Correspondent's Notebook

China’s influence in the Pacific

13 June 2008

With one of the fastest growing global economies, and one of its biggest populations, China is a major player in the world.

Over the past few years it’s spread its influence into many other areas of the world, often in pursuit of access to mineral resources to feed its needs, but also to push for political and diplomatic allegiance.

But that influence is also being felt in the Pacific, and a new report has found that over the past three years China has increased its aid spending in the region, by a massive amount.

Radio Australia’s Pacific Correspondent Campbell Cooney has been looking at China, the Pacific, and aid dollars.
This week the Lowy Institute for International Policy released it’s latest research paper: “The Dragon Looks South”. It’s focus is on how much China spends on aid in the Pacific, and why it does so. The research wasn’t helped by the fact China tries to keep details of its aid program secret.

But using public sources report author, Research Associate, Fergus Hanson, found from 2005, when Chinese aid across the region totalled 33 million US, by 2007 it had increased to 293 million. According to the Lowy research, the interest and increase has nothing to do with Chinese military expansion, as has often been hypothesised.

Fergus Hanson says the only battle China’s funding is a diplomatic one.

FERGUS: Chinese aid money is only going to the countries that recognise China exclusively.

Within a day of the release of this report China hit back, rejecting its findings as “pointless”, saying its aid was given without ulterior motive. But the People’s Republic of China, or Mainland China, and The Republic of China, or Taiwan, have spent the past few years fighting for diplomatic allegiance from other nations. In the Pacific Taiwan’s recognised by six nations, and China by eight.

Taiwan’s aid program doesn’t feature in this report, but it’s already been the focus of plenty of study. One often quoted example is the 2001 $US25 million loan from Taiwan to Solomon Islands, intended as compensation to the victims of ethnic violence. Most of that money ended up in the pockets of corrupt politicians, police, and militia leaders.

This new report has found China’s aid does just as little to promote good governance. In essence China and Taiwan have a “No Questions Asked” policy on aid. And the actions of both is seen as an unsettling influence of the region, and the stated aim of countries like Australia and New Zealand, to use aid to promote good governance.

For their part Pacific Island nation leaders seem happy to accept the aid, and align themselves one way or another. But that friendship, rarely filters down to the people on the street. The Chinese have a presence through business and migration in most Pacific Island nations, but that presence is resented by most Pacific Islanders.

In the case of China, the ill feeling isn’t helped by the way it provides aid. Most money goes to infrastructure projects, which have to be built using Chinese companies, labour and materials. There are now plenty of new sporting complexes, colleges, conference centres and government offices across the region. There’s also plenty of animosity from islanders, already unemployed, and living in poverty, who feel they got nothing out of the building project.

The insistence its money be spent on its own companies, workers and materials, has also led to an influx of Chinese influenced architecture. If you visit the Vanuatu Agricultural College on the island of Santo, you find a complex which look at home on the outskirts of Beijing. In this new report Fergus Hanson’s recommended China co-ordinate its aid effort with countries, like Australia, to ensure money goes to the most needed areas.

FERGUS: China can’t go in to donor meetings and say we’re giving X amount of dollars in official development assistance that’s aimed primarily at promoting the development of Pacific Island countries, because its program at the moment is shrouded in secrecy.

It would also remove some of the bargaining power from Pacific leaders, who are skilled at playing aid donors against another. But the choice might be out of their hands. Last week negotiators from China and Taiwan met in Beijing for the first time in nine years to look at ways to improve their relationship. Diplomatic issues weren’t on the table, but Taiwan’s new President Ma Ying Jaou has said he wants an end to the diplomatic war, and the drain it’s placing on his country’s coffers.

If Taiwan’s no longer prepared to fight, it would seem unlikely China would maintain its high spending ways out of a sense of good will.