Cooperation with China creates opportunities, not traps

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Editor's note: Shen Shiwei is a research fellow at the Charhar Institute and former government relations and business consultant for Chinese enterprises' overseas investment. The article reflects the author's opinion, and not necessarily the views of CGTN.

China's so-called "debt-trap diplomacy" seems to have become a trending topic in western media where China is depicted as threatening western countries’ dominance in regions around the world, including the Pacific islands.

However, this view has clearly missed the fact that the Pacific island countries' debts are mainly owned by international financial institutions, such as the International Monetary Fund (IMF) and the World Bank, where western powers have played dominant roles, and by regional powers like Australia.

A glaring display of double standards

When loans are offered by western countries, they are seen by some as "debt pies", but when it comes to Chinese loans, they are labeled as a "debt trap". Isn't this a glaring display of double standards?

US Vice President Mike Pence (R) and New Zealand Prime Minister Jacinda Ardern speak at an electricity projects signing ceremony during the Asia-Pacific Economic Cooperation (APEC) meeting in Port Moresby, Papua New Guinea, November 18, 2018. /VCG Photo

Take what happened in the Pacific island countries for example.

Some western politicians and media like to talk about how the Tonga PM called to request China to write off Pacific islands debt. In fact, the Tongan government already issued a statement on August 17 to clarify the relevant report, and Prime Minister Pohiva himself also cleared up his previous remarks in an interview.

The Tongan PM's call for loans to be forgiven didn't win support. Samoan Prime Minister Tuilaepa Sailele Malielegaoi and other Pacific islands leaders argued that it would be embarrassing and jeopardize the country's chances for future borrowing.

Public data shows that the increase of Chinese loans to Tonga is mainly due to the Tongan government's need to rapidly reconstruct the capital's central business district (CBD) which was destroyed in the 2006 Nuku'alofa riots. The rate of Chinese concessional loans has not increased burdens on Tonga when compared with loans from international organizations.

Then, why has China become the victim of selective reporting and political bias even though China is not the main debt owner?

Debunking China's 'debt-trap diplomacy'

Chinese President Xi Jinping (left center) and Papua New Guinea's Governor General Bob Dadae stand before a meeting at Parliament House in Port Moresby, Papua New Guinea, November 16, 2018. /Reuters Photo

If China's finance is creating debt traps in the Pacific region, then what do we say about the top financer, Australia?

Recently, the Australian government established an infrastructure financing facility for the Pacific worth two billion Australian dollars (1.4 billion US dollars), which would issue long-term loans in telecommunications, energy, transport and water infrastructure in the region.

Another one billion Australian dollars (738 million US dollars) will also be injected into the Export Finance and Insurance Corp., Australia's export credit agency, which will be given more flexibility to support investment in the region in a way that would benefit Australia, said Australian Prime Minister Scott Morrison this November.

In comparison, China's financial presence lags far behind Australia. An IMF debt distress rating for 2008-2017 shows that China holds around 12 percent of the total debt owed by Pacific nations, or 1.3 billion US dollars out of 11.2 billion. Some debt-burdened countries like Tonga, Samoa, and Vanuatu, have borrowed more from multilateral development banks than from China.

Countries, such as the Republic of the Marshall Islands, use US dollar as legal currency and heavily depend on US protection and cash aid since the US military has a strong presence there. Given that, who is more likely to harm the sovereignty of these island countries?

China seeks cooperation instead of dominance

Unlike Australia and New Zealand who always regard the island countries in the South Pacific region as their backyard and within their spheres of influence, China's cooperation with Pacific island countries centers around economic exchanges.

A Papua New Guinean man wearing a shirt with Chinese and Papua New Guinean flags takes a cellphone photo during a ceremony to mark the opening of Independence Boulevard in Port Moresby, Papua New Guinea, November 16, 2018. /Reuters

China doesn't seek military control or political dominance in this region. Since 2006, China has increased its support to the Pacific island countries in infrastructure construction. Based on the recipients' needs and local conditions, China's financing support focuses on capacity building.

In recent years, China and these countries have strengthened cooperation in network building and improved the ability to tackle climate change and protect the environment including the oceans. China shares the common goal of building a stable, safe and prosperous Pacific with them.

Moreover, China provides a huge market for them. Chinese consumers could easily find products like Fiji mineral water, Vanuatu tuna and much more at a Chinese market.

China is also their major tourist source. Beautiful scenery has attracted an increasing number of Chinese tourists who travel there on holiday or hold weddings and honeymoon there. Their economic ties with China will benefit the local economy greatly.

To maintain debt suitability in the recipient nation is a common goal shared by China and many other countries. As China's diplomatic policy states, China sees all countries as equal regardless of their sizes, and based on this principle, will support island countries in developing their economy and improving their ability to pursue independent and sustainable development.

(Cover: Chinese President Xi Jinping arrives for a welcome ceremony at Parliament House in Port Moresby, Papua New Guinea, November 16, 2018. /Reuters Photo)

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