China rejects debt trap charge; says making Sri Lanka logistics hub
ECONOMYNEXT – China has rejected charges of creating a debt trap in Sri Lanka despite gaining a 99-year lease on a port, which is much longer standard commercial deals, in return for cash to repay debt, and said the island will be made into a logistics hub.
China’s foreign ministry spokesman Lu Kang said building a port in Hambantota was an aspiration of successive governments in Sri Lanka.
"The Chinese financial institutions, in light of the needs of the Sri Lankan side, provided support for it to bridge the financing gap," Lu said.
"With the advancement of the project, China adjusted the assets allocation against all odds according to the aspiration of the Sri Lankan side. These moves are all conducive to our commercial cooperation.
"I can tell these people that China and Sri Lanka will stay committed to advancing the cooperation on the project of the Hambantota Port in a bid to make Sri Lanka the logistics hub of the Indian Ocean."
Lu comments came after a New York Times report on ‘How China got Sri Lanka to cough up a port’.
The report said Sri Lanka leased the port to China, because the island was unable to repay the Chinese debt taken to build it and there was not enough revenue.
The report alleged that the loans had been given despite feasibility report showing the port to be unvialble. In any case the port did not make enough money to repay the loan, burdening the port agency.
"As to the people who fabricated the lie of the so-called “debt trap”, if they are unable to offer tangible assistance to the developing countries, they can at least try to put the sincere cooperation between other countries in perspective," Lu said.
China got a 99-year lease on the entire Hambantota port, much higher than a 30 to 40 year lease on terminals that are the international norm.
China had also got a standard commerical lease on a terminal in Colombo port, where it has grown volumes and is paying concession fees to the port agency.
Analysts sharply contrast the expansion of Colombp port where the Asian Development Bank funded and conduted a feasibility study with Hambantota.
Colombo port is profitable and can easily repay the ADB’s loan for the breakwater.
However analysts also fault Prime Minister Ranil Wickremesinghe’s government for not going ahead with a joint venture in the third terminal of Colombo port, despite global giants like MSC, Maersk responding to requests for proposals to complete it.
Critics say is one of the biggest failures of the administration. (Colombo/July04/2018)