Spending part of broader effort to reassert Pacific influence as China spends billions on ‘Belt and Road’ initiative

This article is more than 2 years old

This article is more than 2 years old

Australia has joined a push by the US and Japan to significantly boost infrastructure investment in the Indo-Pacific region, as China continues to spend billions of dollars on its “Belt and Road” initiative across Asia.

The move is part of a broader effort by the US and its allies to reassert their influence in the Pacific amid fears the region is increasingly susceptible to diplomatic pressure from Beijing.

But the move has been announced with minimal detail, and analysts have questioned what level of financial commitment Australia, which has cut its foreign aid budget in recent years, will make towards the new partnership.

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The announcement comes a month after the Turnbull government said it would jointly fund construction of an underwater telecommunication cable network for the Solomon Islands, a project originally awarded to Chinese company Huawei.

Last year Nick Warner, who heads the agency that deals with foreign intelligence, the Australian Secret Intelligence Service, was reported to have warned the former Solomons prime minister Manasseh Sogavare against Huawei’s involvement in the underwater cable project.

Australia’s new infrastructure investment partnership with the US and Japan was announced overnight by the US Overseas Private Investment Corporation, the Japan Bank for International Cooperation (JBIC), and Australia’s Department of Foreign Affairs and Trade.

“We share the belief that good investments stem from transparency, open competition, sustainability, adhering to robust global standards, employing the local workforce, and avoiding unsustainable debt burdens,” the joint statement said.

China’s Belt and Road initiative is a multibillion-dollar infrastructure campaign that is transforming large parts of Asia and the Pacific, increasing China’s geo-strategic influence, and prompting warnings that smaller nations will become dependent on it for investment.

Julie Bishop, the foreign affairs minister, said the partnership would address development challenges, increase connectivity, and promote economic growth in the region.

“This trilateral partnership is in recognition that more support is needed to enhance peace and prosperity in the Indo-Pacific region,” she said.

Few details have been announced about the policy.

It is not known how much Australia is planning to contribute to the partnership, or whether Australia’s foreign aid budget will increase to accommodate it.

A spokesman for Bishop said those details would be worked out in coming months, when a formal memorandum of understanding was written.

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Jonathan Pryke, the director of the Lowy Institute’s Pacific program, said Australia hadn’t done much concessional finance lending through its aid program, but Japan had.

“It would make sense if Japan was going to be taking the lead on this front and use the skills it already has, while leveraging resourcing from the US and Australia,” he said.

“But the question is, what resourcing? We haven’t got any hints about how large this thing will be. The language seems to be [positioning it as] a counter to the Belt and Road initiative, but that initiative is valued in the hundreds of billions of dollars across the Indo-Pacific region, so this announcement raises more questions than it answers.”

The Labor party has welcomed the move, saying Australia has “dropped the ball” in the Pacific region in recent years by cutting its overseas aid by almost $12bn to its lowest levels in history.

Penny Wong, the shadow minister for foreign affairs, said earlier this month that Australia needed to lift its investment in the Pacific as China increased its assertiveness in the region.

Wong said the world was “rethinking how best to work with the US” under President Donald Trump, and Australia was also being disrupted by “more sustained and structural shifts in the world”, including the changing relative economic weight of the US and China.

Under the leadership of Xi Jinping, China has “evinced increasing assertiveness in pressing its interests”, she said.

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In one of the most significant flashpoints of China’s assertiveness, Australia has objected to China’s militarisation of the South China Sea. Reports of China’s navy challenging Australia’s warships have led to warnings it may seek to close the area off to bolster its territorial claim, which was rejected by the court of arbitration in The Hague.

The minister for trade and investment, Steve Ciobo, said the new trilateral partnership was “absolutely” not a challenge to China’s Belt and Road initiative.

“We want to ensure that Australia is very active in engaging with developing economies across the region, and others, to make sure we can meet some of the huge demand there is for infrastructure,” he told Sky News on Tuesday.

with Reuters