China’s aid to Pacific declines as Australia cements position as biggest donor

Australian aid to Pacific island countries has dwarfed that of China, which played a limited role through the Covid pandemic.

The Australian Government worked with Pacific partners to keep the region Covid safe in 2021. Defence delivered 10,000 doses of the Australian-manufactured AstraZeneca vaccines to Fiji on a C-130J Hercules, along with Covid-19 medical supplies and personal protective equipment.

China has played a limited role in supporting Pacific Island countries through the Covid pandemic as its aid to the region continues to fall.

The latest edition of the Lowy Institute’s Pacific Aid Map ­cements Australia’s status as the region’s biggest aid donor by a wide margin, delivering $1.23bn in support to the region in 2020.

Total aid to the region spiked by 33 per cent that year – the latest for which there is complete data – to a record $5.28bn as donors rallied to support Pacific Island countries through the height of the pandemic.

But China provided just $244.5m in development finance to the region the same year – its lowest level since the data project began in 2008.

The Lowy Institute’s Alexandre Dayant said preliminary data suggested the trend had continued into 2021.

“Despite becoming a major new development partner in the Pacific, there has been surprisingly little visible response from China to the crisis in terms of the provision of new development financing,” Mr Dayant said.

However, the map shows aid remains a key diplomatic tool for Beijing, which has targeted its spending more closely on key countries such as Solomon ­Islands and Kiribati.

The countries were the latest to switch their diplomatic allegiance from Taiwan to China, and have proven more susceptible to Chinese influence.

“China has not given up on using development assistance to cement key relationships,” Mr Dayant said.

“In both countries, sizeable new financing from China has displaced existing support from Taiwan.”

Australian aid to Solomon Islands continued to dwarf that of China in 2020, with Australian support at $138m compared to China’s $20m.

But China was close to taking over Australia’s position as Kiribati’s top donor, contributing $30m to the tiny Pacific nation in 2020 compared to Australia’s $31m.

Compared to its rival Taiwan, China is a less generous donor on a per capita basis. Since 2008, Beijing invested $342 per capita in the 10 Pacific countries that have diplomatic relations with China, while Taipei has invested $2779 per capita in the four countries that recognise Taiwan.

Royal Australian Flight Lieutenant Lachlan Connell (right) passes an Australian Aid box to Private Bianca Jordan at Honiara International Airport, Solomon Islands, last December.

Australia has provided 40 per cent of all aid into the Pacific region since 2008, followed by New Zealand (8.6 per cent), Japan (8.5 per cent), and China (8.5 per cent).

The biggest regional aid recipients in 2020 were Papua New Guinea ($1.84bn), the Federated States of Micronesia ($402m), Vanuatu ($337m) and Fiji ($334m).

Mr Dayant said the pandemic had seen a shift towards greater direct budget support for Pacific Island countries, as their economies came under pressure due to the crisis.

Significant budget support would likely continue for some time given the weak outlook for recovery and budget repair in the region, he said.

“The record level of development finance reached in 2020 was primarily driven by a large increase in new loans to the Pacific, while total grant funding remained stagnant,” Mr Dayant said.

The share of official development assistance spent on infrastructure in the Pacific has more than doubled since 2008, rising to $1bn in 2020.

In last week’s budget, Australia lifted promised support for Pacific infrastructure by $500m over 10 years. Australia’s overall aid budget will rise by $1.4bn over the next four years, including $900m of additional support for the Pacific.