China offers Sri Lanka olive branch and warnings

BEIJING (AFP) - Chinese President Xi Jinping worked to mend relations with Sri Lanka on Thursday as state-run media warned the island nation's new government against shutting off billions in investments from Beijing.

Sri Lankan President Maithripala Sirisena is on his first state visit to Beijing since taking office in January and is working to renegotiate more than US$5.3 billion (S$7.3 billion) worth of Chinese deals signed by his predecessor.

He has already suspended construction work on a major Chinese-funded "port city" commissioned by his predecessor Mahinda Rajapakse, who relied heavily on China to rebuild the country's infrastructure during his decade in power, raising concerns in India.

"We will continue to make efforts towards building the relationship towards a new era in the traditional friendship between China and Sri Lanka," Mr Xi said during a meeting with Mr Sirisena. "Mr President, you are an old friend of the Chinese people."

China wants to "deepen the mutually beneficial cooperation in all spheres, push forward genuinely helping each other in our strategic partnership", Mr Xi added at the Great Hall of the People in Beijing.

Mr Sirisena's comments were not translated to the audience.

Sri Lanka has complained that it is paying too much interest on the Chinese loans funding its infrastructure development.

The US$1.4 billion "port city" land reclamation scheme in Colombo suspended by Sirisena was considered a security risk by neighbouring India.

China has said any disruptions to the project will spook foreign investors and an op-ed in the Global Times, a paper affiliated with the Communist Party mouthpiece People's Daily, reminded Sirisena that "Sri Lanka needs foreign investment more than ever".

"A consistent policy is crucial for attracting foreign investment," wrote Mr Lan Jianxue. "Sri Lanka's strategic goals will be better guaranteed if Colombo can integrate them with China-backed projects."

Mr Sirisena has also ordered a review of other Beijing-financed projects and loans amid allegations of corruption.

Mr Sirisena made India - rather than China - his first foreign trip after winning elections in January, seeking to rebuild ties with Delhi.

India was reportedly furious after Chinese submarines were allowed to dock in Colombo last year when Mr Rajapakse was still in power.

Beijing has been accused of seeking to develop facilities around the Indian Ocean in a "string of pearls" strategy to counter the rise of rival India and secure its own economic interests.

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