Australia, New-Zealand Cite Sri-Lankan Example For Chinese Debt-Trap Expansionist Strategy

Australia and New Zealand are boosting coordination with the United States over Pacific island states due to growing Chinese influence in a region. Both Australia and New Zealand have traditionally considered the region within their sphere of influence and see China as an aggressor. EurAsian Times looks at an article from JapanTimes.

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China has increasingly invested in the South Pacific with loans for infrastructure projects under “Belt and Road” initiative, a move both Australia and New Zealand perceive as a direct challenge.

Citing Sri-Lanka — which had to hand over a new port to China to service an unsustainable level of debt from the country — as an example, critics have expressed concern that Beijing might be using loans leverage to gain strategic concessions in the resource-rich, strategically important region.

They fear Chinese investments in ports and roads in the South Pacific could ultimately turn into military bases, just like those Beijing has built in contested areas of the South China Sea despite Xi affirming that his country had “no intention to militarize” the strategic waterway.

“Australia would like to see the United States, Japan, France, the European Union, a wide range of countries — and China — supporting good development and governance in the South Pacific,” said Rory Medcalf, head of the National Security College at Australian National University. “What we don’t want to see is a direct competition between Australia and China for influence in the South Pacific,” Medcalf said.

“We don’t want to see a repeat in the South Pacific of the kinds of risks that we saw in Sri Lanka or other parts of the Indian Ocean, where China’s infrastructure and development assistance had negative consequences,” he added.

China immensely boosted its aid to Pacific island states to the amount of $1.78 billion from 2006 to 2016. The tally fell far short of the $7.7 billion from Australia, but roughly matched the $1.89 billion from the U.S., and surpassed the $1.29 billion from New Zealand and $1.18 billion from Japan, according to the Lowy Institute, an Australian think tank.

Australian Prime Minister Scott Morrison, New Zealand Prime Minister Jacinda Ardern, Prime Minister Shinzo Abe and U.S. Vice President Mike Pence agreed Sunday with Papua New Guinea on a project to improve electricity access in the South Pacific nation to 70% of its population by 2030 from the current 13%.

The four leaders signed the deal, estimated to cost $1.7 billion, with Papua New Guinea Prime Minister Peter O’Neill on the sidelines of an Asia-Pacific Economic Cooperation (APEC) summit in Port Moresby.

Given high demand for infrastructure in the South Pacific and the broader Indo-Pacific, Australia, New Zealand, Japan and the United States, among other countries, would welcome Chinese investment if it were transparent and cost-effective while taking into account recipients’ ability to pay back loans for such funding.

But in many instances, Chinese investment is opaque, leaves recipients such as Tonga and Vanuatu saddled with heavy debt, and privileges resource extraction over benefit to local communities in what critics call “debt-trap diplomacy.”

“China has the right to invest in infrastructure projects and many countries are now a part of the ‘Belt and Road’ initiative,” said Satu Limaye, director of the East-West Center in Washington.

“But there is a concern about countries’ sovereignty and debt trap,” Limaye said. The Asian Development Bank estimates the Pacific region needs $3.1 billion in infrastructure investment per year up to 2030.

In an ostensible rebuke of the initiative, a trillion dollar infrastructure project critics say is intended to draw countries deeper into Beijing’s economic orbit, Pence said at an APEC business forum Saturday in Port Moresby, that the U.S. will not offer “a constricting belt or a one-way road.”

Pence said the U.S. offers “a better option” for infrastructure investment, in reference to the doubling of American development financing in the Indo-Pacific to $60 billion and a joint project with Japan to invest $10 billion in energy infrastructure in the region.

But unlike Pence, Abe has been circumspect about overly promoting a free and open Indo-Pacific concept as a rival to the initiative, a move apparently aimed at not provoking China at a time when Tokyo-Beijing relations are improving.