China to push ahead with Hambantota port project amid reports of Sri Lanka having second thoughts

In a phone call between foreign ministers, Wang Yi said cooperation would turn Hambantota and Colombo ports into ‘twin engines’
Sri Lanka scrapped a separate deal with India and Japan to develop a deep-sea terminal at Colombo port

Diplomacy

Catherine Wong

Published: 6:00pm, 25 Feb 2021

Why you can trust SCMP

Beijing will push forward with a plan to develop Hambantota port, China’s Foreign Minister Wang Yi said in a phone call with his Sri Lankan counterpart amid reports that Colombo was seeking to renegotiate the agreement.

In the call with Sri Lankan Foreign Minister Dinesh Gunawardena on Wednesday, Wang said both countries would continue to cooperate to turn the Hambantota and Colombo ports into “the twin engines” of Sri Lanka’s industrial development and economic growth, according to a Chinese foreign ministry statement.

The call came after reports suggesting the South Asian nation was reconsidering the deal.

Sri Lankan President Gotabaya Rajapaksa, who indicated he wanted to renegotiate the deal soon after he took office in 2019, was recently said to be revisiting the port deal, according to a report by Ceylon Today quoting chairman of the Sri Lanka Ports Authority, General Daya Ratnayake.

Gunawardena added to uncertainty over the deal on Saturday, telling the same newspaper that “the previous government made a mistake on the Hambantota port deal when they cancelled the lease and gave it on a longer period of 99 years plus another 99 years once the first term ends”.

On Wednesday, China denied the deal was being renegotiated, with foreign ministry spokesman Wang Wenbin instead saying the port’s operations were expanding.

Also on Wednesday, Gunawardena was quoted in the Chinese foreign ministry statement as saying China was Sri Lanka’s “closest friend” and offered “heartfelt gratitude” to Beijing’s economic and diplomatic support.

Sri Lanka, located in the Indian Ocean, has long been a theatre for geopolitical rivalry by regional powers. India considers the region to be its strategic backyard, while China considers Sri Lanka to be a critical link for its massive global infrastructure drive known as the Belt and Road Initiative as Beijing expands its presence globally.

No evidence of China’s ‘debt-trap diplomacy’, researchers and analysts say

The Hambantota port deal, signed in 2017 by the previous Sri Lankan government to cover its debts to China, has been the subject of intense international scrutiny amid accusations that Beijing is using “debt-trap diplomacy” for geopolitical clout given Hambantota’s proximity to one of the world’s busiest shipping lanes in the Indian Ocean.

China also holds a stake in another major Sri Lankan port, with a Chinese state-owned company investing US$1.4 billion in the Port City Colombo, a real-estate project involving land reclamation that was completed in early 2019.

This month, amid protests by trade unions and opposition parties, Sri Lanka scrapped a deal to develop a deep-sea terminal at the Colombo port with India and Japan. Under the deal, India and Japan would have owned 49 per cent of the terminal’s shares while the Sri Lanka Ports Authority would retain the majority stake. The deep-sea jetty is next to the Colombo International Container Terminal, which is 85 per cent owned by China and was commissioned in 2013.