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What Does Beijing Want from the Pacific Islands?

A ChinaFile Conversation

In late September, Pacific Island countries the Solomon Islands and Kiribati switched their diplomatic allegiances from Taiwan to China. That month, a Beijing-based company signed a secretive deal granting it exclusive development rights for the strategic island of Tulagi in the Solomon Islands. (The Solomon government later called the deal “unlawful.”) Increased economic and political alignment with China, often at the expense of partnerships with countries like Taiwan and the United States, is often highly alluring to many developing countries in the region.

What does Beijing want from the Pacific Islands? What do these nations offer China politically, in bodies such as the United Nations? And what comparative advantages and disadvantages might Beijing experience in pursuing these interests? —The Editors

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Beijing’s recent interest in the Pacific Islands primarily stems from its ongoing efforts to displace the United States as the regional hegemon. Due to their location, the Pacific Islands have high strategic value as links in the second island chain: They impact the U.S. military’s ability to project force and collect intelligence across the Indo Pacific. Control of this area—base access for the People’s Liberation Army Navy, and denial of such access to U.S. and allied forces—would also complicate the ability of the U.S. military to operate in the region unchallenged. And it would hurt the U.S.’s ability to transit to and intervene and resupply in a Taiwan Strait contingency should Beijing decide to launch military operations against the self-ruled island nation.

Besides the geostrategic considerations, Beijing’s growing interest in establishing formal diplomatic ties to the Pacific nations also relates to its efforts to isolate Taiwan diplomatically. The Chinese Communist Party poaches diplomatic allies as a means of waging psychological warfare against the Taiwanese people. This pressures Taipei to adopt policies that are more palatable to Beijing, such as adhering to the so-called 1992 Consensus, the “one China” framework, and dialogue on unification. While the effectiveness of this strategy is doubtful, four Pacific Islands continue to have official diplomatic ties with the Republic of China (Taiwan)—Tuvalu, Nauru, Palau, and the Marshall Islands—and Beijing could attempt to poach one or all of them.

Beijing knows that Taipei is unwilling and unable to compete with it on a dollar-for-dollar basis. It has exploited high-level corruption in the Pacific to secure access, often by promising infrastructure investment with none of the preconditions on transparency that usually come with Western loans. Additionally, by increasing its influence in the Pacific Islands and elsewhere, Beijing hopes to bring more countries into its ideological camp, thereby eroding support worldwide for the Western-led liberal-democratic model that has prevailed since the end of World War II.

Understandably cynical about the sudden interest expressed by the West following decades of neglect, developing and underdeveloped countries in the Pacific and elsewhere are open to an alternative type of development assistance. Whether Beijing’s money actually materializes remains to be seen. But the elite capture may weaken civil liberties and democratic institutions in these countries.

Finally, by bringing developing countries into its camp, Beijing hopes to increase its influence at the U.N. General Assembly, where some members have supported issues like Taiwan joining multilateral institutions. Beijing can also use its growing sway over U.N. members to refashion international regulations on human rights and other matters in a way better suited to its authoritarian model of development.

For the first time since the end of World War II, the international community is refocusing its attention on the geostrategic value of Oceania, the vast ocean region composed of Melanesia, Micronesia, Polynesia, and Australasia. The United States, Australia, Japan, New Zealand, France, and Taiwan are reinvigorating their efforts, in part in response to China’s growing interest in the region. Beijing’s activities over the last couple of months highlight a formidable two-pronged strategy of diplomatic and economic engagement that the U.S. and its allies and partners will have to vigorously compete against to maintain their preeminence in the Pacific.

In late September, the People’s Republic of China (P.R.C.) successfully persuaded the Solomon Islands and Kiribati to switch diplomatic recognition from Taiwan to the P.R.C., reducing Taiwan to a mere 15 diplomatic partners worldwide (including four in Oceania). Beijing clearly seeks to eliminate Taiwan’s diplomatic presence to undermine President Tsai Ing-wen and diminish Taiwan’s support in international fora. Luckily, as one of us has written, the odds of doing so are remote for the foreseeable future, especially in the Marshall Islands and Palau, who likely would not want to complicate their special agreements—known as Compacts of Free Association—with Washington by switching recognition from Taiwan to China. Regardless, our recent RAND research demonstrates that Beijing continues to be interested in increasing its influence in these Freely Associated States (FAS), along with another FAS country, Micronesia, that already recognizes Beijing.

