Sri Lanka on Saturday sealed a billion-dollar deal to let a Chinese state firm take over a loss-making port in a move that worries many, including its giant neighbour India.
The long-delayed $1.1 billion sale of a 70 per cent stake in Hambantota port, which straddles the world’s busiest east-west shipping route, was confirmed by Sri Lanka’s ports minister Mahinda Samarasinghe. The government used tough laws against industrial action to stop workers going on strike this week to oppose the sale to China Merchants Port Holdings. India is nervous about China’s infrastructure moves into its traditional sphere of influence.
“China has accepted that everything in this agreement will operate under Sri Lankan law,” the minister said at a signing ceremony in Colombo.
Negotiations over the deal were held up for months amid opposition from trade unions and political parties. The minister said this week that several countries had raised fears about the sale. India and the US are concerned that China getting a foothold at the port could give it a military naval advantage in the Indian Ocean.
