After Chagos Deal, PRC Seeks to Alter Indian Ocean Balance

After Chagos Deal, PRC Seeks to Alter Indian Ocean Balance After Chagos Deal, PRC Seeks to Alter Indian Ocean Balance Executive Summary: - Mauritius supports the People’s Republic of China (PRC) on virtually every geopolitical issue while receiving Chinese diplomatic and economic support for its own priorities, particularly over its claim to sovereignty over the Chagos Archipelago. This allows Beijing to secure reliable political backing and a strategically positioned partner in the Indian Ocean at relatively low cost, strengthening its influence in a region where U.S. and Indian interests intersect. - Beijing has built a substantial economic and institutional presence in Mauritius. Through a landmark 2019 free trade agreement, the first Beijing signed with an African state, and Chinese state-led investments, it has amassed long-term economic leverage and strategic access abroad. Huawei is the island’s primary partner for surveillance, connectivity, and digital infrastructure. Concentrating these partnerships under one vendor lowers technical barriers to potential data access or network exploitation. - A May 2025 treaty that relinquished British sovereignty over the Chagos Archipelago to Mauritius means that long-term operational certainty for the United States and United Kingdom, who jointly operate the Diego Garcia military base on the archipelago under a 99-year lease, now depends not only on legal provisions but also on Mauritius’s future strategic alignment. - Beijing’s expanding port access across the Indian Ocean—including in Djibouti, Pakistan, and Sri Lanka—increases the significance of Mauritius’s strategic alignment. Mauritius currently balances by relying on India for security cooperation. The durability of that balance will likely be challenged if PRC–India disputes escalate. On January 18, the ambassador of the People’s Republic of China (PRC) to Mauritius, Huang Shifang (黄世芳), penned a column in Le Mauricien, one of the island’s most widely read daily newspapers. In it, she linked attempts by the United States to block ratification of a deal to return sovereignty of the Chagos Archipelago to Mauritius with Beijing’s protracted struggle to annex Taiwan. The U.S. government is concerned that the deal, which leases Diego Garcia—host to a U.S. military base—to the United Kingdom for 99 years (at approximately $139 million per year), is vulnerable and could be reneged on at any time (U.K. Government, May 22, 2025). Huang’s statements indicate that such concerns are not unfounded. She warns about “hegemonic thinking” (霸权思维) from the United States, arguing that it is not willing to yield to “basic principles of international relations and international fairness and justice” (国际关系基本准则和国际公平正义). She finishes by declaring support for Mauritius’s “just position on the Chagos Islands issue” (在查戈斯群岛问题上的正义主张), but implies that this support is conditional: “[the PRC] expects Mauritius to be united with [it] in saying no to hegemonic acts on issues related to Taiwan” (期待毛方在涉台等问题上与中方一道，对霸权行径说不) (PRC Embassy in Mauritius, January 19). One reason for the intensity of discussions around the Chagos Islands deal is the archipelago’s geostrategic position. At the turn of the century, veteran senior Chinese Communist Party (CCP) official Li Peng (李鹏) paid a visit to Mauritius. While there, he declared the PRC’s willingness to work with Mauritius to “promote the construction of a new international political and economic order” (努力推动国际政治、经济新秩序的建立). In return, Mauritius’s leadership affirmed that they would “abide by the ‘one China’ position” (恪守一个中国的立场) (Ministry of Foreign Affairs [MFA], November 11, 2000). A quarter of a century later, Ambassador Huang stated upon her arrival on the island that Mauritius “enjoys a superior geographical position” (地理位置优越). She also avowed that she would “elevate the strategic partnership between the two countries to a new level” (推动两国战略伙伴关系更上一层楼) (PRC Embassy in Mauritius, May 2, 2025). If she manages to achieve this aim, she will advance the PRC’s interests in a country that has traditionally had stronger ties with India and the West. State-Owned Entities and Huawei Dominate Investment The PRC’s economic relationship with Mauritius is modest by global standards but disproportionate given the island nation’s size. According to the most recent PRC figures, there were 2,541 Chinese foreign investment entities (FIEs) active in Mauritius in 2025 (PRC Ministry of Commerce, November 13, 2025). [1] The PRC is also Mauritius’s largest source of goods and services, accounting for roughly 17 percent of total imports (U.S. International