Jonathan Pryke

China’s Growing Presence in the South Pacific*
Jonathan Pryke**

Abstract
Over the last two decades China has been steadily building its influence in the South Pacific.
The pace and scale of this engagement has created significant anxiety in the Pacific as wellas Western capitals about Chinaʼs potential ambitions in the Pacific. In this address Jonathan
Pryke details Chinaʼs presence in the region, identifies what potential risks this newfoundinfluence poses, and discusses how Western nations are pushing back.

It is great to be back in DC. As a Pacific analyst, we donʼt have the luxury of leaving ourhemisphere too often, so forgive me if thereʼs any jet-lag stumbles in my talk, but it is adelight to be back here in Washington nonetheless.
Now, when we talk about the Pacific, it is good to start by defining what is the South
Pacific. So, the South Pacific―I wouldnʼt expect too many people in the room to spend too muchtime thinking about the South Pacific region, but when you do, you often think of it as a pretty
homogenous place filled with smiling indigenous communities, pristine beaches and endless palmtrees. While there is all that, the reality is that the Pacific is an exceptionally diverse part of theworld. Its fourteen sovereign nations of a cumulative population of 13 million people span across
15% of the worldʼs surface.
This is a very diverse part of the world. These countries span from the 11,000-person atoll
nation of Tuvalu, to the 10-million-person population of Papua New Guinea (PNG), that has alandmass the size of California. So thereʼs not actually much that is homogenous in the PacificIslands region, but one thing that is homogenous across all Pacific countries, except―with theexception perhaps of Fiji, is that of vulnerability.
For these smaller countries, vulnerability comes from small size and remoteness fromtraditional markets. This vulnerability is further exacerbated by rampant population growth on
already overcrowded islands and the multiplier effect of a warming climate that will affect theregion through rising sea levels and increasing frequencies of natural disasters such as droughts
and cyclones. In the larger countries like Papua New Guinea, vulnerability is driven by natural
resource dependence that is reinforcing endemic patronage systems and corruption. One way
or another these are all vulnerable countries, an important point to reinforce when we talk about
increasing geopolitical activity in the region.
I am going to focus largely on China because that is what the theme of this conference isabout. This century, the Chinese footprint in the Pacific has certainly been profoundly growing.
While there have been pockets of ethnic Chinese in the Pacific for more than a century―I wasThis article is based on a presentation made by the author at the symposium “Chinaʼs MaritimeAmbitions in the First Island Chain and Beyond” held by JIIA and Center for Strategic and InternationalStudies (CSIS) on November 18, 2019. For more information, please visit JIIA website at https://www.
jiia-jic.jp/en/events/2019/11/chinas-maritime-ambitions-in-the-first-island-chain-and-beyond.html.
** Jonathan Pryke is Director of the Lowy Instituteʼs Pacific Islands Program.

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China’s Growing Presence in the South Pacificjust two weeks ago in northern Papua New Guinea in a place called Wewak where I met Papua
New Guinea Chinese family that were now on their 5th generation of being in Papua New Guinea―but in the past 15 years these numbers have exploded.
Chinese state-owned enterprises have led the change here, in pursuit largely of economic
opportunity, and fueled by Chinese lending. These state-owned enterprises have put down
deep roots and are engaged in commercial activity across the board in almost ever y PacificIsland countr y. Chinese labor has arrived through these projects and also through fishingvessels, and has discovered paradoxically because of their size and remoteness that most PacificIsland countries are actually really high cost economies despite their relatively poor states ofdevelopment. In the Pacific, the Chinese have found economic opportunity.
If youʼre a Fujian laborer―that is if youʼre a laborer from Fujian province, coming over ona state-owned enterprise project, or on a fishing vessel, if you set up a trade store in the Pacificwhere there is very little to no competition, you can make a heck of a lot more money than you
could in Fujian province competing with a million other people setting up trade stores. So there
is a big economic pull to the region that we do not see with the West, where the private sector
largely sees the Pacific as devoid of economic opportunity because of its relative size and risk.
So, anyway, this Chinese labor has arrived, and remained in the region, setting up tradestores across the region, so we have this spread of Chinese engagement from the top end of town
through high-end infrastructure investment, but then all the way down into the provinces, down
to small towns.
