Chinese President’s visit will ensure economic benefits

The Chinese President Xi Jinping’s visit and strengthening China-Lanka ties will provide many economic benefits to Sri Lanka, economic analysts said. Increasing trade with China, especially our export to China will help diversify our export market.

Sri Lanka exports, mostly textiles and garments (40 percent of the total exports) and tea (17 percent). We depend largely on the US and EU markets especially our main export-apparel where 47 percent of apparel exports go to the EU and another 40 percent to the US market.

This is risky from the economic and political point of view. In case of an economic crisis similar to what we experienced in 2008 there is a risk of adverse economic implications.

Politically, when we depend largely on a few markets they can force us to change our political decisions, foreign policy and even interfere in our internal matters.

The abolition of the GSP+ concession was one instance and we can expect similar threats in the future too based on alleged human right violations, they said.

Economists and the business community have always pointed out the risk of over dependence on US and EU markets. By 2013 Sri Lanka’s exports to India was five percent, with 0.7 percent for Pakistan and one percent for China and that these markets could be better exploited due to the trade agreements such as ISLBFTA, PSLBFTA, SAFTA and APTA which helped greater penetration into these markets.

Sri Lanka’s trade with China is increasing and it is a good sign. The visits of the Heads of State of China and Japan show the growing business relations, especially in trade and investments.

Sri Lanka needs to diversify its export market and increase trade with China, India, East Asia and the Middle East. Strengthening ties with China will help Sri Lanka to achieve its export target of $ 20 billion by 2020 or doubling it from 2011.