“We want to ensure that they retain their sovereignty, that they have sustainable economies and that they are not trapped into unsustainable debt outcomes. The trap can then be a debt-for-equity swap and they have lost their sovereignty.” Asked specifically whether Australia should be worried about countries in the neighbourhood being vulnerable to a loss of sovereignty to China, Ms Bishop said: “We’re concerned that the consequences of entering into some of these financing arrangements will be detrimental to their long-term sovereignty.” Loading Replay Replay video Play video Play video “That would be the case with any country,” she added. “Russia comes and plays in the Pacific every now and again … We want to be the natural partner of choice. We recognise we’re not the only partner, but we would like the Pacific to see Australia as providing them with the kind of support that maintains their sovereignty, maintains their economic stability and doesn’t become an unsustainable debt burden.

"That’s what Australia aims to provide and we encourage others to do the same, including China.” Loading The Belt and Road Initiative is one of Chinese President Xi Jinping’s signature policies – a massive infrastructure-building program valued by some estimates at more than $1 trillion to develop trade and strategic corridors linking China to much of the world. Papua New Guinea has some significant BRI projects completed or underway. Vanuatu, Tonga and Samoa have all had major projects built by Chinese state-owned companies and paid for by so-called soft loans from Beijing, though these have not been badged as BRI. The trap can then be a debt-for-equity swap and they have lost their sovereignty. Foreign Minister Julie Bishop

So-called debt-for-equity swaps by China have been seen elsewhere in the world, notably in Sri Lanka where a large port was handed over to the control of a Chinese company for 99 years after the Sri Lankan government was unable to meet debt repayments. Such swaps fuel fears that China is building a network of strategic assets that could in future be converted to military facilities. Ms Bishop described the BRI as a vehicle for China to further its strategic interests, though she said there would be times when Australia’s interests in particular projects aligned with China’s and the two countries could work together. She said a hypothetical highway in Papua New Guinea built as an Australia-China partnership must not be “a highway to nowhere but a highway to somewhere useful”. Santo Harbor Master Terry Ngwele in Vanuatu, which has seen significant new Chinese investment. Credit:Alex Ellinghausen “Where BRI projects are in our sphere of influence, we want to ensure that they meet appropriate standards … But as I keep saying, this is China’s vehicle, so China will also be determining what it believes is in its strategic interests as China looks for greater political and strategic influence in the region.”