Academic disputes China debt claims

There is no evidence to support the claim that the Chinese government is using loans and debts to create leverage over Pacific Island countries, says a University of the South Pacific academic.

The Head of School and Director Politics and International Affairs, Dr. Sandra Tarte, outlined this when speaking to journalists at the Pacific Journalists Dialogue at the Forum Economic Ministers Meeting (FEMM) in Suva.

Dr. Tarte said this was not an initial Chinese government strategy and the current perception of the Asian powerhouse as an economic colonizer in the Pacific stems from the actions of Chinese firms, rather than the government.

She said the current perception around China’s presence in the region is based on the strategy of using aid and loans to create a situation of indebtedness, which if not managed well, can result in sensitive assets such as ports, wharves and airports having to be handed over to Chinese control.

Dr Tarte believes there has been scaremongering by traditional partners.

“They've used a few examples in a few countries to say this is what China's intentions are, so you know this has been applied to the Pacific to say the Pacific has to be very careful about what China is doing about trying to create debt and create leverage over countries.

“Now the evidence is actually not there to support it.

“There's been a high concern about debt, but the debt that is really a problem is probably PNG and Fiji, which have high levels of debt but that is domestic debt held by their superannuation funds and to some extent multilateral things. Vanuatu and Samoa have had some degree of debt,” said Dr Tarte.

She added: “The only country that has any semblance of maybe debt problems with China is Tonga. But those loans that seem to be the cause of this were not triggered by the Chinese government. These were Chinese firms back in the early 2000s that actually sought those projects and sought the loans to fund them.

“So this was not part of any Chinese government strategy and one would argue that this issue has actually come back to bite the Chinese government.

“It’s a problem they don't want to see this kind of thing escalating. So it’s certainly not the case (that China is using debt trap diplomacy). And Vanuatu has also got some debt with China but there is no debt stress, but they are in a situation where they could become heavily indebted.”

She said China is going grow to be more powerful and more dominant in the global economy and the Pacific has to find a way to work with China and other partners as well.

Dr. Tarte said the best way to be armed is to have the best knowledge and information and not get played by some of other actors.

“I think we have to protect our integrity, as states.

“Our leaders have to be strong on that,” she said.

“I think being very forthright about what’s in our interest. It is always going to be about our interest. We don't want to buy into this thing about ‘Oh, China is coming in and China is going to take over’.”

Dr Tarte rejected the contention in controversial media reports, mainly from Australia, that the Chinese-funded port on Santo in Vanuatu could be a precursor to a Chinese naval presence.

“As the foreign minister said in Vanuatu, we are only concerned about our development, we are only concerned about developing our infrastructure for our people and it’s not about China or about naval facilities or anything else. That's not on the cards, and we reaffirmed our independence.

“Vanuatu is not aligned not it will start to build naval facilities on its territory. So I think people have to respect that and not get caught up in other narratives that are going on.”

Secretary General of the Pacific Islands Forum, Dame Meg Taylor, has welcomed China’s involvement in the region, as she has other development partners.

However, she also suggested that with as many as six Pacific countries recognising Taiwan rather than China, a new approach to regional discussions with China - by having an economic relationship with China rather than a political one - could be considered in the regional context.

This model - used at APEC, saw China, Hong Kong and Taiwan able to sit side by side at the negotiating table – something China is not willing to do in more political bodies such as the Forum Dialogue with development partners.

Dame Meg expressed concern about the impact the new geopolitical tensions are having on Pacific unity.

Without mention names she said:

“What I am most anxious about in the region is…what has happened with the influence of certain governments trying to focus on some countries, not other countries. Influencing some countries and not thinking. Dividing the collection,” she stated.

Dame Meg said the region’s strength is in working together in peace, harmony, security, social inclusion and prosperity in all Forum countries but this is becoming more difficult.

“Holding the collective together is a big challenge,” she stressed.

Prime Minister Peter O’Neill has stated on numerous occasions that he is not interested in partaking in the geo-politics of the region and welcomes all developments partners, including China.

Cedric Patjole