Status of mega H’tota project, debt-restructuring explained

IMF criteria blocking already approved tax concession for mega USD 3.7bn oil refinery project remains unresolved

By Shamindra Ferdinando

 China is confident that significant upheaval that had been caused by President Donald Trump’s unpredictable strategies in respect of Russia, Western Europe and rest of the world wouldn’t alter their strategic planning and objectives.

Calling China’s relationship with Russia mature, resilient and stable, the Chinese embassy here reiterated Chinese Foreign Minister Wang Yi’s recent declaration their partnership wouldn’t be influenced by any turn of events, let alone be subject to interference by any third party.

The Chinese embassy team led by Qi Zhenhong explained the current status in response to The Island query posed at a meeting between the Colombo-based mission and the media at the embassy last Friday (14). China is of the view Trump’s destructive agenda couldn’t derail their plans and they being buoyant it could meet any eventuality.

The Chinese embassy called the meeting to discuss the government work report that dealt with 2024 achievements and 2025 targets in the wake of the recently concluded annual sessions of the National People’s Congress (NPC) and the Chinese People’s Political Consultative Conference (CPPCC) held separately, but at the same time. The CPPCC is widely considered an advisory body. The embassy also dealt with foreign policy matters.

The team consisted of Ambassador Qi Zhenhong, Deputy Chief of Mission and Minister Counsellor Yanwei Zhu, Chief of Political Section Qin Ligong, third Secretary Jin Enze, third Secretary Kang Jie, third Secretary Wang Kai and attache Xing Chaoyang.

The Chinese embassy emphasised China’s abiding interest in seeking what they called a shared future for the two countries while referring to various projects implemented over a period of time for the benefit of Sri Lanka. The embassy emphasised that China’s growth would be essentially beneficial to their friends and Sri Lanka is one of those countries that enjoyed special status. The embassy stressed that the category of countries chosen for a shared future was restricted.

The embassy highlighted China’s foreign exchange reserves surpassed 3.2 trillion USD, China created   12.56 mn new urban jobs, per capita disposable income grew up 5.1% in real terms, the value addition of high-tech manufacturing and equipment manufacturing rose by 8.9 % and 7.7%, respectively and output of new energy vehicles passed the 13 mn mark.

China targeted a modest economic growth of around 5% for 2025 while China’s Gross Domestic product (GDP) rose to 134.9 trillion Yuan in 2024, a year-on-year increase of 5%. China estimated deficit to GDP ratio at around 4% for 2025 while targeting a drop of around 3 % in energy consumption per unit of GDP in 2025.

China also targeted CPI (Consumer Price Index) growth of around 2%. Three other key targets were grain output of around 700 mn metric tons and 12 mn new urban jobs in 2025. However, China acknowledged that unemployment remained an issue in some areas. Asked to explain how China intended to address the unemployment issue, Minister Counsellor Yanwei Zhu acknowledged the difficulty caused by the reluctance on the part of the youth to take ordinary jobs. Zhu claimed that the majority wanted to join major companies.

According to the work report, China has estimated urban unemployment rate at around 5.5 % for 2025. References were made during the Chinese embassy briefing to Minister Yi’s media comments on the sidelines of the ‘two sessions.’ China dealt with several contentious issues including what they called the Taiwan question, South-China sea ‘confrontations’ and ‘conflict’ with Japan. China issued an unmistakable warning to Tokyo that Japan should be prepared to face the consequences of provoking trouble over Taiwan while Beijing sought to normalise relations with India.

Calling it strategy head-of-state diplomacy, China declared that its relations with the world underwent both positive and profound changes. China also reiterated its commitment to the global South whatever the global changes were.

In an obvious reference to the US, China has declared that those with stronger arms and bigger fists shouldn’t be allowed to have control over a particular situation.

Against the backdrop of President Anura Kumara Dissanayake’s state visit to Beijing, the Chinese embassy explained the current status of bilateral relations.

Responding to a media query, Minister Counsellor Yanwei Zhu explained the hurdles faced by the mega USD 3.7 bn Sinopec project to build an oil refinery in the Hambantota district. Zhu asserted that the project would have a major impact on the economy. The Chinese embassy number two said that Sinopec wouldn’t have chosen Hambantota if not for the high level political relationship between China and Sri Lanka.

Zhu stressed that Sinopec required more land, water remained an issue as farmers feared they would be deprived of water, concerns raised by the CPC and the tax exemptions as a result of IMF intervention following the economic crisis. Zhu said that the Sinopec team is here for discussions. The diplomat said that Sinopec needed the tax concessions that had been available at the time they first negotiated the agreement on the proposed oil refinery at Hambantota.

The media sought a response to Tamil MP Selvam Addaikalanathan’s accusation that China was seeking to exploit the ongoing Tamil Nadu poaching in Sri Lanka’s northern waters. Declaring China’s support for Sri Lanka, China expressed the view that Sri Lanka had the wisdom and capacity to address the issue at hand.

Responding to another query, Ambassador Qi Zhenhong pointed out that China finalized a debt restructuring agreement with Sri Lanka to restructure USD 4.2 bn debt. The Chinese envoy said that China’s Exim Bank suffered significant losses as a result of the restructuring process. The ambassador emphasized that China was the first country to finalize a debt restructuring agreement with Sri Lanka. He said so when the media asked him when would China finalise an agreement on its own in the wake of Japan and Sri Lanka entering into a pact in this regard.

China entered into the agreement on June 26, last year whereas the agreement with Tokyo was signed on March 7 to restructure USD 2.5 bn.