In mid-October, China sent Vice Premier Hu Chunhua—an exceptionally senior-level Chinese leader—to attend the third China-Pacific Island Countries Economic Development Cooperation Forum held in Samoa. Following the event, Beijing touted the Belt and Road Initiative’s (BRI) role in assisting Pacific Island states. Yet it is not only Beijing’s trade and infrastructure spending via BRI and efforts to win over Taiwan’s remaining official partners that worries the U.S. and its friends. Rather, it is how Beijing could parlay its political and economic influence into the security domain. Concrete examples already exist, such as in Vanuatu and Fiji, where Australia was concerned about reports of Beijing’s interest in building military bases. Recent news that Beijing attempted to lease Tulagi in the Solomon Islands for 75 years also reflects how a diplomatic shift from Taiwan to China can involve security concerns. Excessive Chinese debt throughout the Pacific is another potential problem. Tonga and others are good examples.

And despite its own status as a major polluter, China underscored the importance of cooperation to combat rising sea levels due to climate change. Beijing probably sees an opportunity to exploit the Trump administration’s withdrawal from the Paris Agreement—a move that diminished Washington’s ability to compete with Beijing on a critical issue that threatens the survival of some Pacific Island states.

Going forward, it could be vital for the U.S. and its allies and partners to not only coordinate their respective strategies appropriately, but also to better understand and address the interests of Pacific Island nations themselves. Otherwise, Pacific Island states could view heightened interest simply to counter China as disingenuous and ephemeral.

We don’t know whether the flurry of Chinese investment and political contact in the Pacific is state-directed, state-sanctioned, or the result of private business interests working to please the Party by taking up its call to seek opportunities overseas. The reality is likely a messy combination of all three.

We do know that Beijing seeks to mitigate economic challenges in China through overseas investment and new markets abroad for Chinese goods and technology. The Pacific is also an important supplier of protein and resources for China; the legitimacy of the Party is deeply connected to its ability to continue to deliver economic benefits and food security.

The influx of Chinese deals and loans over the past decade, massive by Pacific standards and often facilitated through elite capture and corruption, provides Beijing regional leverage. Recent Lowy Institute research finds that while China has not been the primary cause of rising debt risks in the Pacific, it will need to restructure its approach to avoid the “debt trap” accusations of its critics.

The scale of these Pacific investments, and the expanded influence that comes with them among Pacific elites, has implications for Beijing’s foreign and defense policy goals. Beijing is poaching the remaining diplomatic partners of Taiwan in the Pacific to deepen Taiwan’s isolation. Beijing also regularly pressures the region’s developing countries to counter condemnation of China’s human rights policies in international institutions, and in promoting alternative norms in areas such as cyber governance. China is also considering military options to protect its growing interests in the region, which include investments, Chinese citizens abroad, and essential energy imports.

But China’s intent in the Pacific is only as important as the receptiveness of Pacific countries to that intent. Talking about the region through the lens of China’s ambitions ignores the agency of Pacific countries, and, in doing so, undermines objectives to counter those ambitions. Many of these countries understand the risks of Chinese debt: Only Papua New Guinea and Vanuatu have taken new Chinese loans since 2016. And despite being heavily indebted to China, Tonga renegotiated its loans when it signed a Belt and Road Initiative MoU.

Pacific countries do not want to be pawns on a chessboard in yet another great power competition—they remember being on the frontlines in World War II. But this time, Pacific leaders have the agency and autonomy to use China’s interest to secure better deals for their people. Dame Meg Taylor, Secretary General of the Pacific Islands Forum, has said that China’s actions have offered better financing and development opportunities for the region, in part because of the increased competition that has resulted. Regardless of China’s motives, China has fueled renewed attention from countries like Australia and the United States, something the Pacific has long called for.

