COLOMBO: China has broken its customary silence on Sri Lanka’s domestic matters to hit hard at local and Western critics who had accused the State-owned China Harbor Engineering Company (CHEC) of contributing US$ 7.6 million to former President Mahinda Rajapaksa’s 2015 election campaign fund.

The Chinese embassy on Thursday stoutly denied the allegation and also strongly refuted the other charge that Beijing had charged an exorbitant 6.3% interest for the US$ 1.1 billion loan given for the construction of the Hambantota port in South Sri Lanka.

The allegations were made by the New York Times (NYT) late last month and were picked up by the Sri Lankan press and government ministers subsequently.

Government ministers and the Lankan media were going to town using the NYT allegation to corner Rajapaksa who is known to be pro-China and who is on a comeback trail now.

The embassy said that China had faced the same allegation in 2015 and had refuted it with “strong evidence”. CHEC General Manager An Xin said that having met the allegations effectively three years ago, China is confident about facing a second probe.

Prime Minister Ranil Wickremesinghe had said in parliament that the Crime Investigation Department (CID) would conduct a probe into the allegation that the Chinese company had paid money to Rajapaksa to fight the Presidential election. But he denied that the allegation about the deal over Hambantota port was a sell out.

CHEC General Manager said: “The NYT story (about the election fund) is stale as this was already reported three years ago. At that time, the CHEC had fully cooperated with investigations. Our attitude is still the same. We will fully cooperate with local authorities in any kind of investigation now.”

“Such allegations are completely inconsistent with facts. The CHEC has never been involved in the internal affairs of Sri Lanka. Even when the matter was initially reported in the media in 2015, and was diverted to the Sri Lankan authorities for a probe, the CHEC had offered its fullest co-operation,” An said.

Embassy spokesperson Luo Chong said that such Western media reports appear to have the nefarious purpose of preventing Sri Lanka from getting much needed development funds from countries such as China.

“This article is full of distorted facts and is full of prejudice. In 2015 and 2016, the CHEC and Chinese Embassy officials in Sri Lanka had already responded to this issue with strong evidence,” Luo recalled.

He clarified that nobody from the New York Times had contacted the Embassy over any issues regarding the article. “If they had really contacted the Embassy it would have definitely briefed the journalists with the facts,” Luo said.

He then went on to point out how the NYT was selective in its use of information.

“The NYT journalist Ms Maria had met Mr Cabraal former Governor of the Central Bank and did an hour long interview. Mr.Cabraal briefed the journalist about the whole story and finally not a single word uttered by him was written in the article. So even if this journalist had turned to the Chinese Embassy or Chinese companies, not a single word would have been quoted in the article!” Luo contended.

“Cooperation between China and Sri Lanka is not with particular parties or persons, but with the Sri Lankan and Chinese governments,” the official said.

“Our strong ties were evident during and after the civil war. Co-operation between China and Sri Lanka is based on consensus,” Luo said.

As for allegations that China intends to use the Hambantota Port for military purposes, the Chief Operating Officer of Hambantota International Port Group, Tissa Wickremesingha, said: “CMPort Holdings is a commercial organization and we made a commercial investment on the invitation of the Government of Sri Lanka.”

A statement distributed by the embassy said that China has not thrown Sri Lanka into a “debt trap” as alleged by the Western media. It is the West which is wanting to push Sri Lanka into an “under-development trap”

Contrary to the NYT’s claim, Sri Lanka is not in a “debt trap” but is trapped by the lack of development because of low investment in development for decades, the statement said.

“What China is doing is to pull Sri Lanka out of the trap of under-development. But the West is setting an under development trap for Sri Lanka," it charged.

As a most important development partner of Sri Lanka, China has provided great support including financial assistance to Sri Lanka for its post-war reconstruction and national development at its most needed and crucial moments.

The embassy said that Chinese loans are not the main part of Sri Lanka's foreign debt. According to the Annual Report 2017 of the Central Bank of Sri Lanka, the total external debt of the Island country is US$ 51.824 billion, in which outstanding Chinese loans account for only 10.6%.

“Besides, 61.5% the Chinese loans (US$ 3.38 billion) are concessional ones with a much lower interest rate than the international market. Commercial loans from China are negotiated at an appropriate rate by the two sides according to the international market,” the statement said.

Most of the major projects relate to the national economy and people's livelihood such as ports, roads, airports, power stations, and water conservancy. They are based on the urgent needs of the economic and social development of Sri Lanka. They have been proposed by successive governments on the basis of sufficient feasibility studies.

Sri Lanka lacks relevant funds, experience and technicians to meet large capital requirements, low returns, high risks, long return times, and high technical thresholds of these projects. Therefore, Sri Lanka turns to cooperation from the international community, including China.

The Chinese government has made special arrangements in the terms of the funds. And Chinese companies work hard to overcome difficulties and actively participate in projects construction, the statement said.

“This has greatly stimulated Sri Lanka's economic growth, provided employment opportunities, and improved people's livelihoods.”

“China is pleased to see that the major projects and technical talents trained with the support of the Chinese side have become valuable assets of the Sri Lankan nation and people, and will provide a continuous momentum for all-round development in the future.”

“Just as the construction of the Hambantota Port project, the transfer of operation of the port was also proposed by the Sri Lankan government to the Chinese side, and was finally agreed through several rounds of friendly and equal commercial negotiations.”

“The purpose of the port was to fully exploit the geographical advantages of Hambantota, improve operational efficiency and revitalize good assets, so as to further develop the ports economy of Sri Lanka.”

“At present, the port’s business is operated by Sino-Sri Lankan joint ventures; port revenue is shared by both sides, and port security is entirely under the responsibility of the Sri Lankan government. The charge about China taking advantage of the debt for a hidden agenda is untenable,” the statement said.

The so-called "debt trap" is a false proposition created by the Western media, the statement said.

“It is a direct attempt to obstruct the joint development of China and other developing countries including Sri Lanka .The fundamental purpose of such allegations is to maintain the Western world's traditional superior position in international and regional politics and economics.”

The statement went on to say that China will continue to provide selfless support including much-needed funds for the development of Sri Lanka, and would like to work together with Sri Lankan governments, the business community, the media and the general public, to eliminate interference, strengthen confidence, and jointly promote pragmatic cooperation for the benefit of the two countries and the two peoples.