Australia’s belt and road dilemma in the Pacific: is China a partner or competitor?
- Canberra has expressed a willingness to work with Beijing on much needed infrastructure in the region
- However, concerns abound, ranging from standards to security threats, which have made the country hesitant to dive in
Since May 2017 Australian leaders have publicly offered support for efforts to improve infrastructure and other development opportunities in the Asia-Pacific region, and have said Beijing and Canberra should explore the possibility of collaborating.
Yet this positivity has come with limits and some apparent contradictions.
It is clear the Australian government wants to champion what it sees as basic standards for belt and road projects. The challenge it faces is how best to do this without taking an excessively competitive approach that also fails to support Australian businesses participating in the belt and road, as many companies are in favour of doing.
Another option would be to sign a general memorandum of understanding on cooperation with China that includes a clear statement of the standards with which Australia’s engagement would proceed.
The Pacific – Australia’s front line
One motivation underpinning the infrastructure focus has been widespread allegations that Beijing is using “debt-trap diplomacy” to gain leverage over smaller countries. This has been asserted by Australian ministers but also by the new US ambassador to Australia Arthur Culvahouse, who in March, less than an hour after being welcomed to Canberra by the nation’s governor general, warned of China’s “pay day loan” diplomacy.
As the report makes clear, most of these issues can be traced to weak governance, poor oversight, graft and a lack of technical and financial capacity in host countries, rather than directly back to Beijing. Among numerous sensible policy recommendations, the report says developed nations should do more to build capacity in these countries, enabling them to “safeguard their communities, environment, economy and other national interests throughout the life cycle of their Belt and Road Initiative projects”.
Working cooperatively in this way with both China and the host countries would seem a logical step and a valuable contribution that Australia could make to promoting positive outcomes.
Collaborate, compete or challenge?
The Pacific region suffers from a readily recognised infrastructure gap. In some instances, competition for projects could bring economic benefits in the form of lower prices and higher quality assets.
Both Huawei and Sogavare denied the allegations, and the Australian public were not privy to the details of the security agency’s warnings, so observers were left with no choice but to trust the Australian government’s judgment on the case.
In other instances, however, there should be little desire for Australia to launch headfirst into an infrastructure competition.
By the middle of last year Beijing had already spent an estimated A$400 billion on belt and road projects. Australia’s A$2 billion in the Pacific pales in comparison. Of course, Canberra does not have to compete alone, and leveraging partnerships with countries such as Japan may help – in Southeast Asia, Japan has pending infrastructure projects worth more than China does.
But for Australia, there are alternative areas in which it can compete. Take education – some 9,300 students from across the region have in the last decade studied under the Australia Awards, a system of scholarships and fellowships. China is playing an increasingly prominent role in the global market for education, with more foreign students flowing in and Chinese students heading out. Expanding educational opportunities for Australia’s neighbours builds on one of Canberra’s comparative advantages, and is a competition with China that Australia is far more likely to win.
Similarly, in the workforce and cultural exchange, the expansion of the Pacific Labour Scheme, which allows people from Pacific island countries to work in low- and semi-skilled jobs in rural and regional Australia for up to three years, is another useful tool.
These alternatives to Australian-financed infrastructure projects may bring the country far more influence in the Pacific while at the same time making the region more resilient and self-sufficient.
Jane Golley is director of the Australian Centre on China in the World. James Laurenceson is acting director of the Australia-China Relations Institute. This is an edited version of an essay published by the Asia Society Australia under its Disruptive Asia series: China Special Edition