Australia Increases Investment in South Pacific Islands in an Apparent Response to China’s Growing Economic Influence in the Region

On July 11, the Aus­tralian gov­ern­ment signed an MoU with the Solomon Islands and Papua New Guinea (PNG) for coop­er­a­tion on a sub­sea inter­net cable con­nect­ing the three coun­tries.  The project, for which Aus­tralia is foot­ing two-thirds of the cost ($137 mil­lion), is a direct response to China’s grow­ing efforts to car­ry out sim­i­lar infra­struc­ture and oth­er work in these and oth­er South Pacif­ic island nations.

 Ini­tial­ly, in 2016, the sub­sea cable work was award­ed by the Solomon Islands to China’s Huawei Marine Cable .  Fear­ing the secu­ri­ty impli­ca­tions of Huawei car­ry­ing out this project and link­ing to Australia’s telecom­mu­ni­ca­tions infra­struc­ture, Can­ber­ra refused to autho­rize the cable’s land­fall in Aus­tralian ter­ri­to­ry, effec­tive­ly block­ing the project’s implementation.

Huawei’s par­tic­i­pa­tion in the sub­sea cable project was a sub­stan­tial con­cern for Australia’s intel­li­gence com­mu­ni­ty, which has been increas­ing­ly vocal about its con­cerns over the company’s ties to the Chi­nese gov­ern­ment being a risk to region­al secu­ri­ty.  In 2016, the Aus­tralian gov­ern­ment blocked the sale of Aus­grid, the country’s largest elec­tri­cal dis­tri­b­u­tion com­pa­ny, to China’s state-owned State Grid Cor­po­ra­tion.  The gov­ern­ment also appears to posi­tion­ing itself to ban Huawei’s involve­ment in Australia’s planned 5G broad­band network.

More broad­ly, recent events seem to show increased Aus­tralian invest­ment in the region in response to grow­ing Chi­nese com­mer­cial activ­i­ty in the South Pacif­ic islands.  Fol­low­ing news of this deal, reports emerged that Van­u­atu is also in nego­ti­a­tion with Aus­tralian author­i­ties to devel­op a high-speed under­sea inter­net cable con­nect­ing the island-nation to Aus­tralia.  This comes after Chi­na has made a series of aggres­sive invest­ment moves in the coun­try.  Aus­tralian con­cerns about the impli­ca­tions of Beijing’s eco­nom­ic engage­ment of Van­u­atu appears to have been suf­fi­cient­ly intense as to gen­er­ate an assur­ance from the Van­u­atu gov­ern­ment that it would pro­hib­it Chi­nese mil­i­ta­riza­tion of its island – a cen­tral under­ly­ing con­cern of Canberra.

Despite recent push­back, China’s E&F pres­ence in the region con­tin­ues to pro­lif­er­ate through crit­i­cal infra­struc­ture invest­ments that many wor­ry could trap these small nations into famil­iar pat­terns of debt-bur­den and influ­ence-ped­dling.  In some cas­es, Chi­nese enti­ties have gone so far as to offer out­right bribes and finan­cial sweet­en­ers to gar­ner polit­i­cal favor.  Some notable cas­es are as follows:

  • In 2017, alle­ga­tions sur­faced that Huawei had paid a $6.5 mil­lion bribe to the Solomon Island’s rul­ing, Social Cred­it Party.