The Sri Lankan government, once keen to distance itself from a pro-China stance, is now steadily moving back to its former position. This was the message conveyed to the investment community by the country's finance minister, Ravi Karunanayake, during a stop in Hong Kong on Friday.

Speaking at an annual investor conference sponsored by Credit Suisse, Karunanayake said a free trade agreement with China was expected to be concluded "before the end of the year," as a result of the official visit to Beijing by Prime Minister Ranil Wickremesinghe which began on Wednesday.

Even though Karunanayake acknowledged fears about being "economically swallowed" by the world's second largest economy through lowering trade barriers between the two countries, he will be reviewing the pros and cons of the deal with the business community at home. However, the finance minister expressed eagerness about enhancing commercial linkages with China, against the backdrop of slowing economic growth.

Another issue discussed at the conference was the resumption of the Chinese-funded $1.34 billion project known as Colombo Port City. Contracted to state-owned China Communications Construction under Sri Lanka's former government, as well as the port the project includes hotels, office building, shopping malls and other leisure facilities. The sudden halt to the project in March 2015, following the election victory of President Maithripala Sirisena in January of that year, was received as a clear signal of the island's policy shift away from Beijing.

Karunanayake confirmed on Friday that "the [Chinese] company has already started working in Sri Lanka." He also added that the fines that had been imposed BY WHO? ON WHO? for the delayed work had been written off after mutual agreement.

As the minister has mentioned in the past, the delay was blamed on corruption in the former government. Karunanayake reiterated that when his administration took office, the project had not been through a feasibility study or an environmental impact assessment, and even an "agreement with the Sri Lankan government" did not exist. The incoming Sri Lanka government has basically been carrying out an anti-corruption campaign, much like "what China was doing in China," he said.

However, the timing of the restarting of this mega-project coincides with economic headwinds facing the island nation. Because one of the main missions of the finance minister is to showcase Sri Lanka as a "safe destination for investment," the project had to be revived to demonstrate the country's stability to foreign investors. Now that the Chinese are back, he said, "the doubt that you had then is not here anymore."

On the sidelines of the conference in Hong Kong, Karunanayake also told reporters that the country is set to issue a yuan-denominated dim sum bond in the "middle of the year."