China ‘is key’ to Sri Lankan recovery
NEW GOVERNMENT SEEKING STRONGER TRADE, INVESTMENT AND TOURISM TIES
SRI LANKA has asked China to help with trade, investment and tourism to help it grow sustainably, Colombo’s envoy to Beijing said on Monday (25) as it negotiates an emergency $4 billion (£3.32bn) package in order to help it emerge from an economic meltdown.
Ambassador Palitha Kohona’s emphasis on China as a key to Sri Lanka’s economic recovery reflects Beijing’s status as one of Sri Lanka’s two largest foreign creditors, along with Japan. China also holds some 10 per cent of Sri Lanka’s external debt.
In an interview at Sri Lanka’s Beijing embassy, Kohona said Colombo wants China to ask its companies to buy more Sri Lankan black tea, sapphire, spices and garments, and to make Chinese import rules more transparent and easier to navigate.
He said Beijing could also help by pouring further investment into vast China-backed port projects in Colombo and Hambantota. Major Chinese investment plans had not materialised because of the Covid-19 pandemic, Kohona said.
In addition, Sri Lanka would like to see more Chinese tourists, whose numbers fell from 265,000 in 2018 to almost zero after the 2019 suicide attacks and the pandemic.
Kohona said new Sri Lankan president Ranil Wickremesinghe planned to visit China to discuss cooperation on matters including trade, investment and tourism.
Wickremesinghe is no stranger to China. A photograph of him shaking hands with Chinese president Xi Jinping when he visited Beijing in 2017 as prime minister hangs in the hallway of the embassy.
Xi offered Sri Lanka’s new president his support last Friday (22), state broadcaster CCTV reported. In his message, the president said he believes Sri Lanka will be able to move towards economic and social recovery and he is “ready to provide support and assistance to the best of my ability to president Wickremesinghe and the people of Sri Lanka in their efforts”, CCTV reported.
Kohona said he expects no fundamental change in the new government’s policy towards China.
He said he understands China is finding it hard to act quickly to help Sri Lanka now because as a major global creditor, it is also financially exposed to many other countries in monetary difficulty. “Maybe if it was only Sri Lanka, then the decision-making would have been much easier.”
Sri Lanka had been in talks in China for a $4bn aid package, consisting of a loan of $1bn (£830 million) to repay a roughly equivalent amount of Chinese debt due this year.
Colombo is also asking for a $1.5bn (£1.25bn) credit line to pay for Chinese imports. Kohona said they were mainly inputs needed by his country’s lucrative garment industry such as buttons and zippers.
Sri Lanka also hopes to persuade China to activate a $1.5bn bilateral currency swap. Kohona said discussions on financial aid with China are still underway but no date for the next meeting has been set.
The Chinese foreign ministry said this month that Beijing is willing to work with other countries and international financial institutions to “play a positive role” to help Sri Lanka.
Beyond monetary aid, Sri Lanka also hopes China can help it buy fuel, fertiliser and other urgently needed supplies.
China pledged 500 million yuan (£61.54m) of emergency support for Sri Lanka in April and May. “We need a lot more,” Kohona said.