Beijing- China has called on Sri Lanka to release 37 Chinese fishermen detained by the Sri Lankan navy, China's Xinhua state news agency reported on Monday, in a case that could test increasingly close ties between Beijing and Colombo.

Sri Lanka's navy arrested the fishermen on Sunday night. They were aboard two trawlers off  the Sri Lankan east coast town of Batticaloa, Xinhua said.

The navy arrested them for fishing in Sri Lankan waters and they would be handed over to police for further investigation, the news agency reported.

"The Chinese embassy ... has urged Sri Lankan authorities to handle the issue in accordance with the law, sort out the truth and release the Chinese fishermen as soon as possible," Xinhua said.

Sri Lanka's location astride an ancient trade route in the Indian Ocean makes it of strategic commercial and military interest to the United States, India and China.

China has been competing for influence in Sri Lanka with India, traditionally the island's most  important ally.

China has lent Sri Lanka hundreds of millions of dollars to build ports, roads, railways, power plants and a new airport, fuelling speculation China wants military bases on the island, something denied by Sri Lanka.