Due to the international backlash that China had faced with its strategic statecraft investments in Sri Lanka more than a decade ago, there has been growing consus among its intelligentsia that the Government should focus on smaller investments, less involvement of its State-owned enterprises, and greater consideration for the industrial capacity of the host societies of Belt and Road Initiative (BRI) investments, Institute of South Asian Studies National University of Singapore Research Fellow Ivan Lidarev said recently (31 August).
“They very much learnt from their experience. You can find articles written by some of their best South Asian specialists in publications like Xiandai Guoji Guanxi for example, which is probably the primary Chinese journal of international relations. They practically dissect their experience and argue that in the future, China has to focus on smaller investments, less State-owned enterprises, and much greater engagement with civil society,” Lidarev said.
Among the major infrastructure investments made by the Chinese Government in Sri Lanka, the Mattala Rajapaksa International Airport (MRIA) and the Hambantota International Port (HIP) have long been subject to domestic and international scrutiny, due to the scale of the projects, the subsequent debt tied to them, and limited commercial use.
While the MRIA had been built with roughly $ 210 million in financing, HIP saw an initial $ 461 million lent through the Chinese EXIM Bank, and was later leased for 99 years to China Merchants Port Holdings for $ 1.1 billion.
HIP has since achieved significant cargo and operational turnaround, handling 8.24 million metric tonnes of cargo in 2025, and is expected to handle 2 million TEUs by end-2026, with ongoing capacity expansions.
However, based on media reports in July, the MRIA continues to operate at a loss of Rs 6 to 7 million daily, amounting to an annual loss of nearly Rs 4 billion and a cumulative net loss approaching Rs 40 billion since its opening in 2013.
In an attempt to salvage the Government asset, the Sri Lankan Government had called for Expressions of Interest (EOIs) in April 2026, with the submission deadline later extended to July 2026, ultimately raking in 19 formal EOIs from international and local consortiums.
Lidarev explained that China’s experience in Sri Lanka had been marred by the dominance of the ‘debt trap’ narrative, supported by its critics, surrounding its Belt and Road Initiative. This had further been exacerbated with the Government’s alliances with host nation administrations that have since fallen out of public favour.
“China had been a bit burned by the experience in Sri Lanka. First, it was the pushback it received internationally with this idea of ‘debt trap’ diplomacy, but also because China put too much political investment into the Rajapaksa dynasty. It has done so in other places of the world. You can see it for example with the Orbán Government in Hungary, the Vučić Government in Serbia.”
“They did not realise that this would put them in a very precarious political position in Sri Lanka. They had not very carefully thought through their engagement with Sri Lanka, in terms of engaging with Sri Lankan civil society. They had not thought through much about Sri Lanka’s capacity to handle Chinese investment, industrial capacity, so on and so forth.”
“They mobilised a lot of their own State-owned enterprises to do much of their work there. They were somewhat clumsy when engaging with Sri Lanka, and this created many of the problems they faced initially. This is not a problem specifically in Sri Lanka, this is more of a Belt and Road Initiative problem.”
Lidarev added that the Chinese intelligentsia also propose that much greater consideration should be paid towards the capacity of the host societies to handle investments; and inevitably the obstacles that each society creates for its investments, including corruption, patronage networks, and inefficiencies.