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Australia must respond to China’s Pacific Island adventures

By Anthony Bergin and Jeffrey Wall

This week the Australian and New Zealand prime ministers agreed on the need to uphold sovereignty in an era of increasing strategic competition. That should be a key goal when it comes to our Pacific Island neighbours.

When the news broke late last year that a Chinese state-owned fishing company would build a port and fisheries factory on Daru, the PNG town closest to Australia, many wondered whether this was part of a wider plan by China to expand its presence and influence in the Pacific.

The evidence now suggests that it was: the COVID-19 epidemic hasn’t slowed China’s efforts in the region and it is stepping up with highly dubious infrastructure and communications projects.

We know from other states in the Indo-Pacific that China has a policy of building ports and airports and funding construction by Chinese loans that in many cases countries can’t afford. That doesn’t worry China: it funds these projects through state-owned banks such as the Export-Import Bank of China.

If a country that signs up to a loan can’t repay, China takes over the facility. That’s happened with a major port in Sri Lanka which the government defaulted on. China now has a 99-year lease over the port.

The Daru project is yet to commence construction. But it continues to be actively promoted by China’s embassy in Port Moresby. A few years ago, China signed up Vanuatu to a major port project comfortably capable of berthing a large warship. The project was funded by a loan to the Vanuatu government. It’s operational but proving to be uneconomic.

In the recent Samoan elections, one of the key issues was the decision by the pro-China government to award a contract for a major port in Samoa to a Chinese company, funded by a Chinese loan. The opposition alliance won the election.

But the government that’s been in power for 40 years has yet to vacate office. When it does so, one of the first decisions of the new government will be to cancel the port project, worth more than $100 million. Samoa’s main port was recently redeveloped and expanded thanks to a grant provided by Japan.

When, as seems inevitable, the FAST Party led by Fiame Naomi Mata’afa assumes office, Australia will need to monitor how China responds if the new government cancels the port project. We need to be prepared to give the new government substantial assistance if there’s any retribution from China.

Recently, another China project in the Pacific has emerged. Two years ago Kiribati shifted recognition from Taiwan to China. One of the dozens of islands in the Kiribati group is Kanton. It has a population of just two dozen people. It makes no real economic contribution to Kiribati. China is proposing to upgrade an airstrip on Kanton built by the Americans during World War Two. It’s hardly been used since the war, and certainly not commercially. Why would China want to upgrade an airstrip that’s remote and largely disused?

Given Kiribati’s strategic location at the geographic centre of the Pacific, the airstrip would give China some advantage in the event of any Pacific contingencies. The Kiribati government has said it would only be for civilian use. It still has a treaty of friendship with the US. But if China owns and builds the airfield, then it can use it as it likes.

How can Australia respond to the steps China is taking in our direct region of concern? One way might be to leverage the role of the dominance of Christian churches in the Pacific. Our recent modest provision of funding for church health services in PNG needs to be replicated across the region.

Our churches are a valuable resource that Australia should support in our engagement with the region. The Morrison government should convene a summit of Australian churches with Pacific links to determine how they can do more to assist in addressing many of the challenges facing Pacific Island communities.

The Australia Infrastructure Financing Facility for the Pacific, announced two years ago, is a sound idea, but to date it hasn’t proved bold. For example, under the AIFF we’ve provided a loan and part grant of about K190 million (69 million) for road projects in Papua New Guinea.

To put that in perspective, around the time it was announced, the PNG cabinet approved road projects to be undertaken by Chinese companies worth around K500 million.

Finally, we should do more around natural resource sustainability issues.

Recent research sponsored by the Judith Neilson Institute contains eye-popping findings on the resources trade between China and the Pacific Islands. China receives more than half the total tonnes of seafood, wood and minerals exported from the Pacific Islands region and takes more by weight of these resources from the Pacific than the next 10 countries combined.

Australia can work much more co-operatively with the small states of the Pacific around sustainability issues than China, given the resource products that China wants from the islands.

We need to put more “up” into our Pacific Step-up.

Originally published by: on 03 Jun 2021