During his visit to China from January 14-17, Sri Lankan President Anura Kumara Dissanayake secured several agreements, including a $3.7 billion deal with Sinopec to set up an oil refinery in Hambantota. The Sri Lankan foreign minister is expected to reveal details of 15 other agreements soon.
Key agreements include advancing Belt and Road Initiative (BRI) projects, such as Colombo Port City and Hambantota Port, a renewed currency swap agreement, and expanded cooperation in trade, agriculture, digital economy, education, and climate action. China committed to assisting with Sri Lanka’s debt restructuring and pledged to encourage investments in logistics, green development, and digital transformation. The two sides agreed to enhance maritime cooperation, cultural exchanges, and people-to-people ties through tourism, education, and vocational training. China will also support Sri Lanka’s health sector and cultural heritage preservation. Both nations emphasized judicial and security cooperation and shared a commitment to multilateralism and global development initiatives.
Dissanayake invited Chinese leaders to visit Sri Lanka, reflecting a shared desire to strengthen bilateral relations based on mutual respect, trust, and shared development goals.
The visit was typical of how China has been dealing with countries of the Global South like Sri Lanka since 2018.
In the initial years of the BRI, China offered countries significant high-risk, high-volume loans for large-scale infrastructure projects. Often vanity projects for the leaders from developing countries, these projects were disastrous for China. It prompted the Chinese to become more discerning about who they worked with and what they funded. Consequently, they switched to funding more financially viable projects.
And Sri Lankan leaders visiting China returned without much to show in recent years.
Sri Lanka’s ruling National People’s Power needs to attract investment to fulfill its promises to industrialize the country, alleviate rural poverty, and modernize agriculture. This will not be easy.
Previously, when China was looking for reliable and serious counterparts, Sri Lankan leaders repeatedly proved themselves to be unreliable partners who had plunged the country into a fragile state. The Sri Lankan government will need to convince China that there will be returns on Chinese investments, and that they can ensure policy consistency and stability.
“Unlike the good old days,” as when the Rajapaksas were in power, “you can’t just visit Beijing and come home with easy money,” geopolitical analyst Asanga Abeyagoonasekera told The Diplomat. “Dissanayake and the NPP will have to convince the Chinese that they are not like the Rajapaksas.”
Shiran Illanperuma, a researcher at the Tricontinental Institute for Social Research, said that several agreements signed during Dissanayake’s visit to China would be beneficial for Sri Lanka’s economic development. While the agreement to build an oil refinery in Hambantota has been on the cards for years, this is the first time that Beijing officially confirmed the deal to a Sri Lankan leader, he said. The Hambantota International Port Group (HIPG) has been steadily building up the Hambantota International Port, and an oil refinery there fits well into the plans of the HIPG as well as Sinopec. The refinery will also benefit the proposed Hambantota Industrial Zone, Illanperuma pointed out.
At a time when the Dissanayake government is grappling with austerity measures and severe fiscal restraints imposed under the current IMF program finalized by President Ranil Wickremesinghe, Dissanayake’s predecessor, “Chinese investments will do a lot to grow the economy,” Illanperuma said.
The welcome the Chinese accorded Dissanayake was warmer than that for previous Sri Lankan leaders. Dissanayake laid a wreath at the Monument to the People’s Heroes at Tiananmen Square and offered flowers at the Mao Zedong Memorial. The visits were organized as per requests made by the Sri Lankans. Clearly, Dissanayake and the NPP understand what resounds well with the Chinese Communist Party.
“Many would argue that Dissanayake and his NPP have little experience in conducting foreign policy,” Abeyagoonasekera noted. But with his China visit, they have signaled that they understand what clicks with Sri Lanka’s important partners, Abeyagoonasekera said, adding that there were “many encouraging signs in this trip.”
In Beijing, Dissanayake reaffirmed Sri Lanka’s support for the One China Policy and more enthusiastically than previous Sri Lankan leaders. He promised China that Sri Lanka would not allow its territory to be used for any anti-China separatist activities and would firmly support China on issues related to Xizang (Tibet) and Xinjiang.
Meanwhile, conflict transformation specialist Indika Perera warned that the Dissanayake government would need to be extremely cautious about how India and the United States view the NPP’s interactions with China. Since the 1950s, India has considered South Asia to be its sphere of influence and continues to do so to date. It has made it clear that it would not tolerate the presence of any power that it thinks is inimical to its national interests, and New Delhi remains wary of China’s growing economic footprint under BRI and the United States’ strategic interests through the Indo-Pacific framework. The U.S., on its part, seeks to counterbalance China’s influence while maintaining strong ties with India.
For Sri Lanka’s NPP government, navigating this triangular competition will require a balanced foreign policy that prioritizes national interests while avoiding entanglement in great power rivalries.
During his visit to India a month ago, Dissanayake said that Sri Lanka would not permit its “land to be used in any manner that is detrimental to the interests of India.” Regardless of continuous assurances by smaller South Asian neighbors that they will not carry out any activities inimical to Indian national interests, India continues to feel insecure and has not viewed U.S. or Chinese operations in the region favorably.
“We have a rather incompetent foreign service, and foreign policy is NPP’s weakest point. NPP is a domestically oriented party, and it has a lot of experts on the economy, industry, agriculture, etc. However, we don’t know who they rely on to advise on the foreign policy front, therefore it depends heavily on the foreign service that has been highly politicized. Can the government expect this foreign service to balance China, India and the U.S.? I don’t think so,” Perera said.
