BEIJING – Sri Lanka has informed Beijing it is suspending work on a $1.5 billion Chinese-backed resort as part of a reevaluation of recent foreign investments, China’s Foreign Ministry said Friday.
The project was inaugurated in September on an artificial island near the capital Colombo during Chinese President Xi Jinping’s visit to Sri Lanka.
Following Maithripala Sirisena’s surprise presidential election win in January, a Sri Lankan review board said the development appeared to lack required approvals and went ahead with a lack of transparency. That has fueled suggestions corruption was involved.
“It is just a temporary suspension, not a cancellation of the project,” Foreign Ministry spokeswoman Hua Chunying told reporters at a regularly scheduled news conference.
Sri Lanka should “proceed from its national development, its fundamental interests and … ensure the rights and legitimate interests of Chinese enterprises in Sri Lanka,” she said.
Backed by a major Chinese state-owned company, the development known as Colombo Port City is to include a golf course, marinas, apartments, hotels and malls. The review is focusing on loan repayment conditions. It’s not clear how long it will take.
The project reflected close ties between Beijing and former authoritarian President Mahinda Rajapaks. He relied heavily on China for infrastructure projects and backing against allegations at the United Nations of human rights abuses in the civil war against the Tamil Tigers rebel group that it defeated with Chinese assistance.
Beijing’s growing influence in Sri Lanka also alarmed its giant neighbour India, traditionally the leading power in South Asia.
Sirisena, the new Sri Lankan president, is due to attend a regional economic forum in China later this month and meet Xi for talks.
His new government has reached out to the U.S. and other Western nations, as well as to India.