To illustrate, this year my colleague at the Lowy Institute was observing the Solomon Islands
election this year in a place called Makira, which is an island of about 6,000–7,000 people. Evenon that little island in the Solomon Islands, there was a Chinese trade store. So, I do not want toundersell how profound the footprint of China is in the Pacific Islands region, but I also do notwant to be an alarmist. I think it gives China far too much credit to say that since 2006 there has
been some grand Machiavellian politburo and central committee endorsed Pacific strategy. It
has been far messier than that and largely been driven by economic opportunity, and the humandesires of greed from these state-owned enterprises and other actors. For most Pacific countries
it seems that China has almost by mistake built its trade, aid and investment ties to emerge as asignificant geopolitical power in the Pacific―which in many ways should not come as a surpriseas it mirrors Chinaʼs global ascent.
So, China has really stumbled into this influence it finds itself having in the Pacific Islands
region. But when you talk to strategic analysts about the motive or when this motive started,or when this strategy began, they will tell you this does not really matter. Strategic analysts
identify the risk through the lens of capability and the lens of intent, you add those two together.
Capability is the thing that takes time to build, and China has built capability really by accident in
the Pacific. Intent can change overnight.
And so in Western capitals, particularly in Canberra but also in DC, there is now absolutecertainty that there is strategic intent from Chinaʼs new-found leverage in the Pacific Islandsregion. A starting assertion here is that no one, not in the public domain at least, can tell you what
Chinaʼs ambitions are in the Pacific. There is no White Paper strategy for the Pacific devised byBeijing. China asserts that it has no ambitions in the region and operates as a benign power. TheWest is not so convinced.
But what are the risks of Chinaʼs engagement in the Pacific, both to the West and the PacificIsland countries themselves? I break down the risks of Chinese engagement in the Pacific intotwo categories.
The first risk is what I see as being low probability, but of high-impact risk, is that China willuse its leverage, be it debt, diplomacy, trade, to establish some form of permanent military facility
somewhere in the Pacific. I say high impact because this would profoundly change the way
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Australia would look at our own national security.
A permanent facility could enable China to more effectively disrupt our east coast traderoutes. As of today, we only have 21 days of fuel reserves in Australia, and that is not a picture thatlooks like it is going to dramatically change anytime soon. It would also create a wedge between
Australia and our strategic anchor in the United States. Such a facility would be quite expensive
for China to establish and operate―both economically and reputationally. But it may be deemedworth it if it would generate a profound shift in Australian defense settings―forcing us to rapidly
scale up our military and move away from an interoperability model with the United States andother allies.
The probability of this occurring in the region is low, however, largely because of theagency of the Pacific Island countries themselves. These are sovereign nations that wield theirsovereignty liberally, and defend it passionately.
The Pacific do not want further militarization in the region. They didnʼt have a good go of it in
the Second World War, or nuclear testing, and so there is a lot of pushback to this idea that theywould just surrender some piece of sovereignty in exchange for some form of debt forgiveness orother political compromise. So, it is a low probability risk, also because the West, led by Australia
have taken notice and have been more vigilant on this issue, and Iʼll come back to that in amoment.
The second risk, and as one that I see as being of much higher probability but lower impact, isthe way in which China is engaging in the Pacific, mostly through these state-owned enterprises,
and is undermining already weak and vulnerable institutions in the Pacific. Through elite captureand high-level corruption, largely again being driven by individual greed, these countries are
becoming even more vulnerable. We run the risk of complete state failure in a Pacific country iftrends continue.
So, the Lowy Institute has produced a paper on this if you want to know the whole history of
the Bougainville march towards independence that you can find on our website. There is a 30year history that has led us to this impending vote for independence. There is a bit of nuance inthe vote. So, itʼs based on longstanding conflict between Bougainville―the people of Bougainvilleand the people of Papua New Guinea about the royalty rights behind one of the largest gold
mines in the world that resides in Bougainville, and how these revenues were shared.
Now, some nuance around the referendum itself. There will be a referendum forindependence, and I can 99.9 percent guarantee it is going to be over whelmingly forindependence.
But this leads us into a process of negotiation with the PNG government about what theprocess towards independence will look like and then the final step is to be ratified by the PNG
Parliament. Now, PNG Parliament is ver y anxious that this will lead to a domino effect, or afurther unravelling of the tenuous state that is PNG. There are other islands that may feel likethey are more viable as a state apart from PNG than as a part of PNG.
So you might see this unravelling of the PNG state, which has 830 distinct cultural groups. It
is not a homogenous society. This is just the start of a new process. I do not think we are going tosee a new UN voting nation emerge in December. But we have heard that China is very interested
that there have been offers put on the table on the ground.
