The Chinese government has approved a US$1 billion loan for a major highway project in Sri Lanka.

After a recent meeting between Cheng Xueyuan, China鈥檚 ambassador to Sri Lanka, and the Sri Lankan Prime Minister Ranil Wickremesinghe, it was announced that the funding had officially been agreed and it would be provided through the Export-Import Bank of China.

In a statement, the Sri Lankan prime minister鈥檚 office said Xueyuan had requested that the administrative and legal formalities be expedited by the Sri Lankan side.

After being delayed for more than two years due to lack of foreign funding, construction of the first section of the road will be able to commence. It will link Sri Lanka鈥檚 capital Colombo with the hill resort of Kandy.

Colombo is recognised as a key hub for Indian cargo and Beijing has been accused of developing facilities around the Indian Ocean in order to secure its own economic interests and increase its influence in order to counter that of India.

Other Sri Lankan megaprojects funded by China include the Colombo Port City and the Hambantota Port and Industrial Park.