With Jonathan Pearlman

Outbid by China

Yesterday, the flag was brought down for the final time at the Taiwanese embassy in Honiara, Solomon Islands. The Solomon Islands was previously the largest of Taiwan’s Pacific allies, but has decided to switch its allegiances to China, a move that could lead to similar flips by the five allies that remain.

The switch occurred despite Australia’s frantic efforts to combat China’s growing influence in the Pacific. These have included boosted funding to the Solomon Islands and a visit there from Scott Morrison in June, his first overseas trip after winning the federal election. Honiara’s allegiance shift from Taipei to Beijing was not a personal affront to Morrison, but it does highlight the limits of his “Pacific step-up”.

Inevitably, Pacific nations are making the most of Chinese largesse and trade, and this is leading to closer diplomatic – and potentially military – ties. Morrison is right to try to improve ties with Pacific nations, but he will not be able to prevent them from seeking to benefit from closer relations with the region’s – and arguably the world’s – largest economy. For the Solomon Islands, exports to China, mostly from logging, were worth US$326 million in 2017 (the most recent year on record), compared with US$39 million to its second-largest export partner, Italy. Chinese trade with the Solomon Islands now accounts for more than three times that with the island nation’s second-largest partner, Australia. While China’s aid across the Pacific is still much smaller than Australia’s, it is growing, and China has been more willing to provide unconstrained funding. Some of this aid has been used for high-profile projects, such as a recently completed sports complex in Samoa and a new convention centre in Papua New Guinea, built before last year’s APEC conference. These projects often come with the arrival of large numbers of Chinese workers, who have added to expanding Chinese populations across the Pacific.

When Solomon Islands MPs debated the allegiance shift, these projects were persuasive, according to prime minister Manasseh Sogavare. “There is this perceived view … that they [China] are doing great in other countries,” he recently told The Little Red Podcast’s Graeme Smith. “My colleagues who are touring the regions are just basically sending back signals: ‘Let’s go, let’s go, we’ve seen it all. It is happening here.’” Yes, China is happening, and not just in the Solomon Islands.

Last year, China’s GDP of US$13.6 trillion was more than twenty times that of Taiwan. Unsurprisingly, Taiwan is losing its war of chequebook diplomacy against China. Australia may like to think its historical links with Pacific countries and its liberal democratic values make it a more attractive partner than China. But, in the case of Taiwan, a 36-year relationship with Honiara and a commitment to democracy made little difference.

This should not deter Morrison from developing closer ties with Australia’s neighbours. Like Taiwan, Australia will not be able to outbid China, or to contain it, but it can instead try to cooperate with China in the Pacific, both to strengthen development and economic outcomes for island nations and to improve its own ties with Beijing. China’s presence in the Pacific will continue to grow. In some instances, this will benefit Australia, particularly if Chinese commerce and aid help Pacific countries to develop sustainably. In other instances – where China gains military bases or affects governance in these countries – it may become a source of serious concern. Either way, Australia’s Pacific step-up will backfire if its main effect is to antagonise the country it is trying to keep out. China is winning its diplomatic battle against Taiwan. Australia should focus on improving regional ties, but it should avoid becoming entangled in its own diplomatic tussle – or bidding war – with China.