Sri Lanka-China to negotiate FTA during historic Chinese President’s visit
Tuesday, 16 September 2014 00:19
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Sri Lanka and China in recent years have developed increasingly closer economic and trade relations and a proposed free trade agreement (FTA) between the two countries will boost Sri Lanka’s future development, according to the government of Sri Lanka.
Both Sri Lanka and China anticipate that Chinese President Xi Jinping’s visit to the island today, a first by a Chinese head of state in 28 years, will expand cooperation and cement the ties in trade and economy between the two countries.
During President Rajapaksa’s state visit to China in May 2013 both leaders agreed to elevate the bilateral relations to a ‘Strategic Cooperation Partnership’, by substantially expanding the mandate for engagement.
The two countries signed a Memorandum of Understanding and agreed to establish a Joint Working Group on Trade to study the feasibility of a China -Sri Lanka free trade agreement (FTA) and measures to enhance Sri Lankan exports to China.
During Chinese President Xi Jinping’s visit to Colombo the two sides will launch negotiations on the FTA.
A joint feasibility study on the proposed FTA completed in March 2014 concluded that the building of an FTA will bring benefits to both countries.
Although Sri Lanka’s exports to China have increased from US$ 28.39 million in 2005 to US$ 121.63 million in 2013, the exports have not increased up to its potential with the bilateral trade reaching US$ 3.62 billion in 2013.
Sri Lanka hopes the FTA will help the country to gain easier access to the Chinese market and gradually reduce its trade deficit towards the world’s second largest economy.
Some of Sri Lanka’s main export items to China include coir fiber, garments, tea, rubber and precious stones, among others.
China has become Sri Lanka’s second largest trade partner and the second largest sources of imports to the island with imports from China on a range of items have increased in recent years. Some of the main import items include cotton, textiles, iron and steel, vehicles and parts, and plastic products, among others.
In addition to the enhanced trade cooperation, China has become the largest investor in Sri Lanka.
Loans and investments from China have played a significant role in Sri Lanka’s post-war reconstruction. Major projects that have received Chinese assistance include the second international airport in Mattala, Hambantota international port, Norochcholai coal power plant, Colombo-Katunayake Expressway, Southern Expressway extension to Matara and the Moragahakanda multi-purpose irrigation project among others.
China has also become a major source of tourist arrivals to the island.
The government says in working toward Sri Lanka’s goal to attract 2.5 million tourists by 2016, China will play an important role, particularly being the largest outbound tourism market in the world.
Sri Lanka has identified China as a priority market in its tourism promotion strategy and hopes to attract 100,000 Chinese tourists to the island in 2015 and 275,000 by 2016.
This year, Sri Lanka has already recorded more than one million tourists overall, and the number of Chinese tourists has increased drastically in recent years, from 9,668 tourists in 2005 to 81,682 this year.
The trend of incoming Chinese tourists continues to be positive, the government says. Arrival of Chinese tourists to Sri Lanka There increased 141.5 percent in the first eight months of this year compared to the same period last year.
Sri Lanka also hopes to continue attracting more Chinese tourists to Sri Lanka during upcoming years in reaching its goal of attracting 2.5 million tourists by 2016.
Chinese President Xi Jinping arrives today
Chinese President Xi Jinping will arrive in Sri Lanka today on a two-day official visit at the invitation of President Mahinda Rajapaksa where he will inaugurate the first phase of the Port City Project near the Gall Face green with President Mahinda Rajapaksa.
Also the final phase of the Norochcholai Coal Power Plant will be opened on Sept.16 under the patronage of Chinese President and Sri Lankan President.
The Chinese President will ink number of bi-lateral agreements covering political, economic, cultural and social sectors, during his visit to Sri Lanka.
The visiting leader will hold meetings with the President and the Prime Minister and pay a visit to the Parliament where he will meet the Speaker and members of parliament including the Opposition.
This visit by Chinese President Xi Jinping will be the first visit by a Chinese President to Sri Lanka in 28 years. The last Chinese President to visit the island was President Li Xiannian in 1986.
Sri Lanka recognized the People’s Republic of China in 1950, marking a turning point in relations between the two countries. In December of 1952, Sri Lanka and China signed the “Rubber-Rice Pact.” The agreement helped break the blockade and embargo that had been imposed on China by western nations.
On Feb. 7, 1957, Sri Lanka and China initiated full diplomatic relations.
China is the country that President Mahinda Rajapaksa has visited the most during his time in office, visiting the East Asian nation a total of seven times from 2007 to 2014.
China has now become Sri Lanka’s largest development partner with assistance to projects such as, but not limited to, the following: Southern Expressway; Hambantota Port Development Project; Norochcholai Coal Power Plant; Mattala International Airport; Katunayake Airport Expressway;
Moragahakanda Irrigation Development Project and Nelum Pokuna (Lotus Pond) Mahinda Rajapaksa Theatre.
Currently, there are more than 800 Sri Lankan students enrolled in undergraduate and postgraduate programmes at various universities in China. About 100 of these students are benefiting from scholarships provided by the Chinese Government. In recent years, many Sri Lankan students have received the opportunity to pursue higher studies in China through scholarships provided either by the Chinese Government or other organisations.
President Mahinda Rajapaksa continues to reiterate his Government’s commitment to “One China Policy” during meetings with high-level Chinese officials.
