Over the decade starting 2005-2015, China has emerged as the leading source of Official Development Assistance (ODA) and Foreign Direct Investment (FDI) in Sri Lanka to the tune of $14 billion. Most of it is ODA in loans and grants – $12 billion in sectors like energy, infrastructure and services. There is private Chinese investment in the country too – $2 billion and growing.
The main reason for China’s increasing presence in Sri Lanka is that Colombo is struggling to find alternative sources of foreign capital. This has opened the gateway for China to deepen its economic roots in Sri Lanka. China has invested a huge amount of $8 billion in Sri Lanka in the last few years, particularly in port projects such as the Hambantota and Colombo ports.