Chinese Money Heads To South Pacific
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China sent more than $600 million in financial aid to Pacific Island nations last year as compared to just $200 million from the United States, claimed the Wall Street Journal on Friday, as fears continue to mount over the Chinese government’s influence in a region with traditional strategic importance to the U.S..
China sent more than $600 million in financial aid to Pacific Island nations last year as compared to just $200 million from the United States, claimed the Wall Street Journal on Friday, as fears continue to mount over the Chinese government’s influence in a region with traditional strategic importance to the U.S..
According to the report, grants and loans from Chinese banks and businesses to the Pacific Islands grew from just $23.2 million in 2005 to over $600 million, with the majority of the investment tied to infrastructural developments as well as loans to the region’s governments.
In Tonga for instance, China accounted for about 62 percent of the government’s total external debt. Over $113.6 million are also owed by the Tongan government to the Export-Import Bank of China and the Bank of China, or just about a quarter of Tonga’s economy.
Nevertheless, China’s Foreign Ministry has insisted that supplying aid and loans to Tonga and its Pacific neighbours was not tied to any political goals and instead is intended to “support sustainable development in the island countries as well as equal participation in international affairs.”
U.S. Secretary of State Hillary Clinton warned House lawmakers last year though that China’s growing presence in the region may cause future trouble for the States, though State Department officials chose to downplay her concerns.
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[quote]”We should expect that China has an interest there,” said a Washington-based official at the State Department. “But we don’t see this as an area for China-U.S. competition.”[/quote]In the meantime, red-and-white signs advertising “China Aid” are being erected outside schools and buildings across Tonga, as subtle political reminders of the Chinese finances that, for the time being at least, Tonga cannot do without.
After pro-democracy riots in its capital in 2006, Tonga borrowed $70 million from China at a rate of 2 percent to rebuild Nuku’alofa, with repayment stretched over 20 years.
Later, the Tongan government once again asked Beijing for more money to erect schools, a health centre and community halls; and In March this year, the state-owned China Civil Engineering Construction Corp. finished building Nuku’alofa’s new Central Business District, which will hopefully help provide more jobs for Tongans.
“We didn’t want Nuku’alofa to be left there in the ashes, so the government took the difficult decision to go ahead and take the loan,” said Tonga’s secretary to the cabinet Busby Kautoke.
[quote]”China was the only sizable amount that the government could take for the rebuild.”[/quote]“Personally I cannot imagine what we would do without the Chinese. The money they’ve brought in, the businesses they have provided… it’s lifted our street economy to a different level,” added Kalafi Moala, publisher of the Taimi ‘O Tonga newspaper, to AFP.
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China could now be the most important economic partner for Pacific island states, says Derek Brien, head of the Pacific Institute of Public Policy.
“In terms of the question of something like: ‘Which is the most valued international partner to your country?’ China often out-polled say Australia or New Zealand,” said Brien.
[quote]”At the same time, in the press there is a lot of backlash against the rise of China’s immigration. So there’s this disconnect between a perception that China aid, China diplomacy, is good and better than say Australia and New Zealand because the Chinese aid and development comes without strings attached to it.”[/quote]Kautoke has already added that the Tongan government may now seek to temporarily stop borrowing money from China in favour of reducing its dependence.
“The debt with China we’re working on taking care of. We will take no more external loans until the government is satisfied that we manage to bring down our level of debt,” Kautoke said.
