“Today marks the 65th anniversary of the diplomatic ties of China and Sri Lanka. Over the past 65 years, the two sides have lent mutual understanding and support to each other, setting an example of friendly coexistence and mutually beneficial cooperation between countries different in size,” Chinese Foreign Ministry spokesman Zhao Lijian told a media briefing.
Terming the two countries as good friends and brothers, he said, “Sri Lanka has been abiding by the one-China principle, and firmly supporting China’s just position on international affairs”.
“On China’s part, we also have been firmly supporting Sri Lanka in defending national sovereignty and independence, and following a development path suitable for its national conditions,” he said.
China in the last few years courted Sri Lanka with billions of dollars of investments looking for a firm foothold in its Indian Ocean outreach. But the island nation currently faced a dire economic situation as it struggled to repay the expensive loans.
China is yet to give any firm commitment to last month’s request by Sri Lankan President Gotabaya Rajapaksa for Beijing’s assistance in mitigating his country’s deepening forex crisis and spiralling external debt.
Rajapaksa in his meeting with visiting Chinese Foreign Minister Wang Yi pointed out that it would be a great relief to Sri Lanka if attention could be paid on restructuring the debt repayments as a solution to the economic crisis that has arisen in the face of COVID-19 pandemic, according to a statement issued by the President’s Office in Colombo.
It is estimated that Sri Lanka owes debt payments to China in the region of USD 1.5 to 2 billion this year.
The international rating agencies have expressed doubts over the island nation’s ability to meet its international sovereign bond payments of USD 1500 million, the first USD 500 million of which falls next week for payment.
The Lankan President also said that if a concessional trade-credit scheme could be obtained for imports from China, it would enable industries to run smoothly.
China’s takeover of the Hambantota port on 99 years’ lease for USD 1.2 billion debt swap drew international concerns over Beijing acquiring strategic assets far away from home by providing heavy loans and investment to smaller nations.
The Hambantota port together with Colombo port city project where China is building a new city with reclaimed land in the sea were viewed with concern, especially in India as Beijing seeks to increase its presence in India’s backyard the Indian Ocean.
The Belt and Road Initiative is a multi-billion-dollar initiative launched by Chinese President Xi Jinping when he came to power in 2013. It aims to link Southeast Asia, Central Asia, the Gulf region, Africa and Europe with a network of land and sea routes.
In December, China suspended a project to install hybrid energy plants in three islands of Sri Lanka’s north, citing “security concern” from a “third party”, amid reports of Indian concern over its location which is not far from Tamil Nadu’s coast.
Significantly, Wang during his talks with Sri Lankan Foreign Minister G. L Peiris proposed to establish a forum for the development of Indian Ocean island countries, which observers say is an attempt by Beijing to expand its influence in the region.
“During my visit to several Indian Ocean island countries this time, I feel that all island countries share similar experiences and common needs, with similar natural endowment and development goals, and have favourable conditions and full potential for strengthening mutually beneficial cooperation,” Wang had said.
“China proposes that a forum on the development of Indian Ocean island countries should be held at an appropriate time to build consensus and synergy, and promote common development. Sri Lanka can play an important role…,” he said.
In his media briefing on Monday, Zhao said, “China is ready to work with Sri Lanka to take the anniversary as an opportunity to carry forward the spirit of the Rubber-Rice Pact”.
He also spoke of the two countries jointly upgrading practical cooperation including the Belt and Road cooperation, conduct closer coordination and cooperation in international and regional affairs, and consolidate and expand China-Sri Lanka strategic cooperative partnership.
Signed in 1952, the Rubber-Rice Pact was a trade agreement between Lanka and China under which Colombo supplied rubber to Beijing in exchange for rice, leading to the establishment of diplomatic relations and expansion of trade between the two nations.