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10th April
2021
written by Tellus

The Chinese government was quick to welcome the Sri Lankan president`s statement. In a statement, the Chinese embassy stressed that it respects Sri Lanka`s sovereignty and that the security of the port is in the hands of the Sri Lankan government and navy. Take the first casualty of the Chinese debt trap in Sri Lanka, where the Chinese have taken over and leased the port of Hambantota for 99 years in 2018. While in Zambia, the Chinese ZESCO, the state-owned electricity company, has taken a majority stake in Zambia`s national broadcasting company, and if the Republic fails further because of its debt. The Zambian state could also lose ownership of Kenneth Kaunda International Airport. In addition to Sri Lanka, Beijing has made significant progress in the Maldives, which reached a free trade agreement with Beijing at the end of November. On July 29, 2017, Sri Lanka signed a $1.5 billion contract to lease its deepwater port of Hambantota to China Merchants Port Holdings (CMPort). As part of the agreement, CMPort, Sri Lanka Ports Authority (SLPA), the Sri Lankan government, the Hambantota International Port Group (Private) and the Hambantota International Port Services Corporation (Private) agreed on the terms of a 99-year concession contract for the development, management and commercial operations of the Chinese-built port of Hambantota. Under the agreement, the port underwent some changes and a terminal service agreement (TSA) was signed with NYK, a Japanese shipping company, making it the first roll-on-roll-off (RoRo) between a Japanese shipping company and a Sri Lankan port. Subsequently, due to increased activity in the roro, bulk and cargo liquid sectors, the port reached its mt reference value for 2019.

It should be noted that China is Sri Lanka`s largest trading partner in China-Sri Lankan economic relations and that India, which has long dominated, ranks second. Combined import and export trade between China and Sri Lanka last year was $4.426 billion, compared to Indo-Sri Lankan$4.369 billion. In 2016, China invested more than $52 million in Sri Lanka in 2016. The free trade agreement between China and Sri Lanka should be the “crown jewel” in bilateral economic relations. On 25 July, the Sri Lankan government approved the revised 99-year lease with China for the port of Hambantota, calling it a “win-win situation for both countries”. Regarding the agreement, Sri Lanka Port and Navigation Minister Mahinda Samarasinghe said: “China Merchants Port Holdings will manage the operation of the port. The port must not become the base of a foreign navy.┬áIt is therefore clear that the agreement has enabled Sri Lanka to obtain a better agreement without any impact on security. “Chinese aid in the Pacific region has increased dramatically in recent years and the country has become the second largest donor to the region.” Tonga`s debt to China has been estimated at more than $100 million by the Australian think tank Lowy Institute. The prime minister told local media last week that countries would meet to ask the Chinese government to “cancel its debt.” “For me, it`s the only way for all of us to move forward if we just can`t meet our debts,” he added. In the past, Beijing has refused to write off the loans, but has granted Tonga an amnesty for repayments” (Simone Rench – “Tonga Prime Minister” to ask China to “forgive” the Pacific debt 21.08.2018 Link: www.publicfinanceinternational.org/news/2018/08/tonga-premier-ask-china-forgive-pacific-debts).

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