Since Xi Jinping became China’s “Paramount Leader” in 2013, Beijing has pursued ways to minimize its strategic vulnerabilities by diversifying its trade and energy routes. President Xi’s signature pet-project, the Belt and Road initiative (BRI), has been at the forefront of China’s attempts to enhance its sphere of influence through expanded trade and infrastructure investments. Such project is considered by many one of the most ambitious infrastructure projects ever conceived, and serves to further convey the unsettling nature of China’s new world order.
As Beijing pushes ahead with its audacious global trade and Investment plan, the Maldives has grown significantly in strategic importance. Spread over nearly 1,200 islands spanning more than 90,000 sq km, the long popular tourist destination is now considered crucial for China’s global ambitions and India’s plans to counter such ambitions. For many years, the Maldives has been considered a part of New Delhi’s sphere of influence. However, in recent years, Beijing has drastically increased its engagement in the country.
Beijing’s growing presence in the Maldives has fueled the suspicion that the nation is a part of China’s “string of pearls” strategy aimed at developing a network of economic and military ties to encircle and contain India. Such fears proved to be true as former Maldivian President Abdulla Yameen used massive amounts of Chinese capital to develop infrastructure projects in the archipelago. In mid-2018, President Yameen hailed the opening of the “China-Maldives Friendship Bridge” as “the gateway into tomorrow and the opportunities beyond.”
Many have criticized Chinese investments related to the BRI as being a part of President Xi’s “debt-trap diplomacy” in which Beijing seeks to render countries economically and ultimately strategically dependent on it by extending to them massive development loans they are unable to repay. In the latest Maldivian election, President Yameen was voted out of office as a majority of the country’s electorate was extremely dissatisfied with the growing Chinese presence in the archipelago. The new government spearheaded by former opposition leader Ibrahim Mohamed Solih is in the process of uncovering the mountain of debt with which President Yameen saddled the country. As a result of such monuments amounts of debt, around $3 billion according to some estimates, the new government has expressed significant interest in pulling out of their free trade agreement (FTA) with China, which according to Mohamed Nasheed, the Chief of the Maldivian Democratic Party, “is a one-way treaty.”
During President Yameen’s term in office, the drastic increase in China’s presence could be felt not only in surging trade and foreign direct investment, but also in the number of Chinese tourists that visited the archipelago. According to some estimates, around 60,000 Chinese tourists visited the Maldives in 2009. After Yameen’s election in 2013, such numbers skyrocketed and about 360,000 Chinese tourists arrived in the archipelago in 2015 - an astounding 500% increase in six years.
President Yameen borrowed heavily from Beijing to build a new runway for the main airport, housing developments and a hospital, as well as the 2.1km-long “China-Maldives Friendship Bridge.” Members of the new administration have voiced their dissatisfaction with the scale of debt to China - equivalent to almost 20 per cent of GDP - and the inexplicable preference given to Chinese investment under the BRI. According to Finance Minister Ibrahim Ameer, “most of these projects are at inflated prices, and so we are looking at them.” Minister Ameer went on to point out that one of these inflated projects was a hospital in Malé awarded to China for a whooping $140 million, far more than a rival offer of $54 million.
Unfortunately, the Maldives is not the only Asian nation to fall prey to President Xi’s ambitious infrastructure project. From Sri Lanka to Pakistan, simmering voter dissatisfaction over deals perceived was unfair are forcing governments to adopt a far more cautious approach to Beijing’s global ambitions. The 99-year lease of the Hambantota port Sri Lanka awarded to China serves as just another example of China’s “debt-trap diplomacy” aiding President Xi’s desire to challenge the International system’s status quo.
However, concerns over Chinese debt as part of the BRI are not only prevailing in Asia. The election of Jair Bolsonaro, who ran on an anti-China platform, in Brazil illustrates just how seriously actors throughout the international system are taking the “China challenge.” Such concerns comes from the perceptions that, apart from aiding in unsustainable levels of debt, China’s loans and investments serve Beijing’s strategic interests in the Indian Ocean region (IOR).
The infrastructure projects financed as a part of the BRI in the Maldives has crippled the archipelago’s economy to a large extent and the debt incurred as a result of such investments will continue to diminish the ability of the Maldivian government to provide to the more than 400,000 citizens. While the U.S. and India have continuously voiced their concerns over the BRI, more must be done to counter Chinese growing sphere of influence in the Indo-Pacific. The Asian continent clearly needs more infrastructure, and if no nation steps up and provides viable loan terms, Beijing is likely to remain the first port of call.