In September 2024, Sri Lankans experienced a significant political shift in the country. 76 years of governance led by the United National Party, the Sri Lanka Freedom Party and its alliance, and later the Sri Lanka Podujana Peramuna, were rejected by the public. The National People’s Power won the presidential and parliamentary elections within two months. With that a new era of Sri Lankan politics began, and this article attempts to focus on a new era in China-Sri Lanka bilateral relations.
Newly elected Sri Lankan President Anura Kumara Dissanayake paid a four-day state visit to the People’s Republic of China from 14 to 17 January 2025. The Minister of Foreign Affairs, Foreign Employment, and Tourism, Vijitha Herath, the Minister of Transport, Highways, Ports, and Civil Aviation, Bimal Rathnayake and the Director General of Government Information, H. S. K. J. Bandara were seen joining the visit with Dissanayake. The four-day state visit included meetings with Chinese President Xi Jinping, Premier Li Qiang and Chairman of the Standing Committee of the National People’s Congress of China Zhao Leji and others. The visit was significant for the relations between the two countries as the Sri Lankan delegation met high-ranking members from the Chinese Communist Party, signaling increased cooperation in the future.
Key Diplomatic Objectives
1. Reaffirmation of the One China Policy
During his visit to the People’s Republic of China (PRC), President Dissanayake reaffirmed Sri Lanka’s continuous support for the One China Policy, recognizing the PRC as the only legitimate China that exists. He also assured his commitment not to allow Sri Lanka’s territory to be used for any anti-Chinese activities. This stance is aligned with Sri Lanka’s strong diplomatic relations with China since the 1950s (Kuruwita, 2025), and stronger than ever before since President Mahinda Rajapaksa’s time in the office from 2005 to 2015.
2. Strengthening Economic and Strategic Ties
This state visit aimed to strengthen strategic and economic ties between the two nations. Several agreements were signed to advance the Belt and Road Initiative (BRI) projects, strengthen trade and investment, and promote cooperation in areas such as education, climate action and agriculture. China also pledged to support Sri Lanka’s debt restructuring efforts and encourage investments in areas such as green development and logistics (Kuruwita, 2025; Xinhua, 2025).
Both parties emphasized the importance of the cultural ties as mentioned in the joint statement between China and Sri Lanka, released in January 2025. Education and research were seen as significant opportunities to enhance cultural ties, as both parties promised to encourage more exchanges of students, teachers and researchers. China stated they welcome committed Sri Lankan students to pursue higher studies in China by providing them government scholarships, which will be a great chance for Sri Lankan students who wish to pursue their higher studies in a foreign university. China will also work with Sri Lanka to implement the Luban Workshop to create more professionals through vocational and technical training in Sri Lanka (Joint Statement between China and Sri Lanka, 2025)
3. Positioning within Global South multilateral frameworks
China and Sri Lanka emphasized global development initiatives and multilateralism. Both countries agreed to support each other by strengthening coordination and cooperation within large multilateral bodies like the United Nations Organization (UNO), and also to give focus on global issues such as climate change (Xinhua, 2025). Sri Lanka also seeks to leverage China’s BRI for development purposes and navigate risks in debt and regional power dynamics. The BRI is a great opportunity for Sri Lanka to enhance its network and connect with other partnering countries of the BRI.
Strategic Cooperation Areas
1. Development in Infrastructure
A major area of cooperation between the two countries includes infrastructure development, which is mainly led by the BRI. Notable projects in Sri Lanka include the Colombo Port City project and Hambantota Port. These projects can play a crucial role in Sri Lanka’s economic development and turn the island nation into a regional hub of business, transportation and maritime logistics if managed properly (Kuruwita, 2025; Xinhua, 2025). Table 1 provides an overview of the current ongoing Chinese projects in Sri Lanka.
2. BRI Project Advancement
The state visit also highlighted the importance of continuing BRI projects in Sri Lanka. China promised strong support for Sri Lanka’s economic development, sovereignty, and independence. Both countries also signed 15 new agreements covering areas including economic development, education, media, culture, infrastructure, agriculture, digital economy, and marine economy. President Xi emphasized the importance of fostering new highlights and high-quality cooperation within the BRI while building a community of shared future with Sri Lanka. In response, Sri Lanka pledged to further deepen regional connectivity and welcome more Chinese investments. This collaboration also includes infrastructure development and other forms of multilateral cooperation addressing climate change, demonstrating the expanding scope and depth of bilateral relations (Desheng, 2025).