Trade Administration, February 8). And in September 2024, the two countries deepened their financial integration by signing a bilateral currency swap agreement worth Renminbi (RMB) 2 billion ($280 million) (State Council Information Office, September 4, 2024). The flagship Chinese investment, however, has been a slow-motion failure. The Jinfei Economic and Trade Cooperation Zone, a 211-hectare special economic zone a short distance west of the Mauritian capital, was officially launched in 2009 (China Brief, July 22, 2010). Its initial phase was financed by the China Development Bank, a state-owned policy bank that finances Beijing’s strategic overseas projects. By 2015, a Mauritian finance minister derided the site as “a great land for the marriage of dogs,” and the government reclaimed 80 percent of the leased land (Sixth National Assembly of the Republic of Mauritius, April 9, 2015). Shanxi Jinfei Investment (山西晋非投资), which is 90 percent owned by the Shanxi provincial government, has since managed the zone on paper. Operators have rebranded it as “Jinfei Smart City” and continue to channel investment through Cinda Jinfei B and R Fund, a subsidiary of state-owned enterprise China Cinda Asset Management (中国信达资产管理) (Supreme People’s Procuratorate, August 14, 2024; Economic and Commercial Office of the PRC Embassy in Mauritius, September 9, 2025). The zone nevertheless remains largely undeveloped. Mauritian reporting from 2023 notes that a local businessman had converted its remaining acres into an illegal sanctuary for poached macaques (L’Express (Maurice), March 23, 2023). Mauritius is perhaps more useful to the PRC as an offshore financial conduit. Between 2000–2023, it was the largest source of foreign direct investment entering India, accounting for roughly a quarter of all inflows according to Indian government data—a function of its zero capital gains tax and the 1983 India-Mauritius Double Taxation Avoidance Agreement (DTAA). [2] Today, its position as a relatively stable, low-tax offshore environment, makes it a valuable financial conduit to the African continent. The China–Mauritius Free Trade Agreement is the PRC’s first with an African country. In force since January 2021, it enables Chinese companies to establish regional headquarters in Mauritius as a conduit for investment on the African continent (General Administration of Customs, December 16, 2020; Mauritius Chamber of Commerce and Industry, February 2021; Sealand Securities, August 4, 2024; Observer Research Foundation, November 14, 2024). This is helped by Mauritius’s membership of several cross-border currency settlement systems with African nations, and by the Bank of China, which serves as the designated RMB clearing bank for the island as part of an apparent effort to de-dollarize Mauritian foreign trade (Bank of China, March 15, 2017). [3] The PRC currently has limited military or security ties with Mauritius, but infrastructure agreements with the Chinese firm Huawei, including an island-wide surveillance system, have raised concerns. [4] In 2015, Huawei submitted an unsolicited bid to the Mauritian government to construct a cloud-based “safe city” (平安城市) platform, one of several hundred around the world. The Mauritian government awarded Huawei the resulting contract on preferential terms, including a sovereign guarantee through state-owned telecommunications operator Mauritius Telecom (China Brief, June 19, 2018; Huawei, January, 2019; AidData, accessed March 10). The system comprised approximately 4,000 facial recognition cameras, a centralized command and control center, an integrated emergency response management system, and a multimedia radio trunking (shared-channel with automatic receiver assignment) system (AidData, accessed March 16). Mauritian media scholar Roukaya Kasenally has characterized the project as “shrouded in opacity” and resembling others “strongly linked to surveillance and control.” Mauritian auditors found $25 million in payments unsupported by documentation, and confidentiality clauses in the contract that blocked parliamentary scrutiny (Hoover Institution, January 18, 2022). Huawei also supplies internet network infrastructure across the island, and a former Huawei subsidiary, HMN Technologies (华海通信技术), has built the Mauritius and Rodrigues Submarine Cable System (MARS) (Huawei Technologies, March 6, 2018). [5] In 2019, India’s foreign intelligence service, the Research and Analysis Wing (RAW), reportedly issued formal warnings about the People’s Liberation Army (PLA) potentially using Huawei-built internet infrastructure in Mauritius for espionage. Particular concern centered on the Baie-du-Jacotet