Chinese investments are key to Sri Lanka as the country looks to rebuild its economy following years of war, a researcher at the Chinese ministry of commerce research institute said on Friday.

Sri Lankan President Maithripala Sirisena is currently on a four day visit to China in the backdrop of a decision taken by the Sri Lankan Government to review some Chinese funded projects in Sri Lanka.

Chinese researcher Mei Xinyu said that China hopes the visit will help to stabilize and improve the Chinese and the international community expectation of the business environment in Sri Lanka, Chinese state run Xinhua News Agency said.

“Even the Central Bank of Sir Lanka also agrees that China is the biggest source of foreign investments. In 2013, China contributed 40% share of the total 2 billion foreign direct investments,” Xinyu said.

He added that Chinese companies demand no privileges and have a good reputation built by efficiency, technology and low cost in the market. “Again and again, Chinese companies can always be way ahead of other foreign companies. It is often the case that when the project built by Chinese companies have already been completed and in full production, the similar projects built by other foreign companies are still working at basic stage,” he said.

Xinyu further said that similar to other Chinese projects in Sri Lanka, the Colombo Port City project has been through all the legal investigation procedures. “Chinese companies respect and abide to the decision that the host government will examine the project again. But like the capital of Sri Lanka and other foreign countries, we also do not want to see these matters happen again and again,” Xinyu added.

Sri Lanka's Finance Minister, Ravi Karunanayake recently said that they are seeking opportunities to renegotiate with China over the loan conditions stating that the Chinese loan interest rate of 8% is too high.

“Even if Sri Lanka “successfully” forced China to change the signed commercial contract and lower the interest rate, we are afraid that such “success” will substantially increase the risk premium of loans for Sri Lanka. International financial markets are stern,” Xinyu said.

Xinyu further said that conflicts of interest between the host country and the foreign investors are not rare. China also has been in such situations and as the largest country in using foreign investments, China was willing to share the story with Sri Lanka, Xinyu said.

“We hope to share the interests of China's economic growth with our trading partner. Expanding imports, launching the “One Belt and One Road” strategy and expanding the foreign investment and so on, all of these are reflection of our belief. We have started a new Sri Lanka free trade agreement negotiation. We sincerely hope Sri Lanka will win in the competition of attracting foreign investments by its stability of commercial environment and predictable advantages. Thus to achieve leaping development,” Xinyu added.
(With inputs from Xinhua)