The Chinese have invested millions - if not billions - in recent years building infrastructure such as a sea port, and now there are fears the non-Commonwealth country could prove very influential in determining which city hosted the 2018 Games.
Gold Coast Mayor Ron Clarke said Hambantota posed a serious threat to Queensland's chances.
"China is supporting them and China has got lots of money to build new facilities and they have provided facilities and financial assistance to a lot of Commonwealth countries, particularly in Africa," Cr Clarke said.
"So if they want to call in their charge, then no matter how it appears on the surface, that could have an influence on votes."
The influence of China has also been noted by Gold Coast 2018 bid chief executive Mark Peters, who said he was taking Hambantota's bid very seriously.
"We're respecting their bid - there's always that question about what does that Chinese investment mean for the bid, but no-one has the answers to those questions," he said.
"This is not a lay down misere - you see what's happening in cricket at the moment, where suddenly there are different influences playing out.
"We're in a much more political world than we've ever been."
Mr Peters said 71 nations would cast their votes to determine the successful candidate city, which could play into Sri Lanka's hands.
"They have a very strong legacy argument that could go over strongly with some of the African and Caribbean countries."
Foreign policy expert Keith Suter said it was plausible China would seek to build on its sphere of influence by offering behind-the-scenes support to the Sri Lankan bid.
"Ron [Clarke] is right, China is now the single most important investor in Africa, but usually has different sorts of agendas," he said.
"It's not out to make life difficult for the Australians."
"The Sri Lankans would say to the Chinese, 'use your influence where you're investing in order to help ensure our bid when it comes to the vote'," he said.
"The problem is that Australia is already seen to be hosting a lot of sporting events, so Beijing may take the view that the Australians won't mind losing out on the Gold Coast because they get so many other things.
"If the Australian government can counteract that impression by saying to the Chinese that we regard hosting the Commonwealth Games as being very significant indeed and we would regard it as a gross loss of face if we were to lose the bid, then it puts the Chinese in a real dilemma."
Hui Feng, research fellow at the University of Queensland's School of Political Science and International Studies, said Beijing's original intention in Hambantota was to make strategic infrastructure investments.
"It is more likely that the Sri Lankan authorities and the local government would like to further expand the reputation of the town by bidding for the Games by diverting part of the fund from the Chinese investment, and Beijing did not feel compelled to oppose this," he said.
Dr Feng said the investment was part of China's "grand strategy" to establish itself as the major player in Asian and African developing countries.
For the Gold Coast, Mr Peters said all the city can do is put in its best bid.
"What influence China has, we don't know and we can't lose sleep over it," he said.
A decision on the 2018 Commonwealth Games host city will be made on November 11 next year.
China threat to Gold Coast Games