Maldives, China strengthen defence cooperation, sign MoUs for transactions in each other's currencies

Male: The Maldives and China have discussed ways to enhance defense cooperation between the two countries, the Defense Ministry said. In a message posted on X on Friday, the Maldives Defense Ministry said Defense Minister Ghassan Maumoon met his Chinese counterpart Admiral Dong Jun on the sidelines of the 11th Beijing Xiangshan Forum.

“During the meeting, the two ministers discussed ways to strengthen defense cooperation between the two countries,” he said, without revealing details of the discussions.

Maldives Ambassador to China Dr Fazeel Najeeb was also present at the meeting, he added. Maldives and China have previously held discussions to strengthen their military ties. In March, Maldives and China signed an agreement to provide military assistance to the Maldives military and security services, according to a report by news portal adhadhu.com. Under the agreement, China will provide military equipment and training to the Maldives, President Mohamed Muizzu said. He did not provide details, however.

Maldives signs MoU with China to facilitate current transactions in respective currencies

Later on Saturday, the Maldives signed a memorandum of understanding with the People's Bank of China to establish a framework for current account transactions and direct investments in each other's currencies and announced that it could soon have a branch of China's largest bank, ICBC.

China, which is one of the Maldives' largest trading partners with bilateral trade exceeding $700 million, and the main source of tourists to the Maldives, is expected to benefit significantly from the deal, public service media (PSMNews) said on Friday.

The MoU between the Maldives Ministry of Economic Development and Trade and the People's Bank of China (PBOC) aims to facilitate smoother and more efficient trade and investment relations between the two countries by promoting the settlement of transactions in local currencies, PSMNews reported.

Work is underway to open a branch of China's largest bank, Industrial and Commercial Bank of China (ICBC), in the Maldives, news portal Sun.mv quoted Maldives Economy Minister Mohamed Saeed as saying.

Negotiations are still ongoing, Saeed added. The MoU follows President Mohamed Muizzu’s state visit to China in January 2024, where he met President Xi Jinping to discuss strengthening the comprehensive strategic partnership between their countries and underlined a mutual commitment to deepening economic cooperation, PSMNews said.

Maldives-China Free Trade Agreement

The signing of this MoU represents a major step in strengthening economic ties and promoting increased trade and investment flows between the Maldives and China, he added. The Maldives is also working on a free trade agreement with China, the formalities of which have been completed and will be activated once both sides agree, Saeed added.

The move comes ahead of President Mohammad Muizzu’s scheduled visit to India. The Maldives is working out a similar arrangement with India on the rupee and rufiyaa. The Maldives and India have seen a deterioration in bilateral relations since pro-China President Muizzu assumed office last November. At his insistence, India withdrew its military personnel from three air platforms used for medical evacuations on May 10.

However, after External Affairs Minister S Jaishankar's visit here in August this year, the Maldives Foreign Ministry termed it as a “milestone” in bilateral relations and stressed that both countries have expressed their desire to elevate their friendship and strong alliance to new heights.

Jaishankar's official visit to the Maldives was the first high-level trip from New Delhi after President Mohamed Muizzu, seen as a pro-China leader, took office last November.

(With contributions from agencies)

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