Strong ‘negative list’ key for proposed Sino-Lanka FTA : Top economist
A strong ‘negative list’ will be vital should a free trade agreement (FTA) be entered into between China and Sri Lanka, according to Dr. Saman Kelegama, a top economist and Executive Director of the locally-based Institute of Policy Studies. He also added that, while this FTA could be good for local exporters, as China was now more oriented towards domestic consumption rather than its previous exports focus, the FTA had the potential to negatively impact homegrown products because of China’s highly competitive products. He further cited the example of the local toy industry in India, which is now stagnating due to cheap Chinese imports, even without the added benefits associated with a FTA coming into effect.
During his recent presentation, titled “China’s Role in Sri Lanka’s Economic Development”, hosted by the Sri Lanka – Italy Business Council, Dr. Kelegama also commented on the shortcomings of Chinese aid to this country, stating that, compared to other countries, there was virtually no technology transfer from Chinese projects. As an example, he pointed to the recent breakdown at the 
Norochcholai coal power plant, which could not be addressed by local engineers due to a lack of adequate involvement and training with the project as well as its maintenance. He compared this to the Indian project completed locally over the years, such as the Lanka Ashok Leyland bus manufacturer and CEAT Kelani tire producers, which resulted in above 75 per cent technology transfer. On a related matter, he also commented that there were 26,000 work visas issued to Chinese citizens, but no record of how many of these people had gone back.
Additionally, there was also the issue of Chinese loans. Since 2005, the Chinese government had given Sri Lanka US$ 4.8 billion in loans, many of them with a high interest rate and a relatively short, 15-year repayment schedule.
Dr. Kelegama also commented on the reason behind Sri Lanka’s increasing current dependence on Chinese aid, as opposed to other international sources, such as the Asian Development Bank and the World Bank, etc which accounted for the majority of aid to Sri Lanka in the early 2000s. Noting that China was now the leader in terms of aid to Sri Lanka with 25 per cent, while India was at 15 per cent, he highlighted benefits offered by Chinese aid, including any amount being available and few conditions, while the use of Chinese labour was one of the conditions.
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