Maldives and China Enhance Economic Ties with New Currency Transaction MoU

Maldives has signed an MoU with the People’s Bank of China to facilitate current account transactions and direct investments in their respective currencies. This agreement may soon lead to the establishment of a branch of China’s largest bank, ICBC, in the Maldives. China is one of Maldives' largest trade partners, with bilateral trade exceeding USD 700 million and being the top source of tourists.

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Economic Cooperation and Trade

The MoU aims to promote smoother trade and investment relations by encouraging transactions in local currencies. This agreement follows President Mohamed Muizzu's state visit to China in January 2024, where he met President Xi Jinping to discuss strengthening their strategic partnership. The MoU signifies a major step in enhancing economic ties and increasing trade and investment flows between the two nations.

"Work is underway to open a branch of China’s biggest bank, the Industrial and Commercial Bank of China ICBC, in the Maldives," said Maldivian Economic Minister Mohamed Saeed, as quoted by news portal Sun.mv. "Negotiations remain in progress," Saeed added.

Free Trade Agreement with China

Maldives is also finalising a Free Trade Agreement with China, with formalities completed and activation pending mutual agreement. This development comes ahead of President Mohammad Muizzu’s scheduled visit to India. Maldives is working on a similar Rupee-Rufiyaa arrangement with India.

Bilateral Relations with India

Bilateral ties between Maldives and India have seen a downturn since President Muizzu took office last November. On his insistence, India withdrew its military personnel manning three aviation platforms used for medical evacuation by May 10. However, after External Affairs Minister S Jaishankar's visit in August this year, the Maldivian foreign ministry termed it a significant milestone in bilateral ties.

Jaishankar's visit was the first high-level trip from New Delhi after President Muizzu assumed office. The two countries expressed their desire to elevate their friendship and strong alliance to new heights during this visit.

The signing of this MoU represents a significant milestone in bolstering economic ties and fostering increased trade and investment flows between the Maldives and China.