THE FACTORS OF SRI LANKA'S FALL INTO THE DEBT TRAP OF CHINA (CASE STUDY: HAMBANTOTA PORT)

As a developing country in South Asia, Sri Lanka has successfully transformed its economy from a predominantly rural-based one to a more urbanized setting. In the early years of its independence, exceptional natural and human resources have made Sri Lanka’s economic performance one of the strongest in the region. However, like any country in general, Sri Lanka’s economy has gone through various ups and downs. The president-elected in 2005, Mahinda Rajapaksa, began to establish close relations with China to stabilize his country’s circumstances. Under his leadership, Sri Lanka began to build various public infrastructures with Chinese financing. One example was the Hambantota International Port, where, without Sri Lanka’s knowledge, China has caught the developing country in a never-ending debt cycle through its loan repayment schemes. This study investigates why Sri Lanka fell into China’s debt trap in the Hambantota Port case. The method used is the qualitative research method, utilizing secondary data as the source. The research findings illuminate the underlying factors why this phenomenon happened, ranging from Sri Lanka’s over-dependence on Chinese economic aid, Sri Lanka felt beholden to China’s economic and political assistance, and Sri Lanka’s increasing external debt.