Sri Lanka’s trade landscape shifted notably in 2025, with China emerging as the country’s largest trading partner, surpassing India, according to the Central Bank of Sri Lanka. Total trade with China reached approximately $5.5 billion, narrowly ahead of India’s $5.4 billion, while the United States ranked third at $3.5 billion.

The shift reflects an import-led recovery following the easing of restrictions imposed during the 2022–2023 economic crisis. Vehicle imports—particularly electric and hybrid models from China—played a decisive role in accelerating trade growth. In contrast, India’s trade resilience during the crisis was supported by essential imports such as fuel, pharmaceuticals, and intermediate goods.

Despite the rebound, Sri Lanka’s trade deficit with China widened significantly to $4.9 billion in 2025, driven by increased imports of vehicles and construction materials. Meanwhile, a $2.5 billion surplus with the United States, largely from apparel exports, provided a vital cushion to the country’s external balance.