Witnessed by Chinese President Xi Jinping and President of Sri Lanka Mahinda Rajapaksa, Chinese Minister of Commerce Gao Hucheng and Sri Lankan Minister of Economic Development Basil Rajapaksa signed a memorandum on the launch of the Free Trade Agreement (FTA) negotiations, officially announcing the launch of bilateral FTA negotiations. The two parties confirmed that the China-Sri Lanka FTA will be a comprehensive agreement covering trade in goods, trade in services, investment and economic and technological cooperation. The two parties also agreed to accelerate the negotiations to realize an early closure, so as to benefit the enterprises and peoples of the two countries at an early date.

The joint feasibility study between China and Sri Lanka began in Beijing in August 2013, and ended in March 2014. At that stage, the two parties studied the feasibility and effect of constructing the China-Sri Lanka FTA comprehensively and deeply. The results showed that the construction of the China-Sri Lanka FTA would contribute to further deepening bilateral economic and trade relations, and accord with the benefits of the two countries. It was suggested that the two governments launch the negotiations as soon as possible.

In recent years, bilateral trade between China and Sri Lanka has expanded continuously. In 2013, the trade volume between the two countries reached US$ 3.62 billion, up 14.3% year on year. In January-July 2014, the bilateral trade volume reached US$ 2.1 billion, up 7.2% year on year. China has become the second largest trade partner and import source of Sri Lanka. Besides, China is a major source of foreign investment of Sri Lanka.