Following press release issued during the press conference conducted by Chinese Embassy in Colombo, Sri Lanka
I. Series of Celebrations/Commemorations on the 65th Anniversary of China-Sri Lanka Diplomatic Relations & 70th Anniversary of the Rubber-Rice Pact
1. Government-to-Government: On 9th January 2022, Chinese State Councilor and Foreign Minister H.E. Wang Yi visited Sri Lanka, and inaugurated the celebrations with President H.E. Gotabaya Rajapaksa and Prime Minister H.E. Mahinda Rajapaksa with the “China-Sri Lanka Friendship Sailing Cup” at the Port City Colombo.
2. Party-to-Party: On 17th February, the Communist Party of China and 20 government and opposition political parties in Sri Lanka jointly held a conference at the Nelum Pokuna to celebrate the anniversaries. H.E. Xi Jinping, general secretary of the CPC Central Committee, sent a congratulatory letter to the conference. PM and Leader of the SLPP H.E. Mahinda Rajapaksa, Former President and Chairman of the SLFP H.E. Maithripala Sirisena, Leader of the Opposition and the SJB Hon. Sajith Premadasa, Former PM and Leader of the UNP Hon. Ranil Wickremasinghe and other dignitaries were present.
3. Between Religious Group: On 26th February, a Seth Pirith Chanting were conducted online and offline together by 65 Bhikkhus from Sri Lanka and 65 from China at the Abhayagiriya Temple at Anuradhapura, the Ole Temple at Colombo, the Putuo Temple at Zhuhai and the Lingguang Temple at Beijing. President Gotabaya Rajapaksa and Mahanayaka Theros from the Asgiri, the Malwatta and the Amarapura-Ramanna Nikaya Chapters delivered congratulatory and blessing messages to the event.
4. Between Friendship Organizations: On 8th March, a webinar was held to commemorate the 25th Anniversary of the Association for Sri Lanka - China Social and Cultural Cooperation. About 200 representatives from various friendship groups from China, Sri Lanka and other South Asian countries joined online. Chinese Ambassador Qi Zhenhong attended the event and delivered a speech to highlight the people-to-people friendship.
5. Between Think Tanks: On 18th March, an online dialogue conference of the think tanks from China and Sri Lanka was held in Kunming, China. Nearly 200 experts, scholars and enterprise representatives from the two countries attended the event via video link.
6. Charities:
1) On 30th March 2022, Ambassador Qi Zhenhong is going to donate food packages to 650 Muslim family of Colombo before the holy month of Ramazan.
2) China Foundation of Poverty Alleviation has decided to donate 20,000 Panda Pack (school bags with daily necessities, stationaries and hygiene products etc.) worth of 500 thousand USD to public schools in Northern Province as requested by the Provincial Government.
3) The CPC is planning to donate food packages worth of 40 million LKR to the needy family prior to the Sinhala and Tamil New Year through political parties channel.
II. Financial Assistance Since Outbreak of COVID-19 (USD 2.8 Billion has been made)
1. USD 1 billion term financing facility was provided by China Development Bank (CDB) to Sri Lankan Finance Ministry to support Sri Lanka fighting COVID-19 and reviving the economy. (USD 500 million on 18th March 2020, USD 500 million on 12th April 2021, with maturity period of ten years, which is the longest tenure of term financing facility for Sri Lanka. The interest cost is highly competitive and favorable and linked to 6 Month USD LIBOR with a grace period of three years.)
2. CNY 2 billion (approx. USD 300 million) term financing facility was provided by CDB on 17th August 2021 to Sri Lanka.
3. CNY 10 billion (approx. USD 1.5 billion) bilateral currency SWAP agreement was signed between the People’s Bank of China (PBoC) and the Central Bank of Sri Lanka (CBSL) on March 2021, which highly stabilized the forex level of Sri Lanka.
4. New requests of USD 2.5 billion (USD 1 billion financing facility and USD 1.5 billion buyer’s credit) were raised by Sri Lankan government to Chinese government recently. China understands the urgent need of Sri Lanka and its people. Relevant authorities in China are promptly studying the request.
