China’s Pacific investments: Australia’s attacks ring hollow

On Wednesday, International Development Minister Concetta Fierravanti-Wells launched an attack on China, accusing it of lending funds to Pacific nations on unfavourable terms and constructing “useless buildings” and “roads to nowhere” in the region.

It is right to closely scrutinise the potential impact of China’s, or any other nation’s, aid investments in the Pacific, but Australia’s criticisms ring hollow. In recent years, China has been ramping up overseas aid and concessional loans to developing nations. This reflects an ambitious foreign policy agenda of extending geopolitical influence — leveraging power shifts in global and regional politics.

Meanwhile, Australia’s geopolitical influence is on a downward trajectory as a result of shortsighted cuts of more than $11 billion to our overseas aid program, leaving it at the lowest levels on record measured against our gross national income. This has come at a cost to Australia’s reputation, influence, and capacity to credibly shape development outcomes in our region and beyond.

Although Australia remains the largest bilateral donor to the Pacific, the overall contraction of its aid program has weakened its legitimacy in commenting on the nature of loans and overseas aid investments made by China to our nearest neighbours.

There is certainly a case for close scrutiny of China’s overseas aid and the terms on which it provides loans to developing nations, but we must acknowledge the important role it has to play in fuelling progress towards the achievement of the sustainable development goals.

Achieving the SDGs will require a significant increase in funding from traditional and non-traditional donors. Given the enormous size of its economy, China has the capacity to help lift many millions out of poverty with the right investments. However, questions are rightly being asked about China’s objectives and approach in the Pacific.

Reportedly, few of the country’s aid investments prioritise human development or are likely to be effective in promoting sustainable development. There appears to be a lack of informed consultations with community stakeholders in the design and planning of aid investments.

Additionally, concerns have been raised about the unfavourable terms on which Chinese aid and loans are granted, including reports of conditions requiring that Chinese firms be engaged to deliver infrastructure projects — thereby excluding locals from employment opportunities that would otherwise contribute to economic growth.

And, crucially, there is a need for increased transparency of China’s aid investments, including reporting through the UN mechanisms traditionally used by OECD donors.

The Pacific faces serious development challenges, including some of the highest malnutrition rates in the world and extremely low levels of literacy. It is therefore critical for donors, including China, to prioritise investments in human development as a basis for sustainable economic development in the Pacific. This requires targeted investments in health, nutrition and education. A failure to make these investments will undermine the potential effectiveness of other investments designed to promote economic growth.

Australia can and should be scrutinising aid investments in the Pacific by China or any other nation, and influencing these outcomes. But if we are to have any credibility in doing so, we should act to restore our overseas aid budget and commit to further aid investments that will promote sustainable development.

Majella Hurney is head of policy and advocacy at Save the Children Australia.