Australia tells region to adapt to China's chequebook diplomacy

Australia says region should adapt to Beijing's use of 'soft loans' in Pacific over Taiwan issue

PUBLISHED : Wednesday, 29 August, 2012, 12:00am
UPDATED : Wednesday, 29 August, 2012, 3:42am

Australian Foreign Minister Bob Carr yesterday said regional powers had to get used to China's so-called chequebook diplomacy in the Pacific as it works to shore up support over Taiwan.

The Lowy Institute, an Australian think tank, estimated last year that China had pledged more than US$600 million since 2005 in "soft loans" with long interest-free periods to nations such as Tonga, Samoa and the Cook Islands.

It has also stepped up its aid to Fiji following the 2006 coup in which military leader Voreqe Bainimarama seized power from the elected government.

Australia and the United States have previously expressed concern at China resorting to chequebook diplomacy, but Carr appeared to soften Canberra's stance in an interview with the Australian Financial Review.

He urged the region to learn to live with Beijing "developing all the accoutrements of a major power".

"That means defence modernisation but it also means a big aid budget," Carr said.

"My message really is that Australia and New Zealand have got to live with the fact that China will want to deliver aid in this part of the world [and] there is nothing we can do to stop it. It's a fact of life."

China's interest in the Pacific stems mainly from a race for diplomatic influence with Taiwan, which Beijing still regards as part of its territory, although the two sides split at the end of a civil war in 1949.

The rivalry saw some Pacific nations constantly change allegiance between Taipei and Beijing in return for increased aid, until Taiwan elected the Beijing-friendly President Ma Ying-jeou in 2008.

Since then the diplomatic one-upmanship has cooled.

Carr's comments came on the eve of the Pacific Islands Forum, a grouping of mainly small island states, along with resource-rich Papua New Guinea and the dominant regional powers Australia and New Zealand, both US allies.

US Secretary of State Hillary Rodham Clinton is set to make a rare foray to the meeting in the Cook Islands in a move that analysts say is aimed at curbing China's growing influence in the region.

On the broader issue of global aid, Carr said he expected that as China developed it would normalise and "reshape its aid budget to resemble that of other OECD [Organisation for Economic Co-operation and Development] countries".

"In other words, not a Chinese port linked by a Chinese road to a Chinese mine, but the more variegated capacity-building assistance that you see today from an OECD country," he told the newspaper.