TRT | 4 January 2021
China-Mauritius FTA goes into effect. But who benefits?
China’s first FTA with an African country provides a stepping stone into the continent through the geopolitical hotspot Indo-Pacific region.
A free-trade agreement (FTA) between China and the African island nation of Mauritius went into effect on Friday, marking the first FTA between China and a country in Africa. The agreement comes after several years of negotiations, as Mauritius aims to position itself as a middleman between powerful China and mainland Africa; and China gains another foothold in the strategic Indian Ocean region.
Signed on October 17, 2019, the agreement aims to deepen economic and trade relations, while also bringing “new ideas to the China-Africa comprehensive strategic partnership to China,” according to the Chinese Ministry of Commerce when the deal was first signed. “It elevates China-Africa economic and trade cooperation to a new height and creates a new situation,” the statement continued.
“The question will be who really benefits,” Alex Vines, head of the Africa Programme at Chatham House told TRT World, “I can see that the Chinese will significantly benefit. there is a massive trade imbalance between Mauritius and China, in favour of China. We’ll have to see how much Mauritius will benefit.”
Friendly relations between Beijing and Port Louis go back to 1972, and the two countries have enjoyed strong economic and cultural ties since then - primarily in the form of Chinese investment into infrastructure projects, and the establishment of China’s first cultural centre abroad. Despite long-standing ties, and an improvement in import-export balances, trade asymmetry remains - for every dollar of exports to China, Mauritius imported 21 dollars’ worth as recently as 2018.
“I think the real win for Mauritius, if there is one, will be using Mauritius as a platform for Chinese exports into the mainland African continent. That’s why the Chinese have agreed the first FTA with African countries in Mauritius - it’s a stepping stone, basically into broader African markets.”
China has been increasing its footprint in Africa, becoming one of the most influential players in the continent since the start of the Forum on China-Africa Cooperation (FOCAC) in 2000. Trade volume between the continent and China has gone up over 18-fold from 2002 to 2018, alongside increased military presence and training, infrastructure projects, and other fields of influence, which have been both criticised and welcomed by African nations and their citizens.
Geopolitics of the Indian Ocean
China is currently Mauritius’ number one import market, making up 16.7 percent of its import supplies. It is followed closely by India (13.9 percent) and South Africa (8.1 percent), the former of which has been working toward finalising an FTA with Mauritius. This is not a coincidence.
“There is significant geopolitical rivalry between India and China, and India does see Mauritius as part of its near abroad,” explained Vines, adding that India may increase its investments in Mauritius.
“I think the Mauritians probably realise that they have grown their relationship with India as big as they’ll get, which is why diversifying to get further investments from ASEAN countries and China is a strategy of diversification….one of the world’s leading economies like China [may be] one where they wanted to see increased market participation”
The Indian Ocean has been dubbed the new location of the “Great Game” where three major global players—India, China, and the US—vie for economic, military, and geopolitical influence. The Indian Ocean is at the crossroads of global maritime trade, including the strategic choke points of the Straits of Hormuz, Malacca and Bab al-Mandab.
Over 64 percent of the globe’s oil trade transits through the ocean, and its basin is home to over 40 percent of the world’s off-shore petroleum production. The region is also rich in fisheries and minerals like nickel, iron, manganese, copper, zinc, silver, and tin.
In addition to natural resources, the Indian Ocean littoral states have a combined population of more than 2 billion people, which is a massive source of manpower and economic growth.
Both China and India depend on the energy resources that transit the Indian Ocean, and have increased their footprints in the Indian Ocean to secure and maintain their access. Furthermore, security developments in the region including conflicts, piracy off the Horn of Africa, competition — including nuclear — between China, India, Pakistan, and the US have led to an increased deployment of military forces by major global powers.
India has been working to consolidate its Indian Ocean strategy, through economic, diplomatic, and security means. Mauritius, Seychelles and Sri Lanka—all island nations in the Indian Ocean were among the countries visited by India’s Prime Minister Modi early in his first term; Maldives and Sri Lanka were among the first countries visited early in his second term. India has also increased its focus on a blue economy, positioned itself as a “net security provider” and plans to expand its navy to include 200 ships and 500 aircrafts by 2050, to help counter Chinese influence in the region.
China’s Maritime Silk Road, the maritime component of its Belt and Road Initiative, aims to connect and develop infrastructure connecting East Africa, Asia, and the Indian Ocean—though its development has also led to greater militarisation in and securitisation of the geography.
The US is exploring an off-shore balancing strategy via India, and has recently announced a desire to create a new Indo-Pacific fleet to better counter Beijing were Washington to “ever to get in any kind of a dust-up" in the region.