lanka owes to it, given the island nation’s economic woes. But China is the biggest bilateral creditor to Sri Lanka, having loaned about $7 billion of the country’s entire foreign debt of $42 billion (as of 2022). 

The current relationship between China and Sri Lanka

Sun Weidong, China's Vice Foreign Minister and former Ambassador to India, welcomed Gunawardena upon his arrival, according to Chinese state media. This will be the first visit by a Sri Lankan leader to Beijing since Colombo suspended repeated visits by Chinese research ships to Hambantota port, citing India's security concerns.

Colombo's move sparked outrage in China. Earlier this month, however, Sri Lanka said that it would allow international offshore research ships to resupply at its ports, despite a one-year ban on such vessels. Some of China's infrastructure projects in Sri Lanka have raised global concerns about Beijing's debt diplomacy, particularly since China took over Hambantota port in a 99-year loan swap.