With economic recovery efforts underway following Sri Lanka’s recent financial crisis, Chinese investment is seen as a lifeline that could help reboot key sectors, from logistics and manufacturing to digital technology.

In a significant development that could reshape bilateral trade ties between China and Sri Lanka, China’s Commerce Minister, Wang Wentao expressed hope for the conclusion of a comprehensive Free Trade Agreement (FTA) with the island nation, during his visit to Colombo last week. The remarks came as Minister Wang co-chaired the latest meeting of the China-Sri Lanka Joint Committee on Economic and Trade Co-operation, reaffirming China’s long-standing commitment to deepening economic collaboration with the South Asian island nation.

Speaking at a business forum attended by around 100 Chinese companies eager to explore investment and trade opportunities in Sri Lanka, Minister Wang called for accelerating negotiations on the FTA. “It is hoped that the two sides continue to work toward the conclusion of a comprehensive free trade agreement in one package, in line with the principles of equality and mutual benefit,” he said.

The renewed push toward an FTA follows the visit of Sri Lankan President Anura Dissanayake to China in January, during which he met with Chinese President Xi Jinping. Minister Wang noted that an “important consensus in the trade and economic context” had been reached during that high-level visit, though he did not elaborate on the details. He assured that the Chinese Ministry of Commerce stands ready to implement the consensus and support Sri Lanka’s development goals.

Strategic Investments and Economic Cooperation

Among the key issues discussed during the committee meeting was the fast-tracking of a major oil refinery project by Sinopec, one of China’s leading state-owned petroleum giants. The multi-billion-dollar project, seen as a critical part of Sri Lanka’s efforts to boost energy security and attract foreign direct investment, is awaiting approvals for tax concessions, as well as access to land and water resources.

Minister Wang emphasized that the Joint Committee should be a functional mechanism not only for dialogue but also for delivering tangible economic outcomes. “We need to use the Joint Committee to enhance exchanges at all levels and in all areas, tap into cooperation potential, and enrich the essence of our cooperation,” he said.

In a move aimed at addressing Sri Lanka’s chronic trade imbalance with China, both sides agreed to launch a joint research initiative focused on boosting Sri Lankan exports to the Chinese market. This study will examine barriers, potential product lines, and logistical solutions to enhance Sri Lanka’s market access.

Minister Wang also extended an open invitation to Chinese enterprises. “China will continue to support and encourage capable and willing Chinese companies, including those with us today, to increase investment in Sri Lanka,” he said. He added that such investments should support local industries, and advance green, low-carbon, and digital economic development.

China’s Global Trade Vision Amid Protectionist Pressures

With economic recovery efforts underway following Sri Lanka’s recent financial crisis, Chinese investment is seen as a lifeline that could help reboot key sectors, from logistics and manufacturing to digital technology.

Minister Wang’s visit comes at a time when the global trading system faces serious turbulence. Addressing the forum in Colombo, he took aim at what he described as “unilateralist and protectionist actions” by unnamed countries, which have disrupted global trade flows and caused instability. Though he did not mention the United States by name, his comments alluded to the effects of US President Donald Trump’s tariff policies, which continue to have lingering effects on global trade norms.

“As we speak, changes unseen in a century are evolving at a faster pace, and the world is confronted with great challenges,” he said. “Some individual country, with its unilateralist and protectionist actions, has undermined the international trade system, disrupted the global economic order, and damaged the development interests of all countries.”

In this context, Wang called for renewed commitment to multilateralism. “China stands ready to work with Sri Lanka to step up coordination, jointly support free trade and the multilateral trading system, uphold international fairness and justice, and inject greatest stability and certainty into the world and the regional economy.”

Positioning Sri Lanka as a Regional Investment Hub

China has long been a major investor in Sri Lanka, funding infrastructure such as the Hambantota Port and the Colombo Port City. With economic recovery efforts underway following Sri Lanka’s recent financial crisis, Chinese investment is seen as a lifeline that could help reboot key sectors, from logistics and manufacturing to digital technology.

The Colombo forum, held under the theme of “Shared Development and Rejuvenation,” saw active participation from Chinese firms in renewable energy, logistics, construction, and digital services. Many of these companies are reportedly exploring long-term partnerships and joint ventures with local enterprises.

Minister Wang underscored the need for strong and resilient supply chains between China and Sri Lanka. “This will improve local supporting industries, empower the green, low-carbon and digital economy, and build smooth, stable, and resilient industrial and supply chains,” he said.

As negotiations for the FTA continue, observers say the outcome will have wide-ranging implications not only for China-Sri Lanka ties but also for South Asia’s broader economic architecture. For Sri Lanka, a successful trade deal with the world’s second-largest economy could bring a much-needed boost to exports and investment. For China, it would strengthen its presence in a strategically located country along the Indian Ocean, further anchoring its Belt and Road Initiative.

Whether the agreement can be finalised in the near term remains to be seen, but. Observers say, Friday’s developments signal clear political will on both sides to move the process forward.