III. Investment and Mega-projects
1. China is the biggest source of FDI for Sri Lanka
According to the annual report of the Central Bank of Sri Lanka, by the end of 2020, the stock of China’s Foreign Direct Investment (FDI) into Sri Lanka was USD 2,188 million.
2. China is the biggest external contributor to Sri Lanka’s development and employment under COVID-19: Chinese companies strictly abide by the COVID-19 preventive measures and regulations issued by Sri Lankan authorities, and actively promote project construction in an orderly manner while ensuring the physical and mental health of employees. They have overcome all kinds of difficulties including pandemic, economic and financial hardship in Sri Lanka and ensured the mega-projects developing without interruption. So far, the Chinese companies and projects are hiring over 11,000 Sri Lankan employees.
3. Colombo International Container Terminals (CICT): CICT, the only deep-water terminal in South Asia, has won the award for the “Best Container Terminal in Asia” (under 4 million TEUs category) for five consecutive years. In 2021, its throughput surpassed 3.1 million TEUs for the first time (about half of the total volume of the Colombo Port). At present, CICT has around 1,850 employees, of which over 98% are Sri Lankan.
4. Hambantota International Port (HIP): Despite the pandemic, HIP made great breakthroughs in both cargo handling and port investment. An overall throughput of 2.3 million metric tons of cargo was achieved in 2021, with RORO operations surpassing the 500,000 mark, a remarkable increase by 39%; bulk cargo exceeding 1.2 million MT, a significant increase of 59%. 42 companies have signed agreements to enter the international industry park and 10 projects have commenced construction including:
1) Tire Manufacturing Project: initial investment USD 300 million, expected to create 3,000 direct job opportunities. Land leveling has been completed and bids are being invited for plant construction. A supplemental agreement was signed in February 2022 to include an additional 16 acres of land for Phase II (55.8 hectares in total). A further USD 300 million investment is expected.
2) Xinji High Tech Electronic Industrial Park: investment USD 15 million, expected to create 1,000 job opportunities. Construction started in July 2021, within 20 days of signing the agreement.
3) Maldivian Yachts Project: investment USD 58 million, expected to create 700 job opportunities. It is the largest Maldivian investment project in Sri Lanka and scheduled to commence construction by mid-2022.
5. Port City Colombo: In January 2019, all land reclamation (269 hectares) was completed; in May 2021, the Colombo Port City Economic Commission Bill was passed in Parliament; By March 2022, China Harbour Engineering Company (CHEC) has invested USD 1.05 billion in the project. The International Financial Centre is scheduled to be inaugurated by middle of the year.
IV. China’s Aid projects
1. Overall: Since the establishment of China-Sri Lana diplomatic relations 65 years ago, the Chinese government has been providing all kinds of assistance to Sri Lanka, with more than 100 grant projects, and provided training programs to tens of thousands of Sri Lankan professionals (7,000 professionals have been trained 2014-2022). The iconic BMICH, the Superior Courts Complex, the Nelum Pokuna Mahinda Rajapaksa Theatre, and the China-Sri Lanka Friendship Nephrology Hospital etc. are historic testaments of the close relationship.
2. Fighting the COVID-19 Pandemic:
1) Sri Lanka’s main source of medical supplies: The central and local governments, companies, social groups and individuals from China has provided the urgently needed support to Sri Lanka including tens of millions of PPEs, over 100,000 nucleic acid detection reagents and various kinds of medical equipment.
2) 26 million Sinopharm vaccine doses being the backbone of SL’s vaccination: In the middle of 2021 when Sri Lanka was facing the most difficult time in vaccination plan, China supported Sri Lanka with 26 million doses of Sinopharm vaccine despite its huge domestic and global demand. 3 million doses were donated (including 1.6 million for the Northern and Eastern Provinces, and 300 thousand for frontline armed forces). 23 million doses were supplied within 4 months by the Sinopharm Group under its lowest price category in the international supplies in 2021.