submarine cable landing station, a key node in the cable network connecting East Africa and South Asia. RAW intervened by installing digital sniffers to intercept internet traffic at the landing station. Mauritius Telecom chief executive officer Sherry Singh resigned in 2022 and claimed that Mauritian prime minister Pravind Jugnauth had instructed him to allow the installation of sniffers (The Print, July 28, 2022). This led to an ensuing political scandal for Jugnauth, with the opposition accusing him of “high treason” (The Print, July 25, 2022). Collectively, this infrastructure constitutes a single-vendor digital stack with clear intelligence value. This value is enhanced by Mauritian sovereignty over the Chagos Archipelago: Port Louis is far less likely than the United Kingdom to protest or inhibit Chinese espionage there. Political Influence: No Belt, No Road, No Problem PRC economic engagement has frequently preceded expanded political influence and security access. This also appears to be the case in Mauritius. Beijing has promoted bilateral economic ties through a 1996 bilateral investment protection treaty and a 2013 comprehensive visa exemption agreement, which were later followed by two 2018 treaties on extradition and mutual legal assistance in criminal matters. The CCP has also deepened political engagement via meetings with the Militant Socialist Movement (MSM), one of Mauritius’ four main political parties (International Liaison Department [ILD], July 26, 2023). [6] Beijing’s political influence is evident in Mauritius’s recognition of Beijing’s key core interest, the “one-China” principle, which asserts that Taiwan is part of the PRC (Government Information Service, February 8, 2024). And although Mauritius also does not formally participate in Beijing’s One Belt One Road (OBOR) initiative—likely on account of Indian pressure—the policy banks that finance OBOR projects also finance projects in Mauritius, and Huawei’s infrastructure replicates patterns observed in OBOR participants and the bilateral free trade agreement facilitates precisely the economic integration OBOR formalizes elsewhere. [7] Beijing’s influence nevertheless remains limited, in part due to its robust relationship with India. India maintains an extensive security infrastructure in Mauritius. It operates an airstrip and naval jetty on Agalega Island, 1,100 kilometers north of the country’s main island, with a runway large enough for P-8I Neptune submarine-hunting aircraft. In 2023, it provided Mauritius with Dornier surveillance aircraft, patrol boats, and a Coastal Surveillance Radar System (Lowy Institute, March 1, 2021; Swarajya, November 1, 2023). And in 2025, Indian prime minister Narendra Modi selected Port Louis for the launch of his MAHASAGAR doctrine, a strategic framework aimed at expanding influence in the Indo-Pacific. [8] Diplomatically, beyond its endorsement of the “one China” principle, Mauritius maintains a neutral stance at the United Nations on divisive issues such as the PRC’s human rights violations in Xinjiang and Hong Kong, mirroring Indian practice. The strategic balance in the region is steadily changing in Beijing’s favor. Its presence in the Indian Ocean encompasses over 70 ports, with strategic anchors including a military base in Djibouti, and ports in Sri Lanka and Pakistan. Research has identified at least 64 active Chinese research and survey vessels, of which over 80 percent demonstrate suspect behavior or organizational links to the Chinese military, that appear to be systematically mapping the ocean floor, collecting data that is essential to any future submarine operations (CSIS, January 10, 2024). Moreover, Beijing does not need a formal naval base in Mauritius to extract key strategic value. The intelligence potential of Huawei’s digital infrastructure, along with its economic leverage, could be sufficient. A pattern of commercial engagement, infrastructure dependency, diplomatic alignment, and eventual strategic access, which has played out at Djibouti, Hambantota in Sri Lanka, and Ream Naval Base in Cambodia, may be repeated here. The absence of formal security cooperation today does not preclude deeper alignment tomorrow. The treaty transferring sovereignty of the Chagos Archipelago to Mauritius establishes a 24-nautical-mile exclusion zone around Diego Garcia, grants the United Kingdom electromagnetic spectrum control, and explicitly prohibits foreign military forces from establishing bases on the outer islands, with U.K. veto power over all developments. Western analysts have nevertheless voiced concerns over what could happen beyond that buffer. A former Royal Navy base commander