Maldives to pull out of China free trade deal

New administration plans an audit of the deals signed by the Yameen administration

The Maldives’ new government will pull out of a freetrade 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 ruling alliance said.

It is the latest sign of a backlash against China in the Maldives, best-known for its luxury resorts on palm-fringed coral islands. “The trade imbalance between China and the Maldives is so huge that nobody would think of an FTA between such parties,” said Mohammad 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.”

On Saturday, as he took office, the new President Ebrahim Mohammad 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 Yameen Abdul Gayoom 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 adviser 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.

But China’s Foreign Ministry said 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 ties with the Maldives.