China is investing billions of dollars in infrastructure development in Sri Lanka. Sri Lanka is struggling to repay Chinese money, and recently signed an agreement to give a state-run Chinese firm a stake in the strategic Hambantota port as a way of paying down some of that debt.
Under the $1.1 billion deal, the Chinese company will develop the deep-sea port of Hambantota.
"China is providing non-concessional loans that promote unsustainable debt burdens, which I think are increasingly now of concern to the Sri Lankan people in the government," Alice Wells, Acting Assistant Secretary of State for South and Central Asian Affairs told a Congressional subcommittee yesterday during a hearing on South Asia.
"In Sri Lanka, we're the largest grant provider of assistance. China is providing non-concessional loans that promote unsustainable debt burdens, which I think are increasingly now of concern to the Sri Lankan people in the government. But what we bring to our relationship are multiple tools," she said.
While there has been a significant percentage reduction in US aid to Sri Lanka, Wells said the US is using its tools to reinforce a message of reform, and to bring Sri Lanka into a space where they too will institutionalise the principles of the Indo-Pacific -- freedom of navigation, transparency, non-militarisation humanitarian assistance and disaster relief at its core.