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Sri Lanka President asks China to reduce trade deficit, invest in tech university

ECONOMYNEXT – Sri Lanka’s President Gotabaya Rajapaksa has asked China to purchase more goods to reduce a large trade deficit and also invest in a technology university during a visit of a delegation led by ex-Foreign Minister Jang Jiechi.

“Sri Lanka has a strong private sector,” President Gotabaya had said.

“They manufacture various products. Open the Chinese market for these items. Encourage Chinese investors to invest in Sri Lanka. Promote Chinese people to visit Sri Lanka.”

Most Sri Lankans buy Chinese goods because they are more cost-effective than buying from a third country. Chinese investments and loans however contribute to the overall trade deficit of the country, when the money is spent by recipients on imports or cement and steel is imported.

Income earned from Chinese tourists, will also contribute to a trade deficit with China or other countries when tourism workers and hotel owners spend the money.

President Rajapaksa had asked China to participate in Sri Lanka’s tea auction. Sri Lanka however taxes bulk tea exports to discourage them.

He had also invited China to set up a University of Technology to provide more higher educational opportunities for young Sri Lankans.

“Extending President Xi’s congratulations to President Rajapaksa over landslide victories at recent elections, Mr. Yang recalled that he visited Sri Lanka 35 years ago as an interpreter assisting a visiting Chinese delegation,” a statement from the President’s office said.

“He noted that Sri Lanka is the first country in his four-nation tour of Asia adding that the President of China gives high priority to the enhancement of bilateral relations with Sri Lanka.”

Yang Jiechi is an ex-Foreign Minister and had served as the ambassador to the United States.

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Chairman of the China International Development Cooperation Agency, Wang Xiaotao; Assistant Foreign Minister of China, Deng Lee and Chen Song, Deputy Director General of Department of Asian Affairs were also in the delegation.

China has identified several areas conducive for the development of bilateral relations with Sri Lanka.

In addition to completing large-scale projects already underway, these include agriculture, education, tourism, water supply, healthcare, medical supplies, modern technology, digital economy, Blue Economy and labour training.

Sri Lanka intends to re-start talks on a China – Sri Lanka Free Trade Agreement and also complete an industrial zone in Hambantota.

Hambantota Port is now operated by a Chinese company with an equity stake bought by China.

“Constructing a port in Hambantota is an idea of Sri Lanka and not China’s,” President Rajapaksa had said.

“We were convinced that it woulld be a project with a vast potential for generating income and employment opportunities. China offered to fund it.

“Many geo-political analysis interprets this project as ‘debt trap’ set up by China to gain control over Sri Lankan affairs.

“I want to prove that it is not the case and that this large-scale project will help improve the living standards of the people. Assist us in this endeavour.”

President Rajapaksa had said he had toured China 13 times and see how the country developed.

“I have seen massive development especially in rural areas,” he had said.

“My target is to bring about similar development especially in rural areas in Sri Lanka and to raise the living conditions of the people in this country, especially that of the poor.

“I look forward to seeing a visible progress in the Port City project over the next four years.”

The Port City is awaiting the passing of a Special Economic Zone Law by Sri Lanka to attract investors. (Colombo/Oct09/2020)