At Hambantota, a remote fishing town on Sri Lanka's south coast, Chinese engineers dig a channel through the beaches, connecting the Indian Ocean with a vast inland pit, whose soaring concrete walls dwarf the earth-moving equipment working below.

Next year, project managers will fill this man-made crater with water, creating the first phase of an international harbour that will service the passing ships of the oil trade between east Asia and the Middle East.

"There are a lot of local crowds who come to see this," says an official guide, who takes tourists to a vantage point where Mahinda Rajapaksa, Sri Lanka's president, is pictured standing alongside Wen Jiabao, the Chinese premier.

The port in his family's political stronghold is the brainchild of Mr Rajapaksa. But while people see the harbour as an engineering wonder, analysts view it as a symbol of the growing relationship between Co-lombo and Beijing, which lent $360m (€290m, £250m) for the first phase of the project. As Mr Rajapaksa this week celebrates the first anniversary of Colombo's victory over the Liberation Tigers of Tamil Eelam separatist group, these building works show how much he owes his success to Beijing.

The moustachioed ruler, known for his trademark maroon shawl and traditional dress, won a second term this year on the back of his victory over the Tamil Tigers - with China providing him with munitions - and by wooing voters with promises of big-ticket infrastructure pro-jects, many of which are again backed by China.

"China has been trying to jump in and seize more opportunities in Sri Lanka," says Brahma Chellaney, professor of strategic studies at the Centre for Policy Research, a New Delhi think-tank.

China was Sri Lanka's biggest source of foreign funding in 2009, providing $1.2bn - almost triple the amount given by the Asian Development Bank, the number two overseas lender. Aside from Hambantota's port, projects include a coal-fired power plant, an oil bunkering facility and a performing arts centre in Colombo. In March, China pledged another $290m for a new airport and to upgrade the island's railways.

Mr Rajapaksa, who once acted in Sinhalese films, is starting to rely on China for diplomatic support. Beijing helped thwart calls last year for a United Nations inquiry into allegations of human rights violations during the war .

For Beijing, the partnership with Sri Lanka offers secure access to the Indian Ocean through which most of China's oil passes. Some suspect the island could one day serve Beijing as a de facto navy base.

"If China is to emerge as the pre-eminent power in Asia . . . then China has to be the dominant force in the Indian Ocean region," says Prof Chellaney.

Big infrastructure pro-jects come at a price. Sri Lanka's fiscal deficit reached almost 10 per cent of gross domestic product in the 2009 fiscal year.

This led the International Monetary Fund to postpone in February the third tranche of a $2.6bn loan. The delay is not sparking a crisis - the government has adequate foreign exchange reserves and the central bank expects the economy to grow 6.5 per cent this year. But opposition politicians say the IMF's tight conditions give Colombo an excuse to move closer to China. "What do you need good governance for when investors are coming in anyway?" says Harsha de Silva, an economist with the opposition United National party. Whatever critics might say, the fruits of Mr Rajapaksa's friendship with Beijing can be seen everywhere in Sri Lanka. Chinese engineers are putting the finishing touches to the National Performing Arts Centre. "Friendship of Sino-Sri Lanka Will Last Forever" reads a sign on the site.

One of the Chinese team managing the project says a lack of equipment and local skilled labour means the centre is taking about one and a half times longer to build than it would in China. "In China, this would be completed in one year," he says.

In Hambantota, Mr Rajapaksa's family are reaping the political benefits of the rapport with Beijing. His son, Namal, and other relatives were elected to parliamentary seats in the district last month. "We want to see Hambantota become a capital of Sri Lanka," say fishermen during celebration in Hambantota of Namal's victory.

Analysis, Page 7 Interactive map, www.ft.com/chinafdi
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