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Response to Hugh White’s “In Denial”

Response to Hugh White’s “In Denial”

Yellow journal cover of AFA7 CHINA DEPENDENCE with dark purple writing and red shipping containers

This correspondence is featured in Australian Foreign Affairs 7: China Dependence. To read the full issue subscribe or buy the issue.

Hugh White’s article “In Denial” (AFA6: Our Sphere of Influence) is both interesting and provocative.

It is interesting because White explains Australia’s strategic anxiety in relation to our immediate region, and why China might be interested in setting up a military base in the Pacific, better than anyone else I have read.

It is provocative because he calls for Australia to abandon its ambition of retaining an “exclusive sphere of influence”. He argues that “[t]he costs to us of trying to keep China out of the region might simply prove impossible to bear” and that nothing we are doing to counter China’s ambitions “seems to be working”. This is where his argument falters.

To explain why, we need to take a step back and look at China’s growing presence in the region in a bit more detail. Significant pockets of ethnic Chinese have resided in the Pacific for more than a century. For example, the second prime minister of Papua New Guinea, Julius Chan, still a member of parliament, is partly ethnic Chinese. On top of that, the China–Taiwan tension continues to play out in the region, as six of Taiwan’s remaining nineteen diplomatic allies are based there. This has led to some degree of engagement from both sides.

Since 2006, however, Chinese activity in the Pacific has dramatically increased. Whereas twenty years ago the most common foreign face that a Pacific islander would see in their nation would be from Australia, New Zealand or the United States, now it is most certainly Chinese. Chinese state-owned enterprises and infrastructure projects litter every major Beijing-supporting capital, and Chinese stores trade in every large town. The seeds of this engagement have been fuelled by Chinese aid.

Given this footprint on the ground, you would be forgiven for thinking that China has become the largest benefactor in the Pacific. Data from the Lowy Institute Pacific Aid Map, however, shows that between 2011 and 2016 China, the third-largest aid donor, invested only 8 per cent of all aid flows to the Pacific. Australia contributed 45 per cent, followed by New Zealand, with 9 per cent. China has a long way to go to overtake Australia.

On top of that, since 2016 Chinese aid to the Pacific has been in relative decline. This is largely thanks to nations in the region being less open to China’s costly infrastructure projects, backed by debt and implemented by Chinese companies.

For the most part, China’s engagement in the region has not been driven by some overarching grand strategy. It’s far messier than that. Much of the engagement has been driven by Chinese state-owned enterprises. These are mandated to export surplus labour and capital, while at the same time they seek to make a profit for themselves far from the prying eye of Beijing. Labourers who arrived with these projects, or who came through family links or fishing vessels, discovered high-cost economies and stayed. A trade store in Funafuti, Tuvalu, can make you a lot more money than one in Fujian, China. These groups quickly put down roots, without any significant diplomatic support. To give China some credit, it has also charmed elites in the Pacific with the red-carpet treatment in Beijing – a practice Australia is now emulating.

While China’s influence in the region has been growing from the bottom up, it has been developing a strategy in recent years to take advantage of its newfound leverage. Western capitals have become convinced that China is now eager to set up a military base somewhere in the Pacific, for reasons White so eloquently lays out.

I have yet to see, however, anything that shows me that China’s ambition in the region goes any further than strategic opportunism. From China’s perspective, the Pacific represents a relatively low-cost gamble for a potentially large win. But how much is China willing to actually stump up to disrupt the status quo in the Pacific?

Prime Minister Scott Morrison’s “Pacific step-up” shows Australia’s resolve. Building on an already solid base – Australia’s investment has never been wanting, though our attention often has – Morrison is devoting more time and money to the region. The step-up is not about establishing an “exclusive sphere of influence” (something we have never had in the Pacific), but it is about retaining Australia’s position as the partner of choice, and responding to any strategic ambition of China’s that threatens our national interest.

So far, while climate change is preventing Australia from forming strong partnerships with some, the step-up is succeeding. Morrison’s personal charm offensive deserves credit for this – five Pacific visits in a year is more than most prime ministers would make in their entire tenure.

But it is succeeding in large part thanks to the Pacific islands themselves. Leaders of these nations have expressed time and again that they have no interest in the region being further militarised – by Australia or by China. They have been alert to the challenges of China’s engagement longer than Australia has. Now that Australia has woken up, our renewed attention, aligned with the interests of Pacific leaders, shows China that they will have to be more than opportunistic in their engagement in the Pacific.

The threat of China setting up a military base in the Pacific is serious. But it is one that, thanks to Australian vigilance and an alignment of interests with our Pacific friends, can and should be managed. Now is not the time for strategic fatalism.

Jonathan Pryke is director of the Pacific Islands Program at the Lowy Institute

Yellow journal cover of AFA7 CHINA DEPENDENCE with dark purple writing and red shipping containers

This is correspondence to Australian Foreign Affairs 6: Our Sphere of Influence. To read the full issue subscribe or buy the issue.

This correspondence is featured in Australian Foreign Affairs 7: China Dependence.