3. Investment in Maritime Infrastructure
Sri Lanka and China have multiple agreements on developing maritime infrastructure under the BRI projects. These projects include Hambantota International Port (HPI), aiming to make Sri Lanka a major maritime hub in the Indian Ocean Region by providing services such as port, energy, marine and port investment (Hambantota International Port Group, n.d.). The project also aims to create job opportunities that are estimated at around 50,000. However, since 2017, Sri Lanka has leased the port for 99 years to China Merchants Ports Holding Company (CMPort) in a debt-for-equity swap deal. Therefore, Sri Lankan decision-makers should work carefully and maintain high standards to maximize the benefits currently earning.
The Colombo Port City Project is another key project located on reclaimed land from the sea. The project is handled by the China Harbour Engineering Company (CHEC) (CHEC Port City Colombo (Pvt) Ltd - Sri Lanka, n.d.). The China Merchants Ports Holding Company (CMPH) operates the Colombo International Container Terminals (CICT) as a joint venture company with the Sri Lanka Port Authority (SLPA). The CICT is the only deep-water port in South Asia at the moment, and they also aim to increase the capacity of the terminal and manage the container traffic (Details Business Areas, 2018).
4. Economic Collaboration
This includes increasing trade and investment, promoting agricultural cooperation, and developing digital economy partnerships, as it is one of the fastest-developing sectors globally, contributing over 15% to global GDP (Wignaraja and De Zylva, 2018). China has also agreed to assist Sri Lanka in debt restructuring, education, tourism development, logistics and green development (Kuruwita, 2025). China is also focusing on a free trade agreement (FTA) with Sri Lanka, as they already reached one recently with the Maldives (Shivamurthy, 2025).
5. $3.7 billion Sinopec Oil Refinery Project in Hambantota
As a major point of President Dissanayake’s 2025 visit to China, both nations agreed to a $3.7 billion oil refinery project in Hambantota, Sri Lanka. Sinopec will lead this project as decided after a bidding process. This step indicates a shift towards partnerships based on investment rather than financial loans (Moramudali and Chen, 2025).
6. Renewal of Currency Swap Agreement
During the state visit two nations agreed on a currency swap renewal. This is a pivotal point of Sri Lanka’s debt restructuring and economic stabilizing process, and it will also enhance economic cooperation between the two old friends (Kuruwita, 2025).
7. Expanding Trade and Investment
Both countries are highly focused on expanding trade and investment to provide a more friendly business atmosphere for Chinese enterprises in Sri Lanka. Digital transformation, green development, and logistics are the main aspects to be focused on (Kuruwita, 2025; Xinhua, 2025)
Table 1 above indicates that China’s main focus on infrastructure projects in Sri Lanka was mainly on roads, airports, seaports, energy, the telecommunication sector and water supply projects. By investing in such infrastructure projects, China created interdependencies and leveraged them significantly. Sri Lanka, as a strategic point in the Indian Ocean, could be pivotal for China to ensure its regional power balance in South Asia. But during the civil war times, China emerged as a major donor and development partner (Shivamurthy, 2025), proving China’s caring role for Global South partners. The authors assume that providing development assistance is not just a strategic step, it is also a significant priority of uplifting the global south partners while developing itself, as China is doing. If the public could understand this with an open mind, this might be seen as a positive opportunity to develop the country.
What is important is that the Sri Lankan policymakers need to carefully manage Chinese development loans to gain the maximum benefits. In this case, transparency is very important as the government officials are responsible for every decision they take on behalf of the public, and the decisions need to be transparent to the public. Evaluating and reporting each project is also crucial as they can be used to plan future projects carefully.
Geopolitical Context
As President Anura Kumara Dissanayake sets out on a strategic partnership with China, the geopolitical context surrounding this initiative cannot be overlooked. The Indian Ocean remains significant for international relations, and Sri Lanka's geographical position makes it a critical player in the balance of power among regional powers. Sri Lanka must therefore navigate its aspirations cautiously, serving both its national interests and the demands of powerful neighbouring countries.
1. Balancing Relations with Regional Powers
By reaffirming its ties with China, Sri Lanka finds itself seeking a delicate balance between India and China, two strong neighbours. Sri Lankan leadership often emphasizes the need for a non-aligned foreign policy, which allows it to engage with both nations without compromising its sovereignty. A diplomatic quote that describes this approach is from Dissanayake himself in which he notes that "We thrive best when our partnerships create opportunities for all parties involved." (Deccan Herald, 2025).
2. Strategic Positioning in the Indian Ocean
The Indian Ocean is becoming increasingly significant for trade routes and military presence. Sri Lanka's decision to strengthen ties with China under the Belt and Road Initiative (BRI) will likely enhance its strategic location in the region. China’s investments in maritime infrastructure aim to secure its maritime silk route, while Sri Lanka benefits from development and trade opportunities (Ministry of Foreign Affairs of China, 2025). The growth in maritime infrastructure could lead to increased ship traffic through the Colombo harbour, thereby significantly boosting the Sri Lankan economy (Global Times, 2025).
