It has been revealed that the main focus of Chinese President Xi Jinping, who arrives in Sri Lanka today (16 September) on a two day visit marking the visit of a Chinese President to the island after 28 years, would be on the final agreement on proposed Sri Lanka-China free trade agreement.

Both countries have completed the feasibility studies on the signing of this agreement and it has received approval from the Chinese government.

The Chinese Minister of Commerce is to sign a memorandum of understanding with Sri Lanka’s Minister of Economic Development Basil Rajapaksa this evening to begin bilateral discussions tomorrow on the implementation of this free trade agreement.

A senior government official involved in the process of signing this free trade agreement told AdaderanaBiz.lk that the Chinese President would pledge the government to sign the Sri Lanka-Chine free trade agreement next March.

Though China enjoys a huge trade surplus in the current bilateral trade, Sri Lanka enjoys a trade deficit. There are views that Sri Lanka’s under this situation, such an agreement could worsen Sri Lanka’s trade deficit and hence it is unfavourable to the country.

Recently, while expressing views in Colombo, Chinese Ambassador in Sri Lanka Wu Jianghao said that China’s attention has been focused on this issue as a friendly country and this trade agreement would not be signed if it is unfavourable to Sri Lanka.

Under the proposed Sri Lanka-China free trade agreement, the government expects to urge for full tax concessions on the exports of apparels, coconut, tea and rubber based products and precious stones and jewellery. Sri Lanka expects to export around USD 500 million worth apparels per year tax free to China under this agreement.

China has become Sri Lanka’s main economic partner during the past few years and the fastest growing world economic giant has assisted Sri Lanka in implementing several infrastructure development projects like the Hambantota harbour, the Norochcholai coal power plant, the outer circular roads, the Nelum Kuluna or tower etc.

Some criticize the increasing Chinese involvement in Sri Lanka’s economic activities pointing out that while countries like Japan provide long term low interest loans China provided only short term, high interest loans.

Their opinion is that on the long run Sri Lanka would fall into a Chinese trap. Apart from these there are also questions being raised on quality issues over the Norochcholai coal power plant.

Those who counter these arguments claim that since China is a rising economy that would become the strongest in the world while overtaking the United States economy very soon, these relations would be more beneficial to Sri Lanka.