China aid to Pacific Island nations is exacting a price

Danielle Cave at the Lowy Institute sends an update on her dogged research into Chinese development aid patterns (link):

For example, it’s hard to tell whether PNG’s 'distance education network community college' — which is being funded with a US$35 million EximBank loan — ever eventuated. The mysterious project was recently caught up in a high-profile money laundering case in Singapore after authorities detected suspicious transactions that led to the bank account of former PNG Prime Minister Michael Somare (of which he denies knowledge). PNG Government budget documents report the project funds are currently in a trust managed by law firm Young & Williams Lawyers (who were the subject of 2015 investigations by SBS and Fairfax).

This development, which may unravel further and is gathering steam across PNG's online discussion forums, should spook Chinese Government officials working in the region. An opaque aid program is already a tough sell in the Pacific Islands where mistrust, misinformation, frustrations and resentment about China's regional intentions abound.

Some regimes in the region, however, may find that their ambitions dovetail with China's evolving aid goals. Here's Grant Wyeth in the Diplomat (link):

While previously China’s aid presence within the South Pacific was motivated by a desire to squash Taiwan’s diplomatic relations in the region, there seems to be a recent shift toward a more strategic motive. As China develops its blue-water navy capabilities it will require greater access to more ports in the Pacific. Building stronger relationships with Pacific Island nations is paramount for China to be able to project power throughout the Pacific Ocean, and will lay the groundwork for future hegemony should the United States retreat in a measurable way from the region (although this is unlikely in the foreseeable future). 

This is clearly a long term project, but one that China seems very serious about. In late-2014, President Xi Jinping became the first Chinese president to visit Fiji. An official state visit to a Pacific Island country demonstrated China’s interest in the region. It was also significant signal of solidarity after Australia and New Zealand had isolated Fiji regionally following the country’s 2006 coup. The continued frosty relationship between Suva and the two regional heavyweights led to Fiji’s prime minister, Frank Bainimarama, indicating to the United Nations General Assembly that he was reevaluating Fiji’s relationships.

Fiji and PNG figure in another analysis of aid and influence in the region. Joanne Wallis (link):

More recently, changes to the broader Asia-Pacific power structure have altered the geopolitical landscape. Most notably, China has increased its aid to the region and Russia recently made a significant donation of military equipment to Fiji. Indeed, the 2013 Defence White Paper acknowledges that ‘attitudes to our role are changing’ in the region, as ‘the growing reach and influence of Asian nations opens up a wider range of external players for our neighbours to partner with’. A number of these external partners were out in force at the dialogue following the recent Pacific Islands Forum leaders’ meeting, including China, India, Indonesia, Japan and South Korea. 

In only a few years, China's flexibility and forbearance in regional aid strategy has started to pay off. Time to catch up.