The visit comes amid the island nation struggling to boost its foreign reserves after its economy was hit hard by the coronavirus pandemic.
During the high-level talks, the two sides agreed to resume talks on a Free Trade Agreement (FTA) and expedite work on the proposed Hambantota industrial zone.
Yang also assured that China will firmly stand with Sri Lanka to protect its independence, sovereignty and territorial integrity at international fora, including the UN Human Rights Council and continue to assist the country in its development activities.
Rajapaksa expressed satisfaction over the current state of Sino-Sri Lanka relations and said China has been a long-standing friend who supported Sri Lanka irrespective of the government in power.
China extensively supported us to defeat terrorism. Bilateral relations reached a higher level following the end of the armed conflict, he said, referring to the nearly 30-year bloody conflict with the Liberation Tigers of Tamil Eelam (LTTE), which was fighting for a separate homeland in Northeastern Sri Lanka.
China contributed to a number of large-scale infrastructure development projects. Hambantota Port, the Port City project, Southern Expressway are some of them," he said.
Rajapaksa said that constructing a port in Hambantota was an idea of Sri Lanka and not China's.
We were convinced that it would be a project with a vast potential for generating income and employment opportunities. China offered to fund it. Many geo-political analysis interprets this project as a debt trap' set up by China to gain control over Sri Lankan affairs. I want to prove that it is not the case and that this large-scale project will help improve the living standards of the people," the president said.
China is one of the biggest investors in various infrastructure projects in Sri Lanka. But there has been criticism, both locally and internationally, and growing concerns that China has lured Sri Lanka into a debt trap.
The previous Maithripala Sirisena government handed over Hambantota port to a state-run Chinese firm in 2017 for a 99 years' lease as a debt swap amounting to USD 1.2 billion.
The Chinese delegation's visit assumes significance as Sri Lanka is expecting to receive the second tranche of a USD 1.2 billion syndicated Chinese loan. The island nation received the first trance of USD 500 million in March.
The Sri Lankan government had said that the anticipated Panda (Chinese) bonds and the syndicated Chinese loan will strengthen the country's balance of payments in the backdrop of the country's credit rating downgrade by Moody's last week.
Credit ratings agency Moody's downgraded Lanka's sovereign credit rating by two notches, saying the South Asian nation would be hard-pressed to secure funding to service its huge foreign debt.
Sri Lanka was pushed down from "B2" (high credit risk) to "Caa1" (very high credit risk), as the coronavirus pandemic compounded the economic woes of the country.
Sri Lanka's economy, especially the tourism sector, has been hit hard since last year - initially by the Easter Sunday attacks, which killed over 250 people and later by the ongoing coronavirus pandemic.
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
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