Report: China Targets 2 Diplomatic Allies With Pacific Aid | business news

CANBERRA, Australia (AP) – Beijing focused its Pacific aid on new diplomatic allies Solomon Islands and Kiribati, while Chinese financial support continued to decline across the region, the Lowy Institute reported on Monday in its latest annual analysis of regional aid.

China’s aid to the Pacific has fallen to $187 million in 2020 from a peak of $287 million in 2016 — the lowest level since 2008, when the Sydney-based international think tank began providing support for the developing ones to quantify the island states in the Pacific.

At the same time, pandemic response measures propelled Pacific aid to a record $4.25 billion in 2020, a 47% increase from the previous year, according to Lowy’s Pacific Aid Map report.

According to the report, only 5% of Chinese aid to the Pacific has been allocated to pandemic-related assistance.

The institute does not yet have full data for 2021, but preliminary results suggest the decline in Chinese aid has continued.

Alexandre Dayant, director of the Pacific Aid Map project, said China is investing more in the Solomon Islands and Kiribati — Pacific countries that shifted their diplomatic alliances from Taiwan to Beijing in 2019 — than Taiwan provided.

“Chinese aid remains an important diplomatic tool for Beijing in the Pacific,” Dayant said.

“New development finance is narrowly targeted to specific countries,” he added, citing Kiribati and the Solomon Islands.

While Taiwan has provided $8-9 million a year to the Solomon Islands’ so-called Constituency Development Funds, Beijing is now contributing $11-12 million, Dayant said.

The funds are made available directly to the legislature and criticized as a source of corruption.

Beijing has also increased the amount of infrastructure planned for the Solomon Islands to host next year’s Pacific Regional Games, Dayant said, describing China’s investment in the Solomon Islands as small but rising fast.

China also plans to fund an airliner for Kiribati to boost its tourism industry in a deal that didn’t fit the rules of Taiwan’s aid program, Dayant said.

Australia’s new government has promised greater engagement with its Pacific neighbors. It blames its predecessor’s negligence for China’s bilateral security deal with the Solomon Islands earlier this year, raising fears over the establishment of a Chinese naval base in the South Pacific.

Australia, the largest aid donor to the Pacific, last week announced an additional A$900 million (US$570 million) in aid to the Pacific region in the government’s annual budget.

Lowy researchers pointed to several reasons for China’s dwindling aid to the region, including a slowing domestic economy.

Pacific leaders are wary of Chinese infrastructure projects as “white elephants” and falling into potential debt traps, Dayant said.

As the United States and its allies seek to counter China’s growing influence in the Pacific, Pacific leaders now had more potential development partners to choose from.

Meg Keen, program director of Lowy’s Pacific Islands, noted that Papua New Guinea had not taken out a new Chinese loan for three years.

Samoa recently decided against borrowing from China to modernize its port.

“We’re seeing different assessments of risk and reward, different ways of operating, but what’s really important is that the Pacific island nations are making decisions about what best serves their development interests, and they have more choices because there’s competition,” Keen said.

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