Pacific Ports Join Australian Group Amid Increasing Beijing Influence

October 25, 2019 Updated: October 26, 2019

Five ports in the Pacific have joined an Australian association to improve trade and maritime relations amid increasing influence from Beijing in the region.

Fiji Ports Corporation, Samoa Ports Authority, Cook Islands Ports Authority, Lyttleton Port Company from New Zealand’s South Island, and the Port of Napier from New Zealand’s North Island have joined as external associate members of Ports Australia, which has called the move linking ports and maritime sectors across the Pacific a “massive step forward.”

“With so much happening in terms of growth and international relations across the Pacific at the moment, this move will provide solidarity for our region’s trade and maritime sector,” Ports Australia chief executive Mike Gallacher said in a statement on Tuesday.

Ports Australia is the peak body representing Australia’s port authorities and corporations with a network spanning private and publicly owned ports.

The organization said in its announcement that its new relationships with the five ports “will hold a strong focus on sustainability, which is desperately needed for our region’s industry, local communities, and natural environment.”

‘Dangerous Debt Diplomacy’

News of the five ports’ joining the Australian network comes amid increasing investment from Beijing in the region. In recent years, Beijing has increasingly financed infrastructure projects in the Pacific under its “Belt and Road” Initiative (BRI), a loan program rolled out in 2013 that seeks to invest in infrastructure projects throughout the world.

The BRI has been described as a “dangerous debt diplomacy” effort that has the potential to generate debt sustainability problems in developing countries, the Lowy Institute noted in a report on Monday.

“Three small Pacific economies—Tonga, Samoa, and Vanuatu—also appear to be among those most heavily indebted to China [than] anywhere in the world,” the report said.

Six Pacific countries—the Cook Islands, Fiji, Papua New Guinea, Samoa, Tonga, and Vanuatu—are currently in debt to China after signing up to the BRI in late November. New Zealand signed up to China’s BRI in May.

The Lowy Institute said that many of Beijing’s loans have a 2 percent annual interest rate, but it said that China should adopt formal lending rules to make its loans sustainable because natural disasters to Pacific island nations such as earthquakes and tsunamis could affect the countries’ ability to repay loans.

In efforts to undercut Chinese influence, the Australian Government launched a Pacific “step-up” which gave AU$2 billion ($1.37 billion) infrastructure financing program for the area, with another AU$1 billion ($728 million) injected into the Export Finance and Insurance Corp., Australia’s export credit agency, which will be given more flexibility to support investment in the region.

The United States, Japan, Britain, and New Zealand have also in recent times stepped up their aid to the Pacific.

Aid for Alliance

Just last month, Pacific countries the Solomon Islands and Kiribati announced a switch in diplomatic relations from Taiwan to China, following reports that China had promised the two countries aid.

“Taiwan will never compete against Beijing in dollar diplomacy … this is not how we engage in diplomatic relationships. What’s more, China’s promise of aid is often an empty check,” Taiwanese President Tsai Ing-wen said after the Solomon Islands’ move.

Since 2016, Beijing has focused on luring away Taiwan’s allies—which formally recognize Taiwan as a sovereign state—by offering them Chinese investments and loans, which has caused Taiwan to lose seven allies—including the Solomon Islands and Kiribati—since 2016. Taiwan now has only 15 international diplomatic allies.

Concerns Over Chinese Military Base

Australian and U.S. security bodies have expressed concerns that Beijing’s investments in ports and roads in the South Pacific may indicate that it seeks to build Chinese military bases there, reported the Sydney Morning Herald.

Though tiny in landmass, Pacific islands have re-emerged as a strategic priority for the world’s biggest nations, keen to lock-in alliances with the island countries that oversee vast areas of ocean, are rich in resources, and that form a formidable boundary between the Americas and Asia.

pacific islands
Graphic showing ports in the Pacific, with a highlight to ports China has helped develop, leased or expressed interest in funding. (Reuters/Government Agencies)

South Pacific islands north of Australia were “critical to [Australia’s] protection from armed attack” because of their proximity, noted Hugh White, a professor of strategic and defense studies at The Australian National University, in an op-ed for The Guardian.

“Military operations are governed by distance. Whether you can sink a ship, bomb an airfield or seize a town … depends on how far your forces must operate from their bases and how far the enemy must operate from theirs,” he said in July. “For much of our history, distance has worked to Australia’s advantage. We have been secure because we are remote. But we lose this advantage if a potentially hostile great power can operate from bases close to our shores.”

A report last April by the Sydney Morning Herald said that there had been informal discussions but no formal offer between China and Vanuatu about building a naval base in the Pacific island country. Both countries refuted the report and denied this was the case.

“We would view with great concern the establishment of any foreign military bases in those Pacific Island countries and neighbours of ours,” Malcolm Turnbull, then-Australian prime minister, said at the time.

Whilst Vanuatu may have been a false alarm, Beijing has built military bases in disputed areas of the South China Sea, even though Xi Jinping said in 2015 that Beijing had “no intention to militarize” the area.

Frank Fang and Reuters contributed to this report.

Follow Mimi on Twitter: @MimiNguyenLy
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