Chinese cushion of $ 2.5 b for crisis SL

Chinese Ambassador to Sri Lanka Qi Zhenhong in deep thought at the media briefing yesterday at The Kingsbury Hotel

• Govt. requests $ 1 b loan, $ 1.5 b buyers’ credit
• Ambassador Qi says China understands urgent needs of SL people
• Financial assistance from China since pandemic outbreak stands at $ 2.8 b
• Notes China has faced ‘unfair’ treatment from SL at times and mentions suspending of renewable energy project in northern islands
• Says such actions not good for investors or for business environment
• Insists no hidden secret in China’s push for FTA with SL
• Says all concerns will be addressed and SL will not be taken advantage of

By Chandani Kirinde

China is actively considering a new request for $ 2.5 billion ($ 1 billion financing facility and $ 1.5 billion buyers’ credit) from the Government of Sri Lanka, Chinese Ambassador to Sri Lanka Qi Zhenhong said yesterday.

“China understands the urgent need of Sri Lanka and its people. Relevant authorities in China are promptly studying the request,” the Ambassador told journalists at a press briefing coordinated by the Sri Lanka-China Journalists Forum.

The Ambassador said financial assistance from China to Sri Lanka since the outbreak of the COVID-19 pandemic amounted to $ 2.8 billion. This included a $ 1 billion term financing facility at a highly competitive and favourable interest cost by the  China Development Bank (CDB), with maturity of 10 years which is the longest tenure of term financing facility for Sri Lanka and a $ 1.5 billion bilateral currency SWAP agreement between the People’s Bank of China and the Central Bank of Sri Lanka which helped stabilise the forex level in Sri Lanka.

“Our aim is to help Sri Lankan friends to overcome their difficulties. We have done so in the past and will continue to do so,” the Ambassador said, speaking through an interpreter.

He underscored the close and friendly relations between China and Sri Lanka as the two countries celebrate 65 years of diplomatic relations as well as the 70th anniversary of the signing of the Rubber-Rice pact this year but noted China has faced ‘unfair’ treatment at times from Sri Lanka.

He said the Government backtracking after awarding the contract to a Chinese company to set up three renewable energy projects in the northern islands of Delft Island, Analativu and Nainativu was an example of unfair treatment meted out to China and said this not good for investors who come to Sri Lanka and does not show a good business environment.

“This (the renewable energy project) is funded by the Asian Development Bank (ADB) and this is a commercial business. If the media had not reported about this issue, our Embassy would not even be informed of this. All the procedures were in keeping with the international bidding process but for some unknown reason this was interrupted. I have already raised this with our Sri Lankan friends,” Ambassador Qi Zhenhong said.

When questioned by journalists, he refused to speculate if the Sri Lankan Government’s decision to suspend the renewable energy project was due to concerns raised by India.

The Ambassador also said six rounds of talks have been held to discuss the Sri Lanka-China Free Trade Agreement (FTA) and sought to dispel any concerns Sri Lankans may have regarding it.

“Some Sri Lankan friends may ask why the Chinese Government is so eager to push for these negotiations. Honestly, we feel the Sri Lankan people can benefit from China’s development. There is no hidden secret behind this,” he said.

“The FTA will establish an institutional framework for trade in goods and services, investment and economic and technical cooperation, enhance trade and investment flows, optimise the overall business environment and achieve substantial economic growth and social development of both countries,” he said.

The Ambassador said so far China has signed 19 FTAs with 26 countries and regions worldwide and Laos and Cambodia who have signed FDAs with China have already benefited  a lot.

“If the FDA is signed, Sri Lanka can benefit by exporting products to the Chinese market. Tea, gems and jewellery and clothing from Sri Lanka are very popular with Chinese consumers,” he said.

The Ambassador assured that all concerns will be discussed. “Between 1959 and 1961 even when the Chinese people did not have enough rice to eat, China kept the promise to the Sri Lankan people and sent rice. 

“We will not let Sri Lanka accept unfavourable conditions. China will never take advantage of Sri Lanka by signing the FTA. 70 years ago, when China signed the Rubber-Rice pact, we did not do so either. Our ultimate goal is to solve Sri Lanka’s problems,” the Ambassador said.

He added that China’s support to Sri Lanka has been consistent and comprehensive throughout the years.