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China-Sri Lanka economic ties to enter golden era

Updated: 2014-09-15 15:04

(Xinhua)

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COLOMBO - Booming economic and trade relations between China and Sri Lanka is expected to enter a golden era, as the latter is an important participant and major beneficiary of the 21st Century Maritime Silk Road initiative.

The two nations are anticipating more cooperation and closer ties in trade and economy with the upcoming Sri Lanka visit by Chinese President Xi Jinping, who proposed the initiative of the 21st Century Maritime Silk Road last year.

For the Indian Ocean island country that connects sea routes of Asia, Africa and Europe, China has emerged as the largest foreign direct investor, accounting for one fourth of the inflows in 2013, according to Laskshman Abeywardhana, Sri Lankan minister of investment promotion.

Loans and investments from China have played a significant role in Sri Lanka's post-war reconstruction, Abeywardhana said in an interview with Xinhua on the eve of Chinese President Xi's visit.

Direct investment from China is not only contributing to foreign exchange reserve and job creation of the country, but also generating considerable benefits through technology transfer and development, he said.

The minister said projects of 14 Chinese companies registered at the Board of Investment of Sri Lanka has generated more than 2, 500 local jobs.

In Sri Lanka, a number of large projects funded by Chinese enterprises are under construction, as Sri Lankan president Mahinda Rajapaksa has put much efforts in turning the nation into a global maritime logistics center and a world-class harbor and goods distribution center.

Chinese enterprises have undertaken construction of mega infrastructure projects in Sri Lanka, like the Hambantota Port and Colombo South Harbor, which are likely to change the dynamics of the Sri Lankan economy and boost its future development.

During Xi's visit in mid-September, the construction of Norochcholai Coal Power Plant, carried out by China Machinery Engineering Corporation, will be completed after eight years of joint work. The project is expected to meet 45 percent of the total demand of the nation's power grid.

The 21st Maritime Silk Road initiative is expected to attract more foreign investment, especially the Chinese investment, to Sri Lanka, said Abeywardhana.

He also noted that Sri Lanka hopes the proposed Sri Lanka-China Free Trade Agreement (FTA) will help Sri Lanka to gain easier access to the Chinese market and gradually reduce its trade deficit towards the world's second largest economy.

A joint feasibility study on the proposed Sri Lanka-China Free Trade Agreement (FTA) completed in March 2014 concluded that the building of an FTA will bring benefits to both countries.

At a briefing on President Xi's upcoming visit to three South Asian countries of Maldives, Sri Lanka and India from Sept 14 to 19, China's Assistant Foreign Minister Liu Jianchao said China's relations with Sri Lanka have been healthy and stable since the two established diplomatic ties 57 years ago.

China-Sri Lanka relations have become an example of friendly coexistence and mutually beneficial cooperation between large and small countries, he said.

Over the years, the two countries have maintained frequent exchange of visit by high-level officials, continuously deepened practical cooperation in trade, investment and infrastructure development and expanded cultural and people-to-people exchanges, he added.

China has become Sri Lanka's second largest trade partner and the second largest sources of imports to Sri Lanka.

In 2013, bilateral trade reached $3.62 billion, and China became Sri Lanka's largest investor, statistics from Sri Lanka showed.

Asanga Abeyagoonasekera, executive director of the Lakshman Kadirgamar Institute of International Relations and Strategic Studies, said the 21st Century Maritime Silk Road initiative has provided favorable opportunities for China and Sri Lanka to further enhance ties.

Abeyagoonasekera said he believes that Sri Lanka can play a major role in the development of the maritime silk road, and the nation is highly expecting Xi's visit, during which more cooperation agreements are likely to be inked to benefit both nations.

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