China’s expanding economic and infrastructure engagement in the Maldives recently received a push with the award of the first phase of the Thilafushi Port project to China Harbour Engineering Company (CHEC), a subsidiary of China Communications Construction Company (CCCC). In September 2026, Maldives Ports Limited (MPL) signed an agreement with CHEC on a single-nomination basis for the development of international and domestic quay-wall infrastructure at Thilafushi. This builds on an earlier CHEC award in February 2026, which was for survey and design work and now expanded into full construction of the key infrastructure components.
Economically, the Thilafushi port is relevant as it would help the country offload and shift some burden of Malé's commercial port operations to Thilafushi by November 2027. It will also cut cargo-unloading time and ease chronic congestion at Malé's harbour. Though the project was under discussion for years, and originally envisaged for the neighbouring reclaimed island of Gulhifalhu. The aim is to build Thilafushi as the Maldives' central logistics hub handling container/bulk cargo warehousing, an export-processing zone, with throughput projected at 260,000 TEUs by 2030.
China's presence in the Maldives is barely 15 years old. Beijing did not even have an embassy in Malé until 2011. Much changed under President Abdulla Yameen, who came to power in 2013. President Xi Jinping visited the country in 2014, the first Chinese head of State to do so. This was no token State visit, the contracts followed fast; from the Friendship Bridge linking Malé to the airport island, Velana International Airport expansion and various urban road networks in Malé, Thilafushi Phase 2 which was a 150-hectare artificial island reclamation awarded to CHEC in 2022. And by 2018, Chinese-linked debt reached around $1.5 billion. This is a huge number given the entire GDP was under $9 billion.
Even the FTA was pushed through that same year with China eliminating tariffs on over 91% of Maldivian products, with nearly all Maldivian fish/seafood entering China duty-free, and customs clearance times being substantially reduced. Things changed course with Ibrahim Mohamed Solih coming to power in 2018. He pulled back from the FTA, and according to observers, he leaned on Delhi for roughly $1.4 billion in support to help manage the debt the previous government under Yameen had accumulated.
{{/usCountry}}Even the FTA was pushed through that same year with China eliminating tariffs on over 91% of Maldivian products, with nearly all Maldivian fish/seafood entering China duty-free, and customs clearance times being substantially reduced. Things changed course with Ibrahim Mohamed Solih coming to power in 2018. He pulled back from the FTA, and according to observers, he leaned on Delhi for roughly $1.4 billion in support to help manage the debt the previous government under Yameen had accumulated.
{{/usCountry}}But in 2023, when Mohamed Muizzu won the presidency, he campaigned on ‘India Out’ and restored ties with China, with his first visit to the country as president-elect. While ties were later restored with India especially after Maldivian public debt had reached 115% of GDP and China was not offering fresh money and barely restructuring existing loans. Muizzu visited Delhi in October 2024, and India offered rolling over treasury bills, opened currency swap lines, and continued budgetary support. Later in July 2025, Prime Minister (PM) Modi also visited Maldives resetting ties between the two sides.
What is important to note is that the current transfer of port is often read as Maldives maintaining ties with both China and India. Recently, President Muizzu has praised India's role in Maldivian infrastructure, including the Thilamalé Bridge, while simultaneously giving Thilafushi construction contract to China.
Chinese engagement spans across multiple sectors. From big infrastructure projects to deepening commercial interdependence by eliminating tariffs on over 91% of Maldivian products to opening Chinese investment pathways into aquaculture, marine-product processing, modern agriculture and digital industries. But this multi-sector layering also creates diversified dependence which is considerably harder to unwind, because doing so imposes simultaneous costs across the economy rather than a single project's balance sheet.
In this context, it is important to relook at the recent award to construct the first phase of Thilafushi Port. Concerns are being raised over how CHEC was nominated without any competitive bidding. Given CHEC's mixed international track record, especially the classic debt-trap case in Hambantota and even getting blacklisted in Bangladesh over an alleged bribery attempt in 2018, questions are being raised about procurement transparency and accountability.
Additionally, it has become a point of discussion because Thilafushi is one of the destinations covered by India's flagship Greater Male Connectivity Project (GMCP). The broader port project has been substantially financed through an Indian Line of Credit covering roughly 75% of the estimated $400 million total project cost, and China winning the construction contract within a project India is significantly financing is creating tension.
Further, Thilafushi award cannot be fully understood as an isolated commercial transaction; it fits a wider pattern of Chinese maritime strategy across the Indian Ocean Region (IOR), of which the Maldives is one node among several. Thilafushi is strategically located and anchors sea lanes linking the Persian Gulf, East Africa and the Strait of Malacca. While none of China's Maldivian infrastructure currently hosts People's Liberation Army Navy (PLAN) assets; but the risk of being used for dual purposes cannot be ignored. The port and quay-wall infrastructure built to commercial specifications (depth, berthing length, storage capacity) is in some ways sufficient, with limited retrofitting, to service larger naval or research vessels. Previously, it was reported in 2024 that Xiang Yang Hong 3 port call at Thilafushi, had a vessel with acknowledged survey/intelligence-gathering capability. Therefore, it also raises anxiety in India about China's growing footprint.
Maldives has a narrow economic base, heavy infrastructure needs, and therefore continues to rely on external financing. And within this context, China's economic footprint in the Maldives is deepening in many new forms such as loans, construction contracts, more grants, and which may also result in steadily gaining control over the infrastructure. The question, therefore, remains that why was the construction contract awarded on a single-nomination basis rather than competitive tender, and what does this imply for cost transparency and quality assurance given CHEC's mixed track record.
(The views expressed are personal)
This article is authored by Cchavi Vasisht, associate fellow, Chintan Research Foundation, New Delhi.