Maldives president courts investors in China as Indian ties sag

By Ryan Woo and Joe Cash

BEIJING (Reuters) - At an "Invest Maldives" forum in a southern Chinese port city, Maldivian President Mohamed Muizzu shook hands and exchanged words with smiling local officials on a China visit set to deepen bilateral ties as the archipelagic nation pirouettes away from India.

After the forum in Fuzhou on Tuesday, Muizzu and his delegation will meet Chinese President Xi Jinping and Premier Li Qiang in Beijing during his week-long visit, where pacts from infrastructure to tourism are expected to be signed.

Muizzu became president of the Indian Ocean nation in November after winning on his "India Out" campaign platform under which he called New Delhi's huge influence a threat to sovereignty. His government has since asked dozens of locally based Indian military personnel to leave. And in an apparent snub to India, Muizzu is in China this week, before any visit to his country's giant neighbour.

In Fuzhou, the Chinese city designated as the start of China's maritime "Silk Road", Muizzu said China remained one of his country's "closest allies and developmental partners", according to a statement released by his office.

Increasing export of fish products to China under the two countries' free trade agreement will be a key priority, Muizzu added.

Fishing is the largest source of employment in the Maldives, where 99% of its territory comprises the sea. Aquatic products account for over 98% of exports by volume and value.

Muizzu also said his government was keen to explore partnerships under Xi's Belt and Road Initiative, including the expansion of the country's central airport and commercial port.

Under the Belt and Road Initiative aimed at building a global trade and infrastructure network, China has already helped expand the Velana International Airport in Male and built the cross-sea China-Maldives Friendship Bridge.

Chinese firms have invested $1.37 billion in the Maldives since its decision to join the Belt and Road Initiative in 2014, data from the American Enterprise Institute think tank shows.

TOURISM

In 2019, Chinese tourists represented 19.7% of foreign visitors, making them the biggest tourist group, but slipped to third position by 2022 during the pandemic.

The Maldives is also a popular destination among Indian nationals, whose presence has grown more prominent when China's pandemic restrictions kept Chinese visitors away.

Indian Prime Minister Narendra Modi was snorkelling last week in Lakshadweep, an archipelago of atolls and reefs off the coast of Kerala, a visit that some viewed as an attempt to draw tourists away from the nearby Maldivian islands.

Modi's Lakshadweep visit prompted three Maldivian government officials to call him names including "a clown", leading some Indian tourists to share screenshots of cancelled bookings of Maldivian holidays. #ExploreIndianIslands became a trending hashtag in India on X.

One of India's largest travel platforms suspended flight bookings to the tourism-dependent Maldives on Monday .

"India's strained relations with certain countries in South Asia can be attributed to its perception of being the regional boss," China's Global Times reported on Monday, citing analysts.

And, the newspaper added, quoting a Chinese academic, India's current "nervousness" about Muizzu's visit to China showed its "lack of confidence".

'DEBT TRAP'

But the World Bank, in a report in October, warned further cosying up to China could spell trouble in the Maldives, since the $1.37 billion it already owes the Asian giant represents around 20% of its public debt.

China is the Maldives' biggest bilateral creditor, ahead of Saudi Arabia and India, which it owes $124 million and $123 million, respectively.

Former president Mohamed Nasheed in 2018 called Beijing's lending "a debt trap." Beijing rejects accusations its lending practices in developing economies are predatory.

Male spent $162.3 million on interest payments between January to August 2023, the World Bank report said, up 15% from a year earlier and "far exceeding" the annual average between 2014-2019 of $85 million.

The World Bank cautioned a "build-up of sovereign exposure" had taken place during the pandemic and that there was a "lack of domestic investment opportunities," despite Muizzu's appeal for fresh Chinese funding.

The "Invest Maldives" website lists "opportunities" across 10 sectors, including tourism, renewable energy, banking and finance, and agriculture.

(Reporting by Ryan Woo and Joe Cash; Editing by Christopher Cushing and Raju Gopalakrishnan)