Colombo Port City in Sri Lanka, December 21, 2021. /Xinhua
Sri Lanka is mired in a financial crisis as the COVID-19 pandemic hammered the country's tourism sector and led to a foreign currency shortage. Some Indian media have taken the chance to revive an old accusation of a "China debt trap" to slander China-Sri Lanka economic cooperation while ignoring plain facts.
"Although the proportion of loans from China increased from two percent in 2008 to nine percent in 2017, it accounted for about 10 percent of Sri Lanka's foreign debt," Fu Xiaoqiang, vice president at China Institutes of Contemporary International Relations, wrote in a commentary on China Daily.
International sovereign bonds made up the lion's share, 36.4 percent, of Sri Lanka's external debt then. China ranked the fourth largest debt holder behind the Asian Development Bank and Japan. International agencies like the World Bank and countries, including India, owned the rest of the debt.
Fu said that Sri Lanka encountered a considerable foreign currency shortage as 60 percent of its debt requires payment in dollars.
"A drop in foreign reserves is an important factor in exacerbating the debt payment pressure of the country," Fu explained.
"China has been providing assistance for Sri Lanka's socio-economic development as its capability allows, and will continue to do so going forward," Chinese Foreign Ministry spokesperson Zhao Lijian said earlier this month.
With the efforts and solidarity of the Sri Lankan government and people, the country is likely to overcome the temporary difficulties soon and embrace even greater development, Zhao added.
India's suspicion about China's and Sri Lanka's economic cooperation results from a zero-sum game mentality, Liu Ying, director of the cooperative research department of the Chongyang Institute for Financial Studies at Renmin University of China, told CGTN.
In fact, the economic development of Sri Lanka will only make the Indian market more attractive as global supply chains become more regionalized and digitalized during the pandemic, said Liu.
Colombo Port City is among the Belt and Road Initiative projects with Chinese investment in Sri Lanka. PwC, a consultancy, estimates the project will create $12 billion worth of value addition annually during the operational stage.
"Cooperation will create win-win results, especially during the digital economy era," Liu said.
Poor infrastructure in developing countries is an obstacle for development as it makes trade with the overseas markets more difficult, she said.
Fu said the "Belt and Road" project provides opportunities rather than a trap for countries along the route.
If the loans they borrow can help them build infrastructure, improve the investment environment and create jobs, that's good lending, he said.
Such loans can vitalize their economies and help pay back debts when they prosper, he added.
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