Explained | China's influence on Maldives

The recent remarks made by three Maldivian ministers after Prime Minister Narendra Modi posted images from his two-day visit to Lakshadweep snowballed into a diplomatic row.

Even as Maldivian President Mohamed Muizzu suspended the three ministers and the Maldives government distanced itself from the remarks, Muizzu and his wife jetted off to China where the Maldives president appealed for Chinese tourists to visit the island nation, amid an aggressive push by India to promote Lakshadweep as an alternative.

Muizzu, soon after being elected president, asked India to remove its troops from the island nation. Scrapping the previous government's 'India first' policy was high on Muizzu's agenda who had made India's troop removal from the island nation part of his manifesto during the presidential poll campaign.

India has always stressed that Maldives is 'strategically important' for trade, tourism, and shipping and recognises it as a key maritime partner in the Indian Ocean region. The island nation geographically overlooks India and some of the key international maritime shipping lanes also passes through its Exclusive Economic Zone (EEZ).

China, which has been increasing its presence in the Indian Ocean Region, much to the concern of New Delhi has been investing in the Maldives through the latter part of the first decade of the 2000s, but the intensity has increased after 2013 due to Xi Jinping's Belt and Road Initiative (BRI).

China inaugurated its embassy in Maldives in 2011 amid a mutiny by some of the island nation's police officials that resulted in the resignation of then-President Mohamed Nasheed in 2012.

The entire tussle going on in Maldives since then has been about the pro and anti-India and China President elects that significantly impacted the relations between New Delhi and Malé.

As per the Maldives Customs Service, China exported goods and services worth approximately $488 million to Maldives in 2018 compared to the Indian exports that totaled $287 million. Until August 2020, China's exports amounted to approximately $185 million between January and August, while Indian exports amounted to over $169 million to Maldives in the same period.

Investments made by China in various infrastructure projects in Maldives.

An undisclosed Chinese firm acquired a tiny islet named Feydhoo Finolhu on a 50-year lease for $4 million. The islet is strategically positioned near the International Airport at Malé.

Interestingly, since 2006, the island was used as a minimum-security jail and further in 2010 it was opened as a Correctional Training Centre for Children, and later was leased to China in 2016.

Abdulla Yameen Abdul Gayoom was elected as the President of Maldives in 2013 after which he allowed China to expand its commercial presence in the island.

In 2018, when a few political personalities were imprisoned by the Gayoom regime in the Maldives, India intervened and asked Gayoom to restrain from declaring a state of emergency. China had, at the time, warned India against interfering in the domestic politics of Maldives.

China has also strategically helped Maldives transcend from the Least Developed Country (LDC) category to a decently flourishing economy to date.

The Indian Ocean region surrounding Maldives has been the focus for Chinese President Xi Jinping who has extended the Maritime Silk Route project, a branch of Belt and Road initiative (BRI), there.

The project boasts of committing over a trillion dollars for infrastructure projects across Eurasia and Africa, including select projects in Maldives.

In the past seven years, particularly after the announcement of BRI, China has invested billions of dollars in many countries specifically in smaller economies, including in Maldives for infrastructural development.

The Centre for Land Warfare Studies quotes the findings by the Maldivian Embassy in Beijing that state: "The diplomatic relations between the two dates back to 1972 and China has been providing aid in the form of grants since then. 9 Interestingly, between 1982 and 2002 there was no proper trade between them. However, after 2002 the trade between the two countries drastically increased from $2.9 million to $64 million in 2010 and crossed more than $469 million in 2019."

Meanwhile, President Gayoom in 2017 pressed for a Free Trade Agreement (FTA) with China to boost trade access for fish exports in Maldives. By the end of 2018, Gayoom failed to ratify the agreement before his successor, Ibrahim Solih, took charge as the President, and the FTA remained a pipe dream. Unlike Gayoom, Solih, who was not being a pro-China Maldivian leader, restrained from opening all commercial trade routes to Beijing.

Despite having a GDP of $5 billion compared to the massive $17 trillion of China, different Maldivian governments since after 2010 have spent huge amounts of money and resources to expand the infrastructure in Malé, which is the administrative and commercial hub of Maldives.

The two main projects - the expansion of the Velana International Airport in Malé, and the construction of the Sinamale bridge connecting it to Hulhumale— are funded by the Export Import Bank of China.

Maldives with its dependence on imports, also gave China the opportunity to grant loans to the archipelago— giving rise to the possibility of Maldives finding itself in a debt trap in the near future. Till 2018, Maldives owed China $3 billion, wherein the island nation's annual economic output stood at $4.9 billion, with most of it coming from fishing and tourism.