Chinese President Xi Jinping, right, shakes hands with Sri Lankan President Anura Kumara Dissanayake during a signing ceremony at the Great Hall of the People in Beijing, China on Wednesday, Jan 15, 2025. (AP Photo/Aaron Favila, Pool)

BEIJING (AP) — Sri Lanka and China signed a series of cooperation agreements on Wednesday following talks between their leaders, one month after Sri Lankan President Anura Kumara Dissanayake made India his first overseas trip since winning election last September.

The support of the two regional powerhouses — and rivals — is crucial for Sri Lanka to emerge from its worst economic crisis in decades, which led to political upheaval and paved the way for Dissanayake to come to power.

China was once seen as having the upper hand in Sri Lanka through its huge loans and infrastructure investments. While China remains the country’s largest bilateral lender, Sri Lanka’s economic collapse provided an opening for India, which stepped in with massive financial and material assistance including food, fuel and medicines.

Chinese leader Xi Jinping, in opening remarks to Dissanayake, said that relations between their countries are at a historical juncture.

“I am willing to work with you, Mr. President, to chart a new vision for the development of bilateral relations and promote new and greater achievements in China-Sri Lanka friendly cooperation,” Xi said.

Sri Lanka borrowed heavily from China over the past decade for projects including a shipping port, airport and a city being built on reclaimed land. The projects failed to earn enough revenue to pay off the loans, and Sri Lanka leased the port in Hambantota to a state-owned Chinese company in 2017.

Dissanayake said China remains a key partner that has supported important development under its Belt and Road Initiative, a signature policy of Xi to construct roads, ports, power plants and other infrastructure overseas. The initiative has helped China deepen its ties in much of the developing world.

For years, China has been trying to expand its influence in Sri Lanka, an island off India's southeast coast that the government in New Delhi considers part of its strategic backyard. The Indian navy launched a submarine and two warships at a state-run shipyard on Wednesday with an eye on China’s presence in the Indian Ocean.

Marxist-leaning Dissanayake’s visit to the Chinese capital can be seen as an effort to navigate the rivalry between India and China, which his party traditionally has leaned toward.

In New Delhi last month, Dissanayake met Prime Minister Narendra Modi and said he would not allow Sri Lanka to be used in “a manner that is detrimental to the interest of India.”

The agreements between Sri Lanka and China covered a range of areas, including economic and technological development, health inspections for food imports and TV broadcasting and other media cooperation.

Sri Lanka declared bankruptcy in April 2022 and suspended payments on $83 billion in domestic and foreign loans as a foreign exchange crisis led to severe shortages of food, medicine, fuel and cooking gas, along with hourslong power cuts.

China’s support is vital for Sri Lanka to restructure its external debt. China accounts for about 10% of Sri Lanka’s loans, more than Japan or the Asian Development Bank.

The country's crisis was largely the result of economic mismanagement combined with the COVID-19 pandemic, which along with terrorist attacks in 2019 devastated its tourism industry. The pandemic also disrupted the flow of money sent home by Sri Lankans working abroad.

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Mallawarachi reported from Colombo, Sri Lanka.

News from © The Associated Press, 2025