China’s Influence on Maldives

China’s influence on Maldives

Chinese inroads: Chinese infrastructure projects in Maldives directly compete with Indian infrastructure companies’ business prospects.

China Maldives FTA: An FTA with China would have raised the issue of diverting Chinese products into India through Maldives. Maldivian government has not cleared its stand on future Chinese investments yet and may continue to engage deeply with China.

Maldives has emerged as an important ‘pearl’ in China’s “String of Pearls” construct in South China and Maldives.

Just six years after Beijing opened its embassy in Male in November 2011, Yameen signed the Maldives’ first bilateral free trade agreement with China.

China had already secured the Maldives’ backing for its Maritime Silk Route, which aims to connect the Chinese coast with Europe via the South China Sea and the Indian Ocean, during President Xi Jinping’s visit to Male in the year 2014.

Beijing has also poured in millions of dollars for big ticket projects, including a bridge linking the capital and the main airport, called the “China-Maldives friendship bridge”.

Yameen responded by amending the Constitution in 2015 to allow foreign ownership of land in projects with investments of more than $1 billion for which 70 per cent of the land is reclaimed from the ocean.

With China owning 70 per cent of the country’s debt, the Maldives is now into serious debt trap.

Chinese companies were given contracts for several infrastructure projects in the Maldives, including the recently inaugurated Sinamale Bridge linking Male to Hulhule Island, and a 1,000-apartment housing project on Hulhumale, a suburb that Beijing built on reclaimed land.

BRI and MSR, 2017: Maldives endorsed China’s Belt and Road Initiative (BRI) and signed MoU on Maritime Silk Road (MSR), following which China has invested billions of dollars in Maldives building highways and housing as part of BRI.

China Maldives FTA, 2017: China and Maldives signed an FTA, which is China’s second FTA with a South Asian country after Pakistan, while there is no FTA between India and Maldives.

Chinese Debt Trap:

China debt-trapped Maldives during the presidency of Abdulla Yameen (2013-18). During this period, the Maldives borrowed heavily from China to fund infrastructure projects. According to previous estimates, the Maldives debt to China then stood at $3.4 billion, raising concerns over its ability to pay back.