While illegal migration is a concern, there are significantly fewer illegal residents from China than from neighbouring countries. The number of Chinese workers in Sri Lanka is rising but remains a very small percentage of the total labour force.In addition, there have been only limited economic spillovers for Sri Lanka, including knowledge transfer in the loca l labour force. However, imports from China for projects in Sri Lanka have widened the trade deficit between the two countries. Some have brought greater benefits than others, such as the Colombo International Container Terminal (CICT), which has allowed the Colombo port to grow at a rapid pace. Specific projects have contributed positively to Sri Lanka’s economy.This step would also reduce any risk of a Chinese debt trap in the future. However, Sri Lanka’s generally high debt levels show the country needs to improve its debt management systems. Its debt to China amounts to about 6 per cent of its GDP. Similarly, it shows that a matrix of Sri Lankan, Chinese and multilateral policies are required to maximize the benefits and minimize any risks of Chinese investment. The pattern of Chinese investment in Sri Lanka reveals a nuanced picture of benefits and costs.Furthermore, there is criticism that institutional weaknesses in Sri Lanka, including a lack of policy planning and transparency, are resulting in nonperforming infrastructure projects funded by Chin ese investment. There are also concerns that Chinese investment has led to environmental damage and increased security risks for Sri Lanka and the neighbourhood. There are claims that by accepting Chinese outbound investment, Sri Lanka risks being stuck in a ‘debt trap’ and the displacement of its local workers by both legal and illegal Chinese labour.This investment has recently come under scrutiny, due to intensifying geopolitical rivalries in the Indian Ocean as well as Sri Lanka’s prime location and ports in the region.

China’s expansive Belt and Road Initiative (BRI) has led to greater Chinese outbound investment in Asia, including in Sri Lanka.

Sri lanka location in asia