Maritime Silk Road: Increasing Chinese Inroads into the Maldives

13 November 2014 

http://www.ipcs.org/article/china/maritime-silk-road-increasing-chinese-inroads-into-the-maldives-4735.html 

Srikanth KondapalliProfessor of Chinese Studies, Jawaharlal Nehru University, New Delhi 

Chinese President Xi Jinping’s September 2014 visit to the Maldives was his first visit to South Asia, indicating to the balance of power dimension with India. Through the joint press communiqué on September 15, China secured the Maldives’ endorsement for upgrading Beijing’s links with the South Asian Association for Regional Cooperation (SAARC). Three presidential visits from Malé to Beijing have already taken place.

This was the first time a Chinese president made such a visit, indicating towards the emerging focus of this region in China’s foreign policy. He was accompanied by a 100-member business delegation, demonstrating the economic focus of the visit. Besides, Beijing mooted the October 2013 idea of a Maritime Silk Road (MSR) connectivity between China and the Maldives, indicating the strategic nature of relations. The joint statement issued during Xi’s visit suggested that Malé will be “prepared to actively participate” in the Maritime Silk Road initiative of China.

Interestingly, Maldivian President Abdulla Yameen had visited China in August, and attended the second Summer Youth Olympic Games in Nanjing. During the visit, Yameen secured a $16 million grant aid from China. This sum is expected to cover costs partly for the Malé-Hulhule Bridge, other projects. Beijing, as a part of its aid program, constructed a building to house the Maldives Ministry of Foreign Affairs, a national museum, and is involved in the 1000 Housing Units Project. Additionally, Beijing is actively involved in several renewable energy projects, tourism and telecommunication sectors. That the highest leaderships of the two countries visited each other within a month shows both their priorities.

The Vice President of the Maldives, Mohamed Jameel Ahmed, visited China in June, and met his Chinese counterpart, Wang Yang. The Maldives-China cooperation on developing special economic zones, construct harbours and bunkering facilities, and diversifing from tourism in the island nation were firmed up during Xi’s visit to the Maldives.

Today, China’s interests in the Maldives have become multidimensional in the backdrop of its dependence on energy through the Indian Ocean Region as well as to balance the Indian rise. Strategic considerations over-weigh Beijing’s postures towards Malé. For instance, China had been actively proposing its MSR idea to the Indian Ocean littorals as a part of its grand strategy to oppose the US rebalance strategy as well as to further its own influence in the region. This initiative was proposed at various venues to the Maldives and the latter had expressed interest in this initiative.

The Xi-Yameen Joint statement in September 2014 mentions the same, in addition to specific issues of maritime cooperation, thus: “We have agreed to jointly build the 21st Century Maritime Silk Road and take this opportunity to enhance cooperation in the fields of maritime economy, maritime security, ocean research, environment protection, and disaster prevention. We will also try to start some key projects that can yield quick results, at an early date”.

It was reported by Xinhua on August 15, 2014 that the link in this maritime route is via the Ihavandhippolhu Integrated Development Project, or iHavan, in the northern-most atoll of Maldives. The project seeks to capitalise on the location of the atoll, which lies on the seven degree channel through which the main East-West shipping routes connect Southeast Asia and China to the Middle East and Europe.

With economic interdependencies increasing and China becoming the largest trading partner for 128 countries, economic development issues have come to the fore in China’s foreign policy postures. Malé could provide raw materials, market for investments and more significantly aid could transform bilateral relations in Beijing’s favour. This also coincides with the Maldivian plans to transform their economy. 

China’s Ambassador to Maldives Wang Fukang stated that China would provide concessional loans and investments in Maldives in fisheries sector, aquatic products, etc. Bilateral trade between the two stood at $64 million in 2010 and increased to $ 98 million in 2013.

Furthermore, the Maldives’s tourism potential is vast. The number of Chinese tourists to the country increased from 12,000 in 2010 to 330,000 in 2013. Maldivian Tourism Minister Ahmed Adeeb stated in late June that his country will borrow $400 million from China Exim Bank to develop a runway for the Ibrahim Nasir International Airport – the contract for which was originally given to Indian company GMR, but that was cancelled.

Thus China-Maldives relations are on an upswing and appear to be at the behest of Beijing’s increasing initiatives. Today, these relations are expanding in terms of increasing loans from China to the Maldives for infrastructure projects; but although it is not clear how the Malé will repay these debts as most of the loans given by China are at high interest rates and often without transparent procedures. Defence cooperation between the two is imminent with long-term consequences for both India and the US in the Indian Ocean Region. It is interesting to note that President Xi termed the Maldives (and later Sri Lanka) as a “pearl” in the Indian Ocean – reviving the “String of Pearls” rhetoric.