Sri Lankan President Seals Several Deals in China
Posted on January 21st, 2025

By Rathindra Kuruwita Courtesy The Diplomat

China’s Sinopec has agreed to set up an oil refinery with an investment of $3.7 billion in Hambantota.

Sri Lankan President Seals Several Deals in China
Sri Lankan President Anura Kumara Dissanayake meets his Chinese counterpart Xi Jinping in Beijing on January 15, 2025.Credit: X/Anura Kumara Dissanayake

During his visit to China from January 14-17, Sri Lankan President Anura Kumara Dissanayake secured several agreements, including a $3.7 billion deal with Sinopec to set up an oil refinery in Hambantota. The Sri Lankan foreign minister is expected to reveal details of 15 other agreements soon.

Key agreements include advancing Belt and Road Initiative (BRI) projects, such as Colombo Port City and Hambantota Port, a renewed currency swap agreement, and expanded cooperation in trade, agriculture, digital economy, education, and climate action. China committed to assisting with Sri Lanka’s debt restructuring and pledged to encourage investments in logistics, green development, and digital transformation. The two sides agreed to enhance maritime cooperation, cultural exchanges, and people-to-people ties through tourism, education, and vocational training. China will also support Sri Lanka’s health sector and cultural heritage preservation. Both nations emphasized judicial and security cooperation and shared a commitment to multilateralism and global development initiatives.

Dissanayake invited Chinese leaders to visit Sri Lanka, reflecting a shared desire to strengthen bilateral relations based on mutual respect, trust, and shared development goals.

The visit was typical of how China has been dealing with countries of the Global South like Sri Lanka since 2018.

In the initial years of the BRI, China offered countries significant high-risk, high-volume loans for large-scale infrastructure projects. Often vanity projects for the leaders from developing countries, these projects were disastrous for China. It prompted the Chinese to become more discerning about who they worked with and what they funded. Consequently, they switched to funding more financially viable projects.

And Sri Lankan leaders visiting China returned without much to show in recent years.

Sri Lanka’s ruling National People’s Power needs to attract investment to fulfill its promises to industrialize the country, alleviate rural poverty, and modernize agriculture. This will not be easy.

Previously, when China was looking for reliable and serious counterparts, Sri Lankan leaders repeatedly proved themselves to be unreliable partners who had plunged the country into a fragile state. The Sri Lankan government will need to convince China that there will be returns on Chinese investments, and that they can ensure policy consistency and stability.

Unlike the good old days,” as when the Rajapaksas were in power, you can’t just visit Beijing and come home with easy money,” geopolitical analyst Asanga Abeyagoonasekera told The Diplomat. Dissanayake and the NPP will have to convince the Chinese that they are not like the Rajapaksas.”

Shiran Illanperuma, a researcher at the Tricontinental Institute for Social Research, said that several agreements signed during Dissanayake’s visit to China would be beneficial for Sri Lanka’s economic development. While the agreement to build an oil refinery in Hambantota has been on the cards for years, this is the first time that Beijing officially confirmed the deal to a Sri Lankan leader, he said. The Hambantota International Port Group (HIPG) has been steadily building up the Hambantota International Port, and an oil refinery there fits well into the plans of the HIPG as well as Sinopec. The refinery will also benefit the proposed Hambantota Industrial Zone, Illanperuma pointed out.

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