Explained | Why has the China-backed Colombo Port City project come under attack from the Opposition and citizens?

What is the extent of China’s involvement? What are the concerns?

Updated - December 02, 2021 10:57 pm IST

Published - June 06, 2021 03:15 am IST

Photo: Special Arrangement

Photo: Special Arrangement

The story so far: Last month, Sri Lanka passed the controversial Colombo Port City Economic Commission Bill , which governs the China-backed Colombo Port City project worth $1.4 billion, amid wide opposition to the creation of a “Chinese enclave” in the island nation.

Why is the project surrounded by controversies?

The Colombo Port City has grabbed headlines in Sri Lanka in recent months even as the relentless third wave of the COVID-19 pandemic sweeps through the country. Almost an artificial island, the territory coming up on 2.69 square kilometres of land reclaimed from Colombo’s seafront has stirred controversy since its inception. Those backing it see in that patch of land their dream of an international financial hub — a “Singapore or Dubai” in the Indian Ocean. But sceptics claim that it could well become a “Chinese colony”, with the Bill, which is now an Act, providing the Port City and the powerful Commission that will run it substantial “immunity” from Sri Lankan laws, besides huge tax exemptions and other incentives for investors.


Pitched as a “world-class city for South Asia”, the development is envisioned under five distinct “precincts” — the Financial District, the Central Park Living and the Island Living to come up as residential areas, The Marina, which is planned as a leisure destination, and the International Island, which would include educational institutions and convention centres. The Port City project is scheduled for completion by 2041.

When was it launched?

The project was launched in September 2014 by Chinese President Xi Jinping during a visit to the island nation under the Mahinda Rajapaksa administration’s second term. After President Mahinda Rajapaksa was ousted in January 2015, the successor “national unity” government of Maithripala Sirisena and Ranil Wickremesinghe went ahead with the project after briefly halting it. On returning to power in November 2019, the Rajapaksas vowed to expedite the project. The Sri Lankan government says the project will bring in around 83,000 jobs and $15 billion initially.

What is the extent of China’s involvement?

The project is financed chiefly through Chinese investment amounting to $1.4 billion, via CHEC Port City Colombo, a unit of the State-owned China Communications Construction Company (CCCC). In return, the company will receive 116 hectares (of the total 269 hectares) on a 99-year lease.


The Colombo Port City — separate from but located adjacent to the Colombo Port, the country’s main harbour — is the third major port-related infrastructure project where China has a significant stake. China Merchants Port Holdings has an 85% stake in the Colombo International Container Terminals Ltd. (CICT) at the Colombo Port, under a 35-year ‘Build Operate and Transfer’ agreement with the Sri Lanka Port Authority.

In 2017, the Sirisena-Wickremesinghe administration, unable to repay the Chinese loan with which it was saddled by the previous government, handed over the Hambantota Port in the Southern Province to China on a 99-year lease.

Effectively, China has substantial control over two key infrastructure projects in Sri Lanka for a century.

These projects are within the ambit of China’s ambitious Belt and Road Initiative, in which it sees strategically located Sri Lanka as a trusted partner. In March this year, Mr. Xi told Mr. Gotabaya Rajapaksa that the two countries must “steadily push forward” in major projects and promote “high-quality collaboration in jointly building the Belt and Road”, Xinhua reported.

What are the concerns?

Since its launch, the Colombo Port City project has faced opposition from environmentalists and fisherfolk, who feared that the project would affect marine life and livelihoods. However, in the absence of wider political and societal support, their resistance did not dent successive governments’ resolve to pursue the project.


The more recent opposition was specific to the Colombo Port City Economic Commission Bill. The resistance came from Opposition parties and civil society groups, including many who do not oppose the project per se, but rather its governance by “an all-powerful commission answerable to no one”. Significantly, a section of Buddhist monks, wielding much influence in Sri Lankan politics and the Sinhala society, also opposed the Bill and said that it eroded Sri Lanka’s sovereignty.

During a heated parliamentary debate, Opposition MPs said the Bill paved the way for a “Cheelam” or “ChiLanka”, referring to China’s “control” over the Colombo Port City. Trade unions resisted too, contending that labour rights had no protection under the new physical and legal entity. For the first time, there was widespread resistance to a Chinese-backed project from within the Rajapaksas’ support base.

Also read | As India watches keenly, Sri Lanka seeks FDI in Colombo Port City

As many as 19 petitions challenged the Bill in the Supreme Court, leading it to recommend a few amendments, which some Opposition legislators termed “cosmetic changes”.

The government accepted these promptly to avert the constitutional requirement of a two-thirds majority in Parliament and/or a referendum of people. The amended Bill received a parliamentary majority.

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