Taiwanese President Tsai Ing-wen seems justified in labeling the Solomon Islands’ September shift of diplomatic allegiances to Beijing “dollar diplomacy.” Obtained after China reportedly pledged U.S.$500 million in aid, the shift is one of the clearest examples of Beijing’s unrivaled capacity for geoeconomic policy success. Both the Solomon Islands’ and (days later) Kiribati’s abandonment of Taipei were accompanied by their governments joining the Belt and Road Initiative, China’s preeminent vehicle for blurring the lines between economic and strategic international engagement.

These events have caused Washington and its allies and partners to grow increasingly concerned over Beijing’s other intentions in the Pacific. The biggest worry is that Beijing will establish a permanent People’s Liberation Army presence on one or more of the region’s islands. This would make sense for Beijing because of the Pacific’s proven and longstanding importance to regional security. It would also follow a precedent established with China’s first overseas military base, which it opened in 2016 in Djibouti.

It is, however, difficult to prove a connection between Beijing’s military ambitions and its economic outreach to the Pacific. Rumors of a military outpost in Vanuatu arose in April 2018 but were quickly rebuffed by both governments. Such a possibility was again entertained in the wake of the recent lease of the Solomon’s island of Tulagi to the China Sam Enterprise Group. But given that the Solomon’s government called the agreement “unlawful,” People’s Liberation Army utilization is doubtful.

But besides targeting the Pacific Island states which continue to recognize Taiwan—the Marshall Islands, Nauru, Palau, and Tuvalu—China has few legitimate motivations for increasing its economic outreach to the Pacific compared with other areas. One means of determining China’s motivations is isolating what the Pacific lacks that other significant Belt and Road regions possess. Other regions often have sizable domestic markets, or high levels of economic growth, or strategic trade locations. Pacific Island nations have none of those. And besides the atypically large Papua New Guinea, Pacific countries also lack significant exploitable energy resources, as well as access to the most critical transit routes for these and other key commodities. Resources like fisheries and seabed minerals that Pacific countries do abundantly possess may provide for a more commercially viable and perhaps even mutually beneficial basis for ongoing bilateral relations. But more likely, the legitimate economic rights of needy Pacific countries will eventually be sacrificed to serve China’s potentially belligerent maritime ambitions.

Two elements are typically missing from discussions about China’s rise in the Pacific, which contribute to misperceptions about China’s influence and motives there.

First, who represents the Pacific Islands? Much of the debate focuses on the island’s politicians, who are important because they shape China policy in their countries. Many are passionate about engaging with China largely because it favors a government-to-government approach, which gives incumbents more control of the economic resources from China that flow into their countries. However, the views of stakeholders from other sectors, like business, academia, media, civil society, and agriculture, are also important but remain inadequately explored.

For example, the majority of land in the Pacific is under customary title, a framework which preserves the pre-existing rights of indigenous peoples. A large proportion of Chinese activities in the Pacific are China-funded infrastructure projects on land under customary title. Land owners’ voices are missing from the debate, and they also often don’t understand China’s business practices.

Second, who represents China? It is not a monolith. China’s central and provincial (especially Guangdong) governments are the main players in making policies on the Pacific, and in implementing China’s diplomacy toward the region. State-owned Enterprises (SOEs) are the default contractors for Chinese aid projects, and are also increasingly active in commercial ventures such as the Lae Port development project in Papua New Guinea. Due to their high visibility in infrastructure, these companies, such as China Railway and China Civil Engineering Construction Corporation, receive substantial attention from Pacific Islanders. By contrast, Chinese small businesses like retail shops have limited links to Beijing. But, spread across the Pacific, they have more exposure to local communities.

Chinese tourists are a new presence in the Pacific, their numbers increasing from under 4,000 in 2008 to more than 127,000 in 2017 for nine Pacific countries—Palau, Fiji, Papua New Guinea, the Federated States of Micronesia, Samoa, Vanuatu, Tonga, Marshall Islands, and Tuvalu. While contributing to local economies, their pressure on local accommodation and the environment is drawing attention in destination countries such as Palau.

Moreover, quality differences may exist between the types of Chinese businesses operating in the Pacific. I conducted a small survey of 39 Chinese pacific studies scholars in 2019. Fifty percent of them rated Chinese SOEs in the Pacific an eight or above on a 10-point scale for performance, while only 12 percent did the same for private Chinese businesses.