Maldives set to pull out of China free trade deal

The Maldives' new government will pull out of a free trade agreement (FTA) with China because it was a mistake for the tiny nation to strike such a pact with the world's second biggest economy, the head of the largest party in the ruling alliance said.

It is the latest sign of a backlash against China in the Maldives, bestknown for its luxury resorts on palmfringed coral islands. "The trade imbalance between China and the Maldives is so huge that nobody would think of an FTA between such parties," said Mohamed Nasheed, the chief of the Maldivian Democratic Party, which leads the ruling federal alliance. "China is not buying anything from us. It is a one-way treaty."

Earlier, as he took office, the new President Ibrahim Mohamed Solih declared the state coffers have been "looted" and warned that the country was in financial difficulty after racking up debt with Chinese lenders.

Former President Abdullah Yameen, who lost the election in September, signed the FTA during a visit to Beijing in December, and the same month his parliament ratified the treaty despite opposition protests that he had rushed through the 1,000-page document in less than an hour without any debate. Nasheed, a former president and now an advisor to Solih, said parliament would not pass the law changes required for the zero tariffs agreement to come into force.

"It was ratified by parliament, but fortunately it calls for different sets of legislation. We are not going to have this further legislation. We can't go with that," Nasheed told Reuters in an interview in the capital Male. China's embassy in Male did not respond to a request for a comment on the trade pact.

But China's Foreign Ministry said in a statement that Culture and Tourism Minister Luo Shugang, President Xi Jinping's special envoy to the inauguration, told Solih that China paid great attention to developing relations with the Maldives.

The Maldives is among a number of small countries where China has invested billions of dollars building highways and housing as part of its Belt and Road Initiative. Through that initiative, Beijing hopes to improve trade and investment flows with much of Asia and parts of the rest of the world.

China was willing to work with the Maldives to consolidate their traditional friendship, plan their practical cooperation and promote Belt and Road to inject "new impetus" into their future relationship, the foreign ministry cited Luo as saying during Sunday's meeting with Maldivian president. The statement cited Solih as expressing appreciation for China's long-term support of the Maldives and that he was willing to further deepen cooperation under the Belt and Road framework.

Critics in the Maldives say a China-led infrastructure boom has left the tiny country of a little more than 400,000 people debt-ridden, and a free trade pact would only make the situation worse given the lopsided nature of the relationship. Between January to August this year, the Maldives' imports from China were $342 million, while its exports to China were just $265,270, according to Maldives customs data.