has warned the PRC could establish listening stations or anti-aircraft positions on the archipelago’s outer islands (The Telegraph, February 6, 2025). And U.S. conservative think tanks have argued that Mauritius could sign a defense agreement with Beijing granting Chinese access to waters around Chagos, and recommended U.S. contingency plans for potential Chinese efforts to gain dual-use access to Chagos atolls (FPRI, April 21, 2025). The terms of the treaty may make this seem unlikely, but past PRC practice invites room for doubt: the 1984 Sino-British Joint Declaration, which nominally provided guarantees for Hong Kong’s autonomy, was insufficient to prevent Beijing from removing that autonomy following the territory’s handover. If Mauritius becomes increasingly integrated with the PRC, sustained political pressure might have similar repercussions on the agreed terms of the treaty. Conclusion Mauritius’s growing economic dependence on the PRC has come at a time during which its strategic relationship with the West is weakening. Transferring sovereignty of the Chagos Islands back to Mauritius therefore creates a compounding strategic risk for the United States, the United Kingdom, and India. Individually, Huawei’s digital surveillance infrastructure, deepening economic and financial ties, Beijing’s increasing diplomatic courtship, and Mauritius’s sovereign control over islands within operational range of the Diego Garcia base, may not present inordinate cause for concern. Collectively, however, they represent a dangerous inflection point in Indian Ocean security. The treaty safeguards in the Chagos deal, which include foreign force prohibitions, U.K. veto rights, and buffer zones, address today’s threat environment; but they fail to account for the slow, patient accretion of PRC influence that characterizes Beijing’s approach across the Global South. In the coming years, Beijing will likely ramp up espionage and intelligence infrastructure near Diego Garcia. As it does so, it will use its leverage to persuade Mauritius simply to look the other way. Notes [1] Foreign investment entities include foreign natural persons, enterprises, and other organizations (MOFCOM, accessed March 9). [2] While mostly a vehicle for roundtripping Indian money, Chinese venture capital and private equity funds also exploited this channel. But this route narrowed following the establishment of screening panels for Chinese investment in 2016, and a January 2026 decision from India’s supreme court may have blocked it altogether (Reuters, January 16; Nanyang Technical University, January 30). [3] Although figures have not been published for recent years, and trade denominated in U.S. dollars likely still dominates, the clearing bank enables Mauritian companies to trade more easily with the PRC. The cross-border settlement agreements to which Mauritius is a part include the 16-member Southern African Development Community (SADC), the Common Market for Eastern and Southern Africa (COMESA), and the Pan-African Payment and Settlement System (PAPSS). [4] Local police have in the past received training in the PRC from the People’s Armed Police, the country’s paramilitary organization (PRC Embassy in Mauritius, October 20, 2008). But beyond this, there is limited information in the public domain to indicate that such trainings have persisted. [5] Reuters reported separately in 2019 that a Huawei senior executive appeared to manage a Tehran-based telecoms firm that was a subsidiary of a shell company registered in Mauritius, possibly set up to avoid U.S. economic sanctions (Reuters, January 18, 2019). [6] The Party’s International Liaison Department (ILD) has already played a key part in expanding Chinese influence in Sub-Saharan Africa via the establishment of political training centers and organizing seminars that seeks to align local leaders with CCP ideology (ILD, May 25, 2022). It has also made increasing inroads across South Asia in the last two years (China Brief, March 13). [7] Indian pressure comes in part from New Delhi’s robust security relationship with Port Louis (Ministry of External Affairs (India), March 12, 2025). It also comes from the Indian diaspora that makes up a majority of the island’s population. Mauritius has not conducted an official ethnicity census since 1972, which reported that 68 percent of the population were Indo-Mauritian, but the general consensus among various U.S. and Indian government sources indicate that this figure remains broadly accurate. [8] MAHASAGAR stands for “Mutual and Holistic Advancement for Security and Growth Across Regions.” “Mahasagar” (महासागर) is also the Hindi word for “ocean.”