China in the Pacific Islands: Competition Not Dominance
Image Credit: Wikicommons

China in the Pacific Islands: Competition Not Dominance


China is a better friend to Pacific Island countries than the United States, says Samoan Prime Minister Tuilaepa. Certainly, the emerging giant’s growing presence in the region has captured the public imagination. But politicians and officials in Australia and the United States are not quite as enthusiastic about that as the Samoan prime minister appears to be.

Indeed, in 2011, then Secretary of State Hillary Clinton described the United States as being in competition with China in the Pacific Islands, and led a resurgence of US commitments to the region. Clinton adopted more conciliatory language when she attended the Pacific Islands Forum Leaders’ meeting in the Cook Islands in 2012, but she also reminded Island states of the history, values and goals the United States shared with them. The Australian government has long called for more transparency around Chinese aid to the Pacific Islands and sought unsuccessfully to persuade China to join the Cairns Compact for Strengthening Development Cooperation in the region. The Australian Defence White Paper 2013 described the growing reach and influence of “Asian nations” (read China) in the Pacific Islands as a challenge and cautioned that Australia’s contributions may be balanced by support and assistance given by “others” (again, read China) in the future.

Although its presence in the Pacific Islands is not new, it is China’s interests in the region in the last five years that have provoked most unease in the capitals of the region’s established international partners. It is tempting for these partners to adopt the popular threat narrative so frequently invoked in debate about China’s role in the wider Asia-Pacific to interpret its rise in the Pacific Islands but this would be wrong.

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To understand China’s ambitions in the Pacific Islands we should look not at what American, Australian, Japanese and Pacific Island officials and analysts think are China’s hidden intentions, but at what China is actually doing.

The actual extent of the three main elements of China’s engagement with the region – trade and investment, aid, and diplomatic and military ties – is not consistent with the argument that China presents a geo-strategic threat to Western influence in the Pacific Islands.

China’s trade with the Pacific Islands has increased sevenfold over a decade. Its total bilateral trade with the region of $2 billion is, however, still only one third that of the region’s largest bilateral trading partner, Australia. Chinese companies are particularly visible because they are usually involved in major construction projects in the region. But they are competing with, not dominating, an increasingly crowded business environment that includes investors from Asian as well as Western nations. Chinese investment does not nearly approach the 16.2 billion Australian dollars ($15.8 billion) Canberra invests in Papua New Guinea and it is US company Exxon Mobil that boasts the biggest single investment in the region – the $19 billion LNG project in Papua New Guinea.

China’s aid to the Pacific Islands has been lauded by Pacific Island leaders as more flexible than that provided by traditional donors. It may be popular but a comparison of China’s aid of $850 million over the period 2006 to 2011 (a five-year aggregate is the most accurate measure of China’s non-traditional aid) with the contributions of the region’s other major donors shows China is only the region’s fifth largest aid donor, behind Australia, the United States, New Zealand, and Japan. China, which devotes a tiny 4 per cent of its global aid program to Pacific Island countries, is unlikely to challenge the region’s leading donor, Australia, which spent $4.8 billion over 5 years. Even if a reported new $1 billion soft loan assistance package from China is made available to Pacific Island countries, this will likely be spent over a number of years.

There is little evidence to suggest that China’s diplomats are any more successful in persuading Pacific Island countries to align with China’s international positions than those from other countries who leverage aid commitments in efforts to obtain support for votes in the United Nations and elsewhere. China’s military assistance to the region is limited to the provision of uniforms, non-lethal equipment and refurbishment of barracks for the region’s three defence forces in Fiji, Papua New Guinea and Tonga. This pales into insignificance compared with the AU$183 million Australia spends on defence cooperation with the region and on securing Australia’s neighbourhood.

It is Chinese business interests that are really driving China’s rising influence in the Pacific Islands and they present a massive opportunity for Island countries, once remote from the global center of economic gravity. But the Island states need to manage the risks of a rapid rise of economic interest from China, which include a lack of capacity to repay loans and potential resentment towards investors who do not provide sufficient jobs or benefits to rural communities. Less suspicion and more cooperation from the region’s traditional partners would help.

Jenny Hayward-Jones is the Myer Foundation Melanesia Program Director at the Lowy Institute for International Policy and author of a new Lowy Institute Analysis, Big Enough for All of Us: Geo-Strategic Competition in the Pacific Islands.

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