Sri Lanka buries ‘China’s debt trap’ ghost in Indian Ocean, approves $4.5 bl FDI

Spread the love

Close on the heels of the visit of Vickremesinghe to Beijing, Sri Lanka had approved docking of another Chinese ship, widely known for surveillance activities, at the Hambantota Port. China in 2017 had taken a majority stake in the Hambantota Port project.

Spread the love

By Our Special Correspondent

New Delhi, November 27: Showing deepening bonds in the wake of the visit of President Ranil Vickremesinghe to Beijing where he was warmly received by Chinese President Xi Jinping, Sri Lanka on Monday approved the largest ever foreign direct investment proposal of Sionpec in the island nation. Sri Lanka by approving the $4.5 billion refinery proposal of Sinopec has given a major concession to the Chinese petrochemical firm to spread wings outside China.

“Cabinet approval was granted today to award the contract to China Petroleum & Chemical Corporation (SINOPEC) of China, to enter into an agreement to establish a new Petroleum Refinery & Associated Product Processing center in Hambantota,” said Kanchana Wijesekera, Sri Lanka’s Minister of Power and Energy, in a post on X, formerly Twitter.

“For Sinopec, the world’s top refiner by capacity and one of the largest petrochemicals producers, the investment would mark a breakthrough in a long effort to expand beyond China’s borders. The company also owns refinery assets in Saudi Arabia and petrochemicals production in Russia,” Reuters said in a report on the Cabinet decision.

The changing tide in the Sri Lanka’s relations with China was also seen during the visit of foreign minister Ali Sabry to Beijing where he had met his then counterpart Qin Gang of China, who was subsequently sacked for unknown reason while it has been widely believed that he had fallen off in his relations with Xi. “China is a great friend and important development partner. The Sri Lankan side cherishes the selfless assistance of the Chinese government and people to Sri Lanka’s national independence and economic development over the years, and thanks the Chinese side for providing valuable support for Sri Lanka in handling the debt problem and overcoming temporary difficulties,” Sabry had said after meeting Qin.

Notably, Sri Lanka had announced sovereign financial default last year after failing to serice the foreign debts. China alone accounts for more than 20 per cent of Sri Lanka’s foreign debt, which was reckoned as a key reason for the collapse of the economy of the island nation. Sri Lanka had subsequently emerged as an exemplar of the ‘debt trap’ strategy of China, which is saod to have more than 60 countries across several continents in its net. India had extended its largest ever foreign assistance of $4 billion to Sri Lanka to stabilize its economy.