Sri Lanka implements a free trade policy, allowing for the free import of all goods except for oil, which is controlled by the government. In recent years, there has been a fundamental change in the export trade structure, shifting from a focus on agricultural products to a focus on industrial products. The main export commodities are textiles, clothing, tea, rubber and its products, and jewelry products. The main import targets are India, China, the United States, Canada, the United Arab Emirates, Singapore, Japan, Australia, etc.
China Sri Lanka Trade
In 1952, China and Sri Lanka signed the Rice Rubber Trade Agreement, which became a beautiful story in the history of friendly cooperation between the two countries.
From 1953 to 1982, China Sri Lanka trade was a bookkeeping trade. In 1983, trade between the two countries began to be settled in spot exchange. The bilateral trade volume in 2018 was 4.58 billion US dollars, an increase of 4.1% year-on-year. In 2020, the bilateral trade volume was 4.16 billion US dollars, a year-on-year decrease of 7.3%. In 2021, the bilateral trade volume was 5.903 billion US dollars, a year-on-year increase of 41.9%. In 2022, the bilateral trade volume was 4.15 billion US dollars, a year-on-year decrease of 27.8%. In 2023, the bilateral trade volume was 4.11 billion US dollars, a year-on-year decrease of 1.1%.
At present, China mainly imports rubber and its products, black tea, gemstones, and coconut oil from Sri Lanka, and exports textiles, mechanical and electrical products, building materials, small hardware, medicine, etc. Some well-known Chinese products, such as Haier home appliances, Huawei smartphones, and Qingqi motorcycles, have entered the Chinese market. [18]
Trade partners
In 2020, China surpassed India to become Sri Lanka’s largest trading partner, while the United States remains Sri Lanka’s third largest trading partner.
In 2020, Sri Lanka’s trade volume with China, India, and the United States totaled 10.5 billion US dollars, accounting for approximately 40% of the total foreign trade volume, but decreased by 2.1 billion US dollars compared to 12.6 billion US dollars in 2019. Affected by the COVID-19, the bilateral trade volume with other major trading partners also declined.
In 2020, European and American countries remained the main export destinations for Sri Lanka. Sri Lanka’s exports to the United States account for 24.9% of the total exports, followed by the United Kingdom (9.0%), India (6.0%), Germany (5.7%), and Italy (4.5%). In addition, Sri Lanka’s exports to the European Union account for 17.0% of its total exports.
In 2020, Asian countries remained Sri Lanka’s main source of imports. China has become Sri Lanka’s largest source of imports for the second consecutive year, with imports from China accounting for 22.0% of its total imports; Next are India (19.2%), the United Arab Emirates (6.4%), Singapore (4.3%), and Malaysia (3.8%).
service trade
In 2020, Sri Lanka’s trade surplus in services decreased from 2.849 billion dollars to 819 million dollars, a decrease of about 2 billion dollars, mainly because of the impact of the COVID-19 and the sharp decline in tourism and transportation services, the main source of income in previous years.
In 2020, the revenue of the computer and information service industries in Sri Lanka significantly increased, becoming the main contributor to service trade revenue that year. In terms of tourism, the tourism industry in Sri Lanka has been severely affected by global border blockades and border closures by the Sri Lankan government since mid March 2020. The total number of tourists for the year was only 508000, a year-on-year decrease of 73.5%; Tourism revenue was approximately 682 million US dollars, a year-on-year decrease of 81.1%.
Transportation service revenue has significantly decreased due to disruptions in global supply chains and logistics networks, with both sea and air freight revenue experiencing declines. In addition, due to the sluggish global economic activity, the inflow and outflow of service trade in various industries, including insurance, financial services, construction services, and other commercial services, have all decreased in 2020.
Oil trade
On June 26, 2022 local time, Sri Lanka, which was short of funds, announced the dispatch of ministers to Russia and Qatar in the hope of obtaining cheap oil at the last moment when fuel was almost depleted.
