China Courts the Maldives

Originally published as Jabin T. Jacob, ‘China’s Maldives Strategy: How Much of a Threat to India?’, Policy Wonks, 9 September 2015.

Indian analysts have long considered the Maldives as a potential pearl in the ‘string of pearls’ strategy that they believed China is engaged in. There was even a name for the specific island in the Maldives – Marao – which saner minds however, have dismissed as a figment of the imagination. Nevertheless, all the concern about the Maldives falling into the Chinese embrace was not enough to generate a coherent Indian policy towards the island nation with policy even held hostage by private Indian entrepreneurial interests. While it is true that the Maldives’ domestic political dynamics – political contestation as well as the gradual rise of Islamist forces – left New Delhi in a vulnerable and sticky situation, China has used the same interregnum to ramp up its ties across a range of issues.

Upswing in China-Maldives Ties

Several Politburo Standing Committee (PBSC) members of the Communist Party of China have visited the Maldives in recent years with PBSC No. 1 and Chinese President Xi Jinping topping things up with his September 2014 visit. The Maldives soon endorsed his 21st Century Maritime Silk Road (MSR) idea and deals were struck for the modernization of the Maldives’ international airport and a sea bridge between the airport in Hulhule and Male that many neutral observers see as being completely unnecessary and wasteful. Add to this, the joint plans for the Ihavandhippolhu Integrated Development Project in the north on the 7-degree Channel through which the main international shipping routes connect China to West Asia and Europe and which therefore, will be part of any MSR routing.

China has not limited its outreach to the Maldives to only the political and to infrastructure development. Discussions have also begun between China and Maldives on creating a bilateral Free Trade Agreement (FTA) and in keeping with the holistic approach of the MSR, the former also offers several scholarships to Maldivian students. By designating the Maldives the equivalent of a ‘most favoured nation’ for tourists, Beijing has deepened China’s importance to the Maldivian economy. In 2010, China became the largest source of tourists to the Maldives and in 2014, the number of Chinese tourists exceeded the population of the Maldives for the first time providing some 30% of the archipelago’s tourists. With the Maldives being a top choice among Chinese travellers for overseas weddings and honeymoons, the island nation’s luxury resorts and hotels also took to hiring Chinese staff and providing Chinese menus.

And while it was reported in March 2015 that tourist arrivals from China had begun to fall, it is unlikely to be a long-term trend given how the Chinese government too can push and promote tourism to particular destinations if it deems this important. There are already direct flights from China to the Maldives, including charter flights from Hong Kong, Shanghai and Beijing, which is more than can be said for India where only a few South Indian cities have direct flights and a Mumbai-Male flight actually stopped operations.

Meanwhile, the Chinese ambassador to Maldives has been on record stating that three focus areas where the two countries ought to increase their cooperation were tourism, infrastructure projects, and the maritime domain. These are slated to cover training of maritime personnel, cooperation in fisheries and marine research, and oil exploration among other things.

Significant Implications for India

It is the Sino-Maldivian maritime cooperation that causes Indian analysts the greatest worry. In July 2015, the Maldives passed a constitutional amendment making it legal for foreigners to buy land. Earlier, foreigners could only lease land up to 99 years. Among the stipulations under the new amendment is that foreigners who wish to purchase land must invest over US$1 billion and that 70% of the land should be reclaimed from the sea. No doubt, the Maldives has the right to attract large-scale foreign investment to promote its economic development and to reduce its dependence on tourism. However, what is interesting about the amendment is how much it actually fits with capabilities that China displays more than any other country at the moment.

For instance, China has plenty of private individuals not to mention enterprises – including state-owned ones – that could easily fork out that kind of money to meet the conditions set by Male. Further, as must be evident from the current rapid pace of reclamation by Chinese vessels in the disputed waters of the South China Sea, there is perhaps no one better in the field than the Chinese. The reclamation clause is practically an open invitation to the Chinese to take possession of territory in the middle of the Indian Ocean even if Male will exercise sovereignty.

Clearly, China is looking to develop a two-ocean presence as part of its ambitions of being a global superpower. To this end, a robust presence in the Indian Ocean is a sine qua non for China and Beijing realizes that countries such as Sri Lanka and the Maldives will be crucial cogs in this strategy. One Chinese commentary noted in particular that the island chain formed a circle around the south-western part of the Indian peninsula. How then, it also went on to ask could the islands not be strategically important? In fact, given Pakistan’s problems and the China-Pakistan Economic Corridor’s (CPEC) long gestation period, it is likely China’s multiple smaller-scale projects in the islands that might be the more serious long-term threat to Indian interests. One could well ask if the CPEC is not merely a Chinese feint to draw attention away from its more significant actions elsewhere.

Both China and the Maldives have denied that military bases will be built in Maldivian territory. That said, it would be a mistake to look for such obvious signs as military bases as the only proof that China is making headway in the Indian Ocean nation. Rather, what we will see is a slow and steady rise of exchanges between Maldivian and Chinese military officials and regular naval vessel port calls from China can be expected. Indeed, even without formal basing rights, Maldives can still serve as a non-exclusive logistical hub and refuelling station for the Chinese vessels, including submarines. This would be a considerably harder Chinese presence for India to deal with than an obvious military posture in the form of a base.

Of course, Maldives has the right to balance ties between India and China but given the immaturity of its political institutions, political instability is likely to be common and India’s record shows that it suffers for its high-handed approach to the tiny archipelago. China on the other hand can afford to stay clear of domestic political squabbling in the Maldives. Using civilian political and economic measures to make the first inroads, China is only stepping into the ‘friendly neighbour’ and leadership vacuum created by India’s own actions.