3. Diplomatic Support in International Forums
In the face of global challenges, Sri Lanka's collaboration with China also opens avenues for diplomatic backing in international forums. China's weight in the United Nations and other multilateral organizations provides an opportunity for Sri Lanka to express its interests more clearly (Sunday Times, 2021). This collaboration may come in the form of backing during discussions related to climate change, economic development, and regional security matters, aligning with China's global objectives while benefiting Sri Lanka’s international standing.
Recommended Policy Actions
For Sri Lanka to fully gain the benefits of its deepening relationship with China, several policy actions have been highlighted by scholars and policy institutes. Firstly, diversifying economic partnerships is essential. While Chinese collaborations offer significant opportunities, overdependence poses long-term risks. Strengthening ties with ASEAN countries, the European Union, and India can enhance economic resilience and geopolitical balance (Observer Research Foundation, 2025). Secondly, leveraging Chinese investments strategically can catalyze broader development. Beyond infrastructure, Sri Lanka can use these investments to expand sectors like energy, technology, and manufacturing, provided the projects are managed with transparency and long-term sustainability in mind (Global Times, 2025). Thirdly, maintaining diplomatic flexibility is crucial. A dynamic foreign policy that balances relations with both China and India, while promoting regional multilateralism, can help Sri Lanka navigate shifting geopolitical dynamics (Gateway House, 2025).
Amidst these high-level strategies, several modest yet impactful actions remain underutilized. One such initiative is the formation of an independent Foreign Investment Impact Assessment Taskforce, including members from civil society, academia, and business, to review and publicly brief on major bilateral projects, thereby increasing transparency and public trust. Additionally, bilingual digital dashboards that track project progress, financial flows, and social outcomes could facilitate data-driven adjustments and citizen engagement. The government could also embed policy nudges into contracts, such as local hiring quotas, incentives for technology transfer, and environmental safeguards, all achievable without extensive legislative overhaul. Finally, introducing foreign policy literacy modules in secondary education would help cultivate a more informed and globally aware generation. These grassroots-oriented actions are low-cost, culturally resonant, and politically feasible, yet they often remain sidelined in favor of grand diplomatic visions.
Potential Challenges
While the prospects of deepening relations with China appear promising, several well-documented challenges must be carefully managed. First, navigating regional power dynamics is crucial, as tensions between China and India over territorial disputes continue to escalate. Sri Lanka must tread carefully to avoid being drawn into broader geopolitical rivalries (Foreign Policy, 2024). Second, ensuring balanced international relations is vital. Strengthening ties with China should not come at the expense of alienating other key international partners, and a nuanced foreign policy is required to maintain this equilibrium (Deccan Herald, 2025). Third, the issue of maintaining economic sovereignty remains pressing. The influx of Chinese investments, while beneficial in the short term, may compromise Sri Lanka’s long-term control over strategic sectors unless protective mechanisms are in place (Chatham House, 2020).
Beyond these widely acknowledged strategic concerns, Sri Lanka also faces a set of more localized, systemic challenges that could quietly erode the benefits of foreign engagement. Entrenched bureaucratic inefficiencies often stall the implementation of large-scale agreements, regardless of high-level diplomatic progress. Additionally, the politicization of foreign investments, where projects become mired in domestic party politics, can cause mismanagement, public opposition, or abandonment. Another underappreciated challenge is the limited institutional capacity to enforce environmental, labor, and transparency standards in megaprojects funded by foreign entities. This gap can lead to exploitation, unequal benefits, and environmental harm. Furthermore, low levels of public awareness regarding the long-term implications of international partnerships hinder civic engagement and accountability. If left unaddressed, these domestic vulnerabilities risk undermining even the most strategically sound bilateral initiatives.
Conclusion
The strategic visit of President Anura Kumara Dissanayake to China marked a significant milestone in the evolution of China-Sri Lanka relations. By deepening cooperation across multiple areas, reaffirming key diplomatic objectives, and maintaining a proactive diplomatic stance, Sri Lanka is poised to enhance its standing in the regional and global arena.
The evolving partnership between Sri Lanka and China presents a landscape rich with opportunity, but not without complexity. As strategic initiatives continue to deepen bilateral ties, Sri Lanka must remain vigilant in safeguarding its economic sovereignty, institutional integrity, and regional balance. The recent political transition signals a willingness to reset foreign policy priorities, but genuine success will depend not only on high-level diplomacy but also on transparent governance, inclusive development, and civic accountability.
In this significant chapter of its international engagement, Sri Lanka has the chance to reshape its role in the Indo-Pacific and the Global South. Whether it emerges as a strategic bridge or becomes strategically bridged over will depend on how well it can balance cooperation with caution, vision with vigilance. And here’s something to think about. If foreign partnerships are designed to build the nation’s future, should the people of that nation not be more actively involved in shaping how those partnerships unfold?
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