China-Sri Lanka should enhance economic relationship

China and Sri Lanka have had a relationship that has extended over a thousand years into the past. 1400 years ago, the Chinese Scholar monk Fa Xian spent two years in a Buddhist Monastery in Sri Lanka studying Buddhist scriptures. There have also been trade and economic exchanges from ancient times. This year China celebrated 600 years of the voyages of the Chinese navigator Zhang He. He visited Sri Lanka at least five times, and on most of these voyages, the economic nexus was the most important.

In modern times, shortly after Sri Lanka received her independence and the People's Republic was established, within one year of each other, the two countries signed what is known as the Rubber-Rice Pact. I understand that this was the first trade agreement that China signed with a non-Communist country.

That was in 1952 and symbolized both the economic as well as political ties between the two countries.

Five years later, during my father's term as Prime Minister, the two countries established resident Embassies in each others capitals.

Today, I am happy to therefore be here to help carry forward our economic relationship. Just four months ago, in Colombo, H.E. Premier Wen Jiabao and I witnessed the signing of the China-Sri Lanka Agreement for Further Strengthening of Economic Relations. Economic relations is not merely a matter of buying and selling.

As that Agreement implies, there are diverse areas of economic cooperation. These include joint ventures, contractual and consultancy services for various mega infrastructure projects including power, transport and communications. They include tourism which is a major growth industry for both our countries.

We have commenced discussions under the Agreement to work out modalities to facilitate trade and economic relations including joint ventures. I come here today with a group of very senior businessmen from Sri Lanka who cover such products as tea, gems and jewellery, rubber products, coir products, garments, food and vegetables, agricultural machinery, building materials and household items. They include people involved in services such as tourism and shipping.

Yesterday, I had friendly and fruitful discussions with H.E. Hu Jintao, the President of the People's Republic of China. During those discussions we have mapped out means to advance our economic cooperation further.

The Minister of Tourism and the Chairman of the Board of Investment will be addressing you on the opportunities that exist to build up a strong win-win situation in the economic field. You will have the opportunity of seeking clarifications from them.

You will also personally be able to have close encounters of the profitable kind with the businessmen individually. We may not have always had time to establish prior linkages well in advance of this visit. However, I am sure that in the days to come, you will be able to link up personally with potential partners for our mutual benefit.

On my part what I can assure you is that Sri Lanka welcomes you as a partner. Many of you have already visited Sri Lanka and know the esteem and friendship with which Sri Lankans look at China. Our Production Zones or Free Trade Zones which include many foreign partners were the earliest to be set up in South Asia.

In fact, your former President Jiang Zemin visited Sri Lanka around the 1970s to study what was then called the Greater Colombo Economic Zone, one of the first to be set up in South Asia. China can utilise our Production Zones.

Concessions can be negotiated on an individual basis to suit your special needs.

Since Sri Lanka liberalised its economy in the seventies, it has followed a consistent, liberal, free market economic philosophy. We are a democratic country in which successive Governments maintain the strongest of relations with China - its Government and enterprises of different forms of ownership.

Sri Lanka's trade and tariff policy is moving towards and increasingly lower tariff regime. Sri Lanka is a signatory to the South Asian Preferential Trading Arrangement (SAPTA), the Bangkok Agreement, the Generalised System of Preferences (GSP), and the Global System of Trade Preference (GSTP).

Sri Lanka has also entered into Free Trade Agreements with India and Pakistan, which are two of the largest markets in the South Asian region. Indo-Lanka FTA bilateral trade has grown over 250 per cent to approximately US$ 1.3 billion by early 2004.

Negotiations are already under way to expand the Indo-Lanka Free Trade Agreement into a Comprehensive Economic Partnership Agreement (CEPA). Sri Lanka's admission to GSP+ from July 1st, 2005 provides eligibility for zero tariff entry, inter-alia, for over 90 per cent of Sri Lanka's exports to the EU market. A Trade and Investment Framework (TIFA) has also been entered into with the USA. We can discuss links with third countries.

Sri Lanka's strategic location in the Indian Ocean, lying midway on the sea route between East and West, linking China and Southeast Asia with the Near East and the Mediterranean world could easily serve as a gateway to the lucrative South Asian market and beyond towards Africa and the Middle East, as it had done during era of the Silk Route.

The Southern Port of Hambantota is being developed in association with Chinese enterprise. China's own economic performance has been dazzling. Its welfare and development are part of global welfare and development.

We would very much like to enhance and deepen our economic relationship.

I would like to end with the words of the late Foreign Minister Lakshman Kadirgamar who during a visit undertaken last year to China said: ".....Sri Lanka wishes China to succeed, and trusts China to exercise responsibly and constructively the enormous power and influence that will necessarily accompany great economic success."