China Surpasses India as Sri Lanka’s Top Trading Partner in 2025 📈

• Overall Trade Figures: China became the leading partner with total trade reaching US$ 5.5 Bn, narrowly overtaking India at US$ 5.4 Bn. The US followed as the third largest partner at US$ 3.5 Bn. These three nations account for 41.1% of Sri Lanka’s total merchandise trade. • Import-Led Dynamics: The shift was primarily driven by a sharp rebound in imports following the easing of restrictions. While China trade was hit harder by 2022-2023 controls due to its focus on machinery and construction materials, it saw a faster recovery as high-value imports resumed. • Sector Performance: • Automotive: A surge in electric and hybrid vehicles from China was the primary catalyst for the 2025 crossover. India also saw increased trade via motor vehicle imports. • Apparel & Textiles: The US remains the vital destination for exports, providing Sri Lanka a trade surplus of US$ 2.5 Bn, largely supported by the apparel sector. • Essentials: Trade with India remained resilient throughout the crisis, supported by fuel, pharmaceuticals, and intermediate goods. • Trade Deficits: Despite the top ranking, Sri Lanka’s trade deficit with China widened to US$ 4.9 Bn in 2025 (up from US$ 4.1 Bn in 2024), as exports to China remain relatively low compared to the influx of iron, steel, and vehicles. _Source: Central Bank of Sri Lanka (CBSL) Annual Economic Review 2025_