China has removed People’s Bank of Sri Lanka, a state-owned bank, from its blacklist where it was placed after failing to pay a Chinese firm for a fertilizer deal. The move came a day after China’s Foreign Minister Wang Yi concluded his trip to the island country. 

In November last year, the Sri Lankan government rejected a consignment of organic fertilizer from the Chinese fertilizer producer, Qingdao Seawin Biotech Group Co Ltd, citing quality issues—a claim the firm disputed and demanded a third-party test. 

A local court in Sri Lanka then ordered a freeze on the payment, prompting the Chinese Embassy to take coercive measures, including blacklisting the state-owned bank and arbitration proceedings. 

Last month, Sri Lanka sought a negotiated settlement and paid $6.7 million in compensation plus the original contract amount of $ 42 million in exchange for fresh fertilizer delivery in accordance with Sri Lankan standards. 

On Monday, the Economic and Commerical office of the Chinese Embassy in Sri Lanka issued a notification, delisting the People’s Bank of Sri Lanka. Earlier, it had barred Chinese firms from accepting letters of credit from the bank. 

With the notification on Monday, the two nations have effectively ended the fertilizer controversy that stained the bilateral ties for almost three months. The breakthrough came after Wang Yi, China’s state councilor and foreign minister, visited the country. 

Besides the fertilizer row, Colombo’s decision to put an energy project in Sri Lanka’s Tamil-majority northeast - the contract of which was awarded to a Chinese firm— on hold following objection from India also irked Beijing. 

In a veiled reference to India, Chinese Envoy to Sri Lanka Qi Zhenhong said that no third country can derail ties between Sri Lanka and China. Later on Monday, the Chinese Foreign Ministry said, “It does not target any third party and should not be interfered with by any third party.”

(SAM)