China and Australian Flags: Credit: ABC News
The Pacific has become a battleground for soft power competition between Beijing and Canberra (and allies). China, through the Belt and Road Initiative (BRI), increased its investments in the Pacific by 400% from 2013 to 2018, signing up all the Pacific Island Countries (PICs), including Papua New Guinea (PNG), to the mega infrastructure initiative. Australia, after “losing” a lot of its old backyard friends to China, has rolled out several “counter” initiatives, including the Australian Infrastructure Financing Facility for the Pacific (AIFFP). How is it going for Australia?
A world order with the “Dragon” at the dinner table
Centuries ago, Napoleon was quoted as saying, “Let China Sleep, for when she wakes, she will shake the world.” In Chinese President Xi’s words, “We should be forward-looking, move ahead, and reject practices of discrimination and exclusion of others.” This quote resonates with the “China Dream.”China has embarked on a mission to exert more influence on the global stage.
In the Pacific, China increased its investment in the region by 400 percent, from $900 million in 2013 to $4.5 billion in 2018.
President Xi visited Moresby in November 2018, just ahead of the Asia-Pacific Economic Cooperation (APEC) summit, making it the first official presidential visit by a top-most PRC leader. That same year, Papua New Guinea (PNG) became the first PIC to join China’s mega infrastructure project, BRI. The initiative aims to build connectivity and cooperation across six main economic corridors encompassing China and: Mongolia, Russia; Eurasian countries; Central and West Asia; Pakistan; other countries of the Indian sub-continent; and Indochina. As of 2022, the cumulative BRI engagement amounts to USD 962 billion and a membership of 149 countries, 25 of which are from East Asia and the Pacific (including China).
In PNG, for example, the BRI has funded four mega projects: the PMIZ, a USD $156 million mega fisheries project that aims to retain Pacific-caught tuna for local processing; the KSCN, a USD $270 million underwater optic cable linking 14 coastal provinces to the capital, Port Moresby; the USD $902 million Ramu 2 Hydropower Plant (Ramu 2); and Western Pacific University (WPU), in the country’s Southern Highlands province.
In the Solomon Islands, this year’s Pacific Games will happen in the Chinese-funded and built stadium. However, it seems like China is up to something more. After the stadium aid, Beijing and Honiara made news when they signed a security pact in March 2022. The Solomon Islands are so inclined towards China. In 2020, leaked documents revealed the country was discussing a $100 billion loan from a Chinese businessman. To put this into context, this loan amount would be 77 times bigger than the Island country’s Gross Domestic Product (GDP).
Time to secure the backyard
First things first, the security agreement between the Solomon Islands and China attracted Western attention, leading to several high-level diplomatic visits to Honiara, including a visit by Japan's Foreign Minister, President Joe Biden’s Indo-Pacific Coordinator, Kurt Campbell, and Australia’s Foreign Minister, Penny Wong. The United States said it would “respond accordingly” if the security pact Honiara and Beijing signed led to a Chinese military presence in the Pacific. However, the Solomon Islands seem to be growing horns after they again signed a police cooperation deal with Beijing. Canberra asked the two parties to ‘immediately’ publish the policing deal.
Although Australia is a prominent aid donor to the PICs, Canberra is now rethinking its development approach in the Pacific. In 2018, Australia rolled out the Australian Infrastructure Financing Facility for the Pacific (AIFFP) to provide loan and grant financing to Pacific island countries and Timor-Leste. According to the AIFFP website, Australia is partnering with the Government of Papua New Guinea to finance an AUD621.4 million investment to upgrade and refurbish selected Papua New Guinea’s (PNG) ports. After neglecting PICs’ climate plight for a long time, the Australian Government, through the AIFFP, is now investing in climate infrastructure through the Pacific Climate Infrastructure Financing Partnership (PCIFP). Under this new arrangement, Australia has contributed AUD32.4 million to the Tina River Hydropower Development Project in the Solomon Islands.
Since World War II, Australia has squandered the chance to build deep and enduring relations with its neighbors in the South Pacific. However, recently, Australia has not only rejected BRI penetration in its territories but has responded with concrete infrastructure finance projects for PNG and the broader PICs. The rise of China as the top infrastructure investor in the Pacific region in recent years has worried traditional “partners” of the region, including Australia and New Zealand. I argue that the ‘neglect’ of the region after World War II left a vacuum that China was quick to fill. It will take a while for Australia to catch up with China, but it is not impossible. Australia, compared to China, has a deeper and better understanding of the socio-cultural, economic, and political dynamics of the region. Australia’s quality of projects has also gone without question. China is scaling down on the volume of BRI projects, not just in the PICs but globally, creating a ‘second chance’ for Australia. PICs have options and could greatly benefit from the competition between and among the big powers.
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