Why the China-Mauritius FTA matters

The Free Trade Agreement could prove crucial in further opening African markets for China & give the country growing influence in a geostrategically key region

Last month, China’s Free Trade Agreement (FTA) with Mauritius came into effect. Mauritius is the first African country with whom China has signed an FTA. This agreement is significant not only for China’s trade relations with Africa but also for its implications on the geopolitics of the Indian Ocean. Traditionally, Mauritius is considered as India's key Indian Ocean partner and therefore, the FTA and consequently growing Chinese role has implications for India's influence in the region.

It is well-known that China is the largest trading partner of Africa and in 2019, bilateral trade between China and Africa stood at $ 192 billion. Angola, South Africa, Nigeria, Egypt and the Republic of Congo are some of the major trading partners of China in Africa. It is expected that China’s FTA with Mauritius will prove crucial in further opening African markets for China. For Mauritius, China is the largest trading partner and the trade balance is heavily skewed in favour of the latter. Mauritius hopes to attract greater Chinese investment through the FTA. For Chinese firms, Mauritius can act as a gateway to Africa.

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Meanwhile, African countries are building a single market through the African Continental Free Trade Area (AfCFTA) which also came into effect last month. It is likely to create a single market of 1.2 billion people with a combined market worth of $ 3 trillion. China’s role as Africa’s foremost trading partner and easier access to the market facilitated by the FTA with Mauritius is likely to further boost China’s trade ties with Africa.

China is also a key member of the Regional Comprehensive Economic Partnership (RCEP) which brings 15 major economies of the Indo-Pacific region together. RCEP is already among the largest trading blocs in the world. Taken together, these two trading arrangements are bookending the Indian Ocean as RCEP covers the Eastern Indian Ocean and, AfCFTA covers the Western Indian Ocean. China enjoys robust trading relationships with Africa as well as RCEP countries and consequently, is likely to loom large over the trading dynamics of the Indian Ocean which will further enhance its geopolitical weight.

Importance of Mauritius to China

China’s choice of Mauritius for signing the FTA is also significant as the tiny Indian Ocean country does not produce anything significant but is located in a geostrategically valuable location. Mauritius, a country with a population of 1.3 million, lies at the crossroad of Asia, Africa and the Middle East. It is known as a hub of financial services and is more well-known as a tax haven. Based on this, it can be inferred that, for China, reasons for signing the FTA are not necessarily found in the trading potential of this economically rich and politically stable country but in other factors like geographic location.

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Over the years, China has built strong ties with the neighbours of Mauritius such as Seychelles and Madagascar to the South and Sri Lanka to the north. China is also an observer in the Indian Ocean Commission, a group of five island countries in the South-West Indian Ocean. For China’s international trade, the region around Mauritius is critical as a foothold in Mauritius could facilitate monitoring of shipping lanes that crisscross the Indian Ocean. China has opened a military base in Djibouti in 2017 and the Chinese Navy pays regular visits to the littoral and island countries of the Indian Ocean to conduct defence diplomacy. Therefore, China’s strategic interests in the Indian Ocean and geoeconomic realities are coming together in the maritime space around Mauritius.

For China, Mauritius is an interesting choice also because of the geostrategic influences that run through this country. Mauritius was once a British colony and since the 1970s, hosts one of the largest American military bases in the world, Diego Garcia. Over the years, Diego Garcia has played a major role in the wars in Iraq and Afghanistan and ensured a firm American foothold in the Indian Ocean. In fact, it is indispensable to the American military strategy towards the Indian Ocean.

However, Diego Garcia is located in the Chagos archipelago and Mauritius claims sovereignty over the archipelago. Mauritius, Britain and the US are locked in a dispute, especially since 2016, over the Mauritian claims of sovereignty on the Chagos archipelago. Sensing the firm stance of the Mauritian government, Britain and America sought India’s help to resolve this issue since the latter enjoys close relations with Mauritius.

Indian interests in Mauritius

India and Mauritius share cultural affinities and there exists a large presence of Indians in Mauritius dating back to the colonial times. However, despite this, India cannot take its influence in Mauritius for granted. Mauritius is smartly leveraging its geostrategic location and is playing major powers against each other. Other Indian Ocean states like Seychelles, Sri Lanka and the Maldives are also adept at playing this game. Although India is building dual-use infrastructure (naval jetty and airstrip) on the Agalega island of Mauritius and is a major defence partner, China remains the largest trading partner of Mauritius.

In this evolving geopolitical scenario, the China-Mauritius FTA has become operational. Whether it will benefit Mauritius or not remains to be seen. In the meantime, the growing challenge of China in the Indian Ocean will continue to pose difficult questions for other major powers.

(Sankalp Gurjar is a Research Fellow with the Indian Council of World Affairs, New Delhi. Views are personal)

Disclaimer: The views expressed above are the author’s own. They do not necessarily reflect the views of DH.