China signed a host of trade agreements with Sri Lanka this week, including a currency swap deal and Beijing funding a $1.4 billion port in Colombo, as Chinese Premier Xi Jinping visited the island.

The two countries also agreed to strengthen defence and maritime security relations, with China announcing its opposition to any interference in Sri Lanka's “internal affairs”.

Alluding to the upcoming United Nations investigation into mass atrocities on the island – a move that China opposed - Xi stated that, "China... resolutely opposes any move by any country to interfere in Sri Lanka's internal affairs under any excuse.”

Sri Lanka meanwhile, “reaffirmed its commitment to the one-China policy, and support for the efforts by the Chinese Government to realize national reunification.”

Amongst the deals announced was a $1.63 billion currency swap, which would allow the People's Bank of China to invest in China's interbank bond market on behalf of the Central Bank of Sri Lanka, and the inauguration of a $1.4 billion dollar port project in Colombo.

The port will be the single largest direct foreign investment project to date in Sri Lanka, and follows on from the Chinese-built Hambantota port.

Also see our earlier post: ‘String of Pearls’ or 'New Silk Road’? (14 November 2010)

An earlier Chinese project which was hit by a series of problems, the Norochcholai power plant, was declared open during Xi's visit, with Sri Lankan President Mahinda Rajapaksa cutting fuel prices to mark the occasion. The plant has suffered a string of breakdowns, the most recent occurring just weeks ago, in the run up to Xi's visit.

Xi is due to fly to India on Wednesday.