Thursday, March 11, 2010

China to build new international airport in Sri Lanka

China is to lend Sri Lanka about $200m (£133m) to build a second international airport in the south of the island.

Another $100m from Beijing will help boost the island's railway network, Sri Lanka's foreign ministry said.

The new airport will be near a vast sea port which is being largely funded with Chinese money.

China is financing a growing number of such projects in Sri Lanka, which some see as an attempt to undermine Indian influence in the region.

The two countries are vying for contracts in Sri Lanka following the end of more than 20 years of civil war.

'Best terms'

Last week, the Sri Lankan government said China was supplying more than half of all the construction and development loans it was receiving.

Work has already started on the airport.

It is close to the massive sea port under construction at Hambantota, which is largely being funded by the Chinese government's lending arm, the Export-Import Bank.

Both projects have the same Chinese state-owned company as contractor, says the BBC's Charles Haviland in Colombo.

The projects Beijing is financing include a host of road improvements in the formerly war-torn north, a huge theatre in the capital and coal power plants, our correspondent says.

They are built by Chinese contractors and use large numbers of Chinese workers.

Analysts in Sri Lanka say there is some unhappiness among Sri Lankan companies and workers who feel they are missing out.

They say Chinese interest rates are higher than those levied by Japan or the Asian Development Bank - but that Chinese projects happen more quickly and with fewer advance studies.

The government, however, says China is simply offering the best terms.

Some officials in India, Sri Lanka's neighbour and China's rival, have said they fear Beijing is trying to undermine Delhi's influence in the region through its economic assistance.

India, for its part, has just announced a credit of $70m to help upgrade Sri Lanka's southern railway line.

© BBC News

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