BEIJING China and Sri Lanka could sign a free trade agreement by the end of the year, state news agency Xinhua cited Sri Lanka's foreign minister as saying, a move that will help cement Colombo's growing economic and diplomatic ties with Beijing.
Sri Lankan Foreign Minister G.L. Peiris, who is on a four-day visit to China, said "the feasibility study is on the verge of completion".
Peiris told Xinhua in an interview published late on Wednesday it would be the most significant bilateral achievement since the 1952 Rubber-Rice Pact, when rubber and rice was bartered between China and Sri Lanka.
Chinese Foreign Ministry spokeswoman Hua Chunying told reporters on Thursday that the two countries "are currently undertaking feasibility studies and look forward to starting the negotiations at an early date".
China has signed a series of free trade agreements, mostly with smaller economies like New Zealand, Switzerland and Iceland, though it is negotiating more significant ones with Australia, South Korea and Japan.
China has increasingly tight ties with Sri Lanka, funding airports, roads, railways and ports. Those ties have unsettled India, traditionally Sri Lanka's closest economic partner.
Hua added that China was also seeking greater maritime cooperation with Sri Lanka, to build what she called a "21st-century Maritime Silk Road".
"Our cooperation will range from maritime connectivity, the economy, technology, rescue and environmental protection to disaster mitigation and fishery," she said, adding that other countries were welcome to join the initiative.
The island of 21 million people just off India's southern tip is at the forefront of competition between Asian giants China and India.
China has consistently defended Sri Lanka's rights record, which came under fire at a Commonwealth summit in November, saying Colombo had made big strides in promoting human rights and achieving national reconciliation over the years.
On Tuesday, China's Foreign Minister offered support for Sri Lanka after the United States said it would table a U.N. resolution against Colombo over its human rights record.
President Mahinda Rajapaksa's government, which finally crushed a 26-year rebellion by ethnic minority Tamil separatists in 2009, has rejected calls for an international inquiry into atrocities during the civil war.
(Reporting by Sui-Lee Wee and Ben Blanchard; Editing by Paul Tait and Ron Popeski)