3. RMB 800 million (apx. USD 125 million) new grant: During Chinese State Councilor and Foreign Minister Wang Yi’s visit to Sri Lanka in January 2022, the Economic and Technical Co-operation agreement (RMB 800 million) was between China International Development Co-operation Agency (CIDCA) and Sri Lanka Treasury.
4. Aid Projects un-interrupted in COVID-19 pandemic:
1) China-Sri Lanka Friendship National Nephrology Specialized Hospital in Polonnaruwa: The hospital has an area of 25,000 square meters, featuring 200 general inpatient beds, 100 hemodialysis beds which makes it the biggest nephrology specialized hospital in South Asia. The grant amount is RMB 460 million (apx. USD 72 million). Construction started in July 2018 and the hospital was opened in June 2021. The hospital has successfully performed a kidney transplant surgery from a living donor recently, the first of its kind since the operation of the hospital.
2) Joint Research and Demonstration Center for Water Technology in the University of Peradeniya: The project is to focus on providing safe drinking water and carrying out research on the origin of CKDu (chronic kidney disease of unknown etiology). The grant amount is RMB 81 million (apx. USD 13 million). Construction started in September 2018 and the handover certificates were signed in January 2021. It covers a total area of 5,000 square meters, which makes it the largest research center for the safety of drinking water in South Asia.
3) The Outpatient Building of National Hospital: The gross floor area is 49,150 square meters and the designed daily outpatient visits are 6,000. The amount of grant is RMB 489 million (apx. USD 77 million). Construction started in August 2014 and is estimated to be completed by April 2022.
4) 1996 Units of Subsidized Housing for the Low-Income Families: In January 2022, the exchange of letters for the project was done. The amount of grant (construction cost) shall be within RMB 552 million (apx. USD 87 million).
5. Training programs: In 2021, more than 800 Sri Lankan trainees participated in multilateral and bilateral training courses online, covering a wide range of fields including agriculture, manufacturing, trade, education, health care, transportation, information and communication, public management, etc.
V. Projects with Chinese Government Concessional Loan / Preferential Buyer’s Credit
1. Mega-projects before COVID: 1) Lakvijaya Power Plant (Norochcholai Power Plant) was fully operated since October 2014, providing about 40% of electricity consumed by the whole island. 2) The first phase of the Southern Railway Project was officially opened in April 2019. It is the first newly built railway in Sri Lanka in the past century and forms an integral part of the transportation infrastructure in the southern region.
2. The Extension of Southern Expressway: Opened to the public in February 2020, reducing the travel time between Colombo and Hambantota from 5 hours to 2.5 hours.
3. Kandy North - Pathadumbara Integrated Water Supply Project: Being the largest municipal water supply project in Sri Lanka, it aims at providing safe pipe-borne water to six Divisions in the Kandy District and covers more than 450,000 people. Once completed, it will alleviate water shortage in the region and improve the public environment. The project is scheduled to be completed by December 2022.
4. Central Expressway Section I Project: By February 2022, 25% of the work has been completed and the EXIM Bank of China has made the first disbursement of concessional loan.
VI. Trade
1. China is the second largest trading partner of Sri Lanka. In 2021, bilateral trade value reached USD 5 billion, up by 32% compared to 2020, of which Sri Lankan exports to China were USD 274 million, up by 23% year on year. Sri Lankan products such as tea, gems and jewelry and clothing are popular with Chinese customers.
2. The China - Sri Lanka FTA negotiations: Launched in 2014 and 6 rounds of negotiations have been conducted. China-Sri Lanka FTA will eliminate or reduce tariff on products of export or import interest to both countries, and establish an institutional framework for trade in goods, services, investment, and economic and technical cooperation, which will reduce trade costs for enterprises of both countries, enhance trade and investment flows, optimize the overall business environment, and achieve sustainable economic growth and social development of both countries in the long run. So far, China has signed FTAs with 26 countries and regions.
3. China International Import Expo (CIIE): Sri Lanka has been invited to attend the CIIE for five consecutive years since 2018, offering a great platform to promote Sri Lankan products to the Chinese market and identify reliable business partners. Last year, 25 Sri Lankan companies have exhibited their products in the event.
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