One of China’s largest state-run firms that was behind the controversial Hambantota port project has bagged the first contract in Sri Lanka’s planned $13-billion Port City, weeks after the US criticised the Chinese government for acting as a “predator” in the island nation.
The China Harbor Engineering Company Limited (CHEC), a subsidiary of state-run behemoth China Communications Construction Company Limited (CCCC), signed a $1-billion agreement on Thursday with Browns Investments, an arm of Sri Lankan conglomerate LOLC Group, for developing the Colombo International Financial Center (CIFC).
The signing ceremony in Colombo was attended by Prime Minister Mahinda Rajapaksa and China’s envoy to Sri Lanka, Qi Zhenhong. “Attracting foreign direct investment is a priority of our government. This unique project is a powerful example of Sri Lanka’s return to the business world,” Rajapaksa was quoted as saying by the media.
Rajapaksa tweeted that the financial centre will be the first FDI project within Port City and that “this landmark project is a strong indicator that [Sri Lanka] is now back in business”.
China Harbor Engineering Company was also the firm involved in the controversial Hambantota Port Development Project. After struggling for years to pay off debts related to the project, Sri Lanka handed over the port and 15,000 acres around it to China for 99 years in December 2017.
There was no immediate response from Indian officials on the development.
Five subsidiaries of CCCC were among 24 Chinese companies added to a blacklist by the US commerce department on August 26 this year for “helping the Chinese military construct and militarize the internationally condemned artificial islands in the South China Sea”.
Two months later, during a visit to Sri Lanka, US secretary of state Mike Pompeo cautioned the island nation’s leadership about Chinese investments and influence. A strong and sovereign Sri Lanka, he said, could be a “beacon for a free and open Indo-Pacific”, and this was a “contrast from what China seeks”.
“We see from bad deals, violations of sovereignty and lawlessness on land and sea that the Chinese Communist Party is a predator, and the US comes in a different way, we come as a friend, and as a partner,” Pompeo told a news conference after meeting President Gotabaya Rajapaksa.
Pompeo’s comments were swiftly rejected by the Chinese embassy, which tweeted that Beijing was only promoting cooperation with Colombo.
The Port City, to be built on 660 acres reclaimed from the sea on Colombo’s seafront, is back in the limelight since the Rajapaksa family returned to power and reports suggest China will have the main role in building it as part of the Belt and Road Initiative.
While responding to criticism that Sri Lanka is again giving a key role to China in infrastructure projects despite the debacle of Hambantota port, Sri Lankan officials have argued that the US and others were not offering enough financial support to the country.
“We turned to all our friends, including the World Bank and India…The one entity that came to our assistance hastily was China,” Palitha Kohona, who recently took over as Sri Lanka’s ambassador to China, was quoted as saying by The Wall Street Journal last month, while talking about Sri Lanka’s efforts to garner financial backing for projects such as Port City.