Report: China targets 2 diplomatic allies with Pacific aid | Economic news

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

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

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

Only 5% of Chinese aid to the Pacific has been allocated to pandemic-related support, according to the report.

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

Pacific Aid Map project director Alexandre Dayant said China was investing more in the Solomon Islands and Kiribati – Pacific countries that switched their diplomatic allegiances from Taiwan to Beijing in 2019 – than Taiwan had provided.

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

“New development finance has become narrowly targeted to specific countries,” he added, citing Kiribati and the Solomons.

While Taiwan had provided $8-9 million a year to the so-called Solomons Constituency Development Fund, Beijing was now contributing $11-12 million, Dayant said.

The funds are allocated directly to legislators to spend and are criticized as a source of corruption.

Beijing has also increased the scale of infrastructure planned for the Solomon Islands to host the Pacific Regional Games next year, Dayant said, describing China’s investment in the Solomon Islands as low but growing rapidly.

China also planned to fund an airliner for Kiribati to boost its tourism industry under a deal that would have breached the rules of Taiwan’s aid package, Dayant said.

Australia’s new government has promised greater engagement with its Pacific neighbours. He blames his predecessor’s negligence for China’s conclusion of a bilateral security deal with the Solomons earlier this year, which sparked fears of establishing a Chinese naval base in the South Pacific.

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

The Lowy researchers pointed to several reasons for the decline in Chinese aid to the region, including the slowdown in the domestic economy.

Pacific leaders were becoming wary of China’s “white elephant” infrastructure projects and falling into potential debt traps, Dayant said.

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

Lowy’s Pacific Islands program manager, Meg Keen, noted that Papua New Guinea hasn’t taken out a new Chinese loan in three years.

Samoa had recently given up borrowing from China to modernize its port.

“We are seeing different assessments of risk and return, different modes of operation, but most importantly, Pacific island countries are making choices about what will best serve their development interests, and they have more choices because there are competition,” Keen said.

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