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Australia is edgy about China’s growing presence on its doorstep

THE new wharf at Espiritu Santo island in Vanuatu is one of the longest in the South Pacific. Built by Chinese contractors with a loan from the Chinese government, it can accommodate three cargo ships or two cruise liners at the same time. But it is not its capacity that has attracted attention in nearby Australia (see map). Press reports there suggest that the governments of China and Vanuatu have been discussing the establishment of a Chinese naval base on Espiritu Santo. Although Vanuatu’s foreign minister, Ralph Regenvanu, roundly dismissed the reports, Malcolm Turnbull, Australia’s prime minister, took the story sufficiently seriously to say, “We would view with great concern the establishment of any foreign military bases in those Pacific Island countries.” Vanuatu’s prime minister has since reassured him in person that no base is in the offing.

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China has greatly expanded its presence in Pacific countries in recent years, mainly by financing infrastructure projects like the wharf. But Chinese firms have diversified beyond such development schemes into commercial construction. Mining, including the $2bn Ramu nickel mine in Papua New Guinea and gold and bauxite mines in Fiji, has also attracted Chinese capital.

Australian officials are clearly spooked. Last year the country’s spy chief, Nick Warner, persuaded the prime minister of the Solomon Islands to drop a deal with Huawei, a Chinese telecoms firm, to lay a subsea internet cable to Australia. Instead, the Australian government is financing the project itself. In January Australia’s international development minister, Concetta Fierravanti-Wells, accused China of deliberately indebting Pacific islands by constructing “useless buildings” and “roads to nowhere”—comments the Chinese government dismissed as “full of ignorance and prejudice”.

There is no doubt that external debt is piling up all over the Pacific. Vanuatu’s stands at around a third of GDP, and around half of that is owed to China. Samoa’s debt amounts to 50% of GDP, around 40% of which is owed to China. Two-thirds of Tonga’s debt, which is also about half of its GDP, is held by China. Tonga came close to default in 2013. China was not willing to write off any of its debt, but did suspend repayments for five years.

But leaving Pacific governments beholden is a far cry from building a naval base. The Chinese navy ventures only occasionally and cautiously into the distant reaches of the Pacific, usually in the form of a courtesy call by a hospital or training ship to a friendly country such as Fiji. China only has one foreign base at the moment, in Djibouti in the Horn of Africa, right next to the main shipping lane between Asia and Europe. Vanuatu, by contrast, is a much less strategic spot.

Moreover, if China does want to build a base, Vanuatu would be a peculiar choice. Its government has changed 24 times since independence in 1980. The constant political intrigue sometimes manifests itself in foreign-policy rows. Fiji, which has been at odds with Australia ever since a military coup in 2006, is much better disposed towards China. More deeply indebted Tonga, meanwhile, has an enticing harbour at Vava’u in the country’s north. What they all have in common, however, is a knack for exploiting geopolitical rivalries (oscillating between China and Taiwan has been a common ploy) to win more foreign aid. Time, perhaps, for Australia to build a few nice, long wharves.

This article appeared in theAsiasection of the print edition under the headline“The Great Wharf”

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