Beijing, April 9

Sri Lanka has asked China to swap some of the $8 billion it owes Beijing for equity in infrastructure projects and offered to sell stakes in Sri Lankan firms to Chinese ones, officials said today.

The ouster of president Mahinda Rajapaksa, who steered Sri Lanka toward China until 2015, was a setback for ties, as his successor reviewed projects to check if they were fair and legal. Now President Maithripala Sirisena’s government, faced with falling foreign reserves, a balance of payments crunch and few, if any, alternative investors, is heading back into China’s embrace, albeit asking for better terms.

Sri Lankan PM Ranil Wickremesinghe said his indebted country was suffering due to global economic uncertainty. “We’ve been talking with some firms and Chinese government about possibility of some infrastructure projects becoming public-private partnerships, in which part of debt will become equity held by Chinese firms.”