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TRADE WARS
China's Xi wins Maldives backing for 'maritime silk route'
by Staff Writers
Male, Maldives (AFP) Sept 15, 2014


China issues yuan bonds in Paris for first time
Paris (AFP) Sept 15, 2014 - China took a new step towards international use of its currency, the yuan, on Monday when it successfully launched yuan-based bonds in Paris for the first time.

The bonds, intended to raise 2.0 billion yuan (240 million euros, $310 million) were issued by the state-owned Bank of China.

The issue attracted a strong level of interest, and demand amounted to 3.65 times the amount offered, the president of the central bank Tian Guoli said at a ceremony at the premises of the Paris Euronext market.

"Investor demand has been very strong and this shows that the process of the internationalisation of the yuan is maturing," he said.

In June, China and France signed an agreement for yuan clearing arrangements, one of a number of such accords Beijing has sought with foreign countries to help boost use of its currency overseas.

Yuan clearing allows companies and financial institutions to use the currency for cross-border transactions, and promotes liberalisation of trade and investment.

Britain said last week that it would be the first country outside China to issue yuan-denominated bonds, as London seeks to become a Western hub for trading in the Chinese currency.

China's President Xi Jinping secured Maldivian support Monday for a "21st century maritime silk road" as he began a South Asian tour in the strategically located Indian Ocean atoll nation.

The Maldives is best known for its tourist industry but also straddles major international shipping lanes, and Chinese investment there has grown significantly as Beijing tries to secure vital trade routes.

In a joint statement, the two countries also said they agreed to cooperate on security issues -- a potentially sensitive issue in a region traditionally dominated by India.

"The Maldives welcomes and supports the proposal put forward by China to build the 21st Century Maritime Silk Road, and is prepared to actively participate in relevant cooperation," the statement said.

"The two sides agreed to enhance cooperation in other areas, such as marine, economy, and security," it said, without elaborating.

Xi is the first Chinese head of state to visit the Maldives since the former British protectorate gained independence in 1965.

It is his second meeting with President Abdulla Yameen in a matter of weeks, following their talks last month in the Chinese city of Nanjing.

India has regarded China's growing influence among its neighbours with concern, leading new Prime Minister Narendra Modi to prioritise regional relationships which critics say the previous government neglected.

A Maldivian government source said before the meeting that Male was keen to avoid upsetting regional superpower India by bringing up sensitive security issues, since New Delhi considers the islands to be within its sphere of influence.

Yameen said the Maldives was "honoured" to be a part of the trade route initiative, flagged by Xi during a visit to Indonesia last year and intended to revive a route running from China through Southeast Asia and the Indian Ocean to Europe.

The proposal called for increased maritime cooperation between China and Southeast Asian nations, and for China to work with partners to develop ports and other maritime infrastructure.

"I am confident that this is the beginning of an era of heightened and sustained cooperation between the Maldives and China," Yameen said.

Yameen also secured Chinese support for an ambitious project to build a road bridge between central Male island and nearby Hululle island, where the international airport is located.

- Growing militancy -

Chinese have become the largest single group of holidaymakers to visit the Maldives, a nation of 1,192 tiny coral islands scattered some 850 kilometres (530 miles) across the Equator.

The Maldives received just over one million tourists last year and more than 30 per cent of them were Chinese. Tourism accounts for more than a quarter of the $2.3 billion economy.

"Known as 'a string of pearls that God left in the human world' and with its simple and warm-hearted people and picturesque scenery, Maldives is a magnet attracting tourists from around the world," said Xi, adding he was eager to experience the islands for himself.

But as well as being renowned for sandy beaches and turquoise waters, there is also some alarm that the Maldives has become a recruiting ground for jihadists.

The one-square mile capital island saw a demonstration earlier this month pressing for sharia law.

At least four nationals are said to have been killed while fighting in Syria this year.

Former president Mohamed Nasheed told Britain's Independent on Sunday paper at the weekend that up to 200 Maldivians were fighting for the Islamic State in Iraq and Syria. The entire population of the Maldives is only around 330,000 Sunni Muslims.

"Radical Islam is getting very, very strong in the Maldives," said Nasheed, who lost last November's run-off election to Yameen. "Their strength in the military and in the police is very significant."

Eight Chinese were among a group of foreign tourists injured in a bombing in Male in 2007 carried out by suspected Islamist militants.

Xi leaves the Maldives on Tuesday for Sri Lanka before heading on Wednesday to India.

Prime Minister Modi has moved quickly to engage with China, inviting Xi to India soon after taking office in May.

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