But we do not know if those offers are genuine. There are a lot of carpetbaggers in the Pacific
who read the tea leaves of Beijing and go out and try to act upon Beijingʼs behalf. But who arethey actually representing? There are a lot of business interlocutors who say they represent
someone. We do not actually know who they do represent. So, it is one more front to be anxious
about, but I think there is a lot more to play out in this Bougainville independence process before
we get to that point of China making proper inroads there.
I do not say this, sitting in my ivory tower in Sidney. This is the concern I hear from the more
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China’s Growing Presence in the South Pacificenlightened colleagues and members of parliament I engage with throughout the Pacific on myfrequent travels into the region.
This would be a problem for Australia. We want the Pacific region to be prosperous, and wewould be the first to step in to help pick up the pieces if a state were to collapse in the region.
But it would not profoundly change Australiaʼs macroeconomic security settings, so higher
probability, but lower impact.
I was at last yearʼs APEC leadersʼ summit in Port Moresby observing the whole thing, andXi really left a lasting impression on the region with his charm offensive. China, to be blunt,they are not great diplomats. They shoot themselves in the foot all the time. Xi did not do that.
He was so generous with his time. I could not believe at the PNG parliament when his Secret
Service actually let the parliament mob him and he shook hands with everyone and he just wascompletely, you know, there was no time pressure. He talked to every single parliamentarian. Itwas really quite amazing.
At the APEC leadersʼ dinner, that night, he sat there, yakking away with the Prime Ministerof Papua New Guinea after every other world leader had left. And this is not lost in the Pacific.
They recognize that the most valuable commodity of the leader of the Peopleʼs Republic of China(PRC) is time. And then it was also in such sharp contrast to Pence, who, because of Secret
Service demands, they even said that, right up until before arrival, he was not even going to stayovernight in this third-world country because of security concerns. And then he ended up staying
overnight. And, so, you know they just completely undermined any goodwill they could have built
from that.
And he walked around in a bubble, and the only time you could get a local person near him
was for a prearranged photo-op. It was quite sharp contrast, and this is something that China has
been doing well for quite a while. This respect for equivalence, no matter what the imbalanceof the size of the countries really does pay in spades, particularly when you have in contrast,
Australia, where we give more than half of aid to the Pacific region in any given year but wehave never had a bilateral guest or government visit from the Australian Prime Minister to thesecountries like Vanuatu or Fiji. Australian Prime Ministers just typically have not seen it worth
their time. I can guarantee you that all Pacific leaders that recognize China make the near annual
pilgrimage to Beijing and get the fully feted red-carpet treatment. We used to send middling level
diplomats to meet with Pacific leaders in airports―hardly a sign of respect.
But if this is a comparative advantage that China has built over ten years, the good news is, itis an easy one to counter. We can just start doing this as well, and Australia has shown that you
can catch up really quickly. The US has also stepped in here, I think, the Trump administration
has done a great job with the North Pacific, with the compact states. If you cannot go there,
bring them to you. All the leaders are very happy to come to DC to have facetime with President
Trump. I think that played really well with the North Pacific.
Fortunately no one here is standing idle. Western nations are scrambling to reengage. We
have had announcements of step-ups, resets, uplifts, pivots and pledges. This engagement has
been spearheaded by Australia, where our new Prime Minister Scott Morrison has made the stepup his flagship policy initiative. It is great for me personally and professionally―being a Pacificanalyst at the Lowy Institute has never looked better. So, thank you, China.
The step-up from Australia is by no means tokenistic. We are doing more of everything―aid,diplomacy, high-level political engagement. The most profound shift is within the structure ofour bureaucracy, giving more profile to the Pacific at our departments of foreign affairs, defense,intelligence, everywhere, but also in the attention that is being given to the region by our mostsenior politicians. In 2019, weʼve had more than 50 ministerial-level visits in either direction todate, and in his first year in office, Prime Minister Morrison has visited the Pacific more times
than any of his predecessors in the histor y of Australia have in their entire tenure as Prime
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Minister.
So, by no means tokenistic. Where does this take us? I think this renewed vigilance is helping
reduce the risks, but it needs to be consistent to be effective. Australiaʼs history and the USʼshistory in the Pacific go a long way further back than Chinaʼs, and so, there is a lot of memoriesof neglect. The institutional memory in the Pacific goes back a lot further than in Australia, andso consistency moving forward is what is going to be the key.
China is going to have to work harder―and in different ways―if it wants to continue to buildinfluence. But with some recent diplomatic defections in Kiribati and Solomon Islands they havegot a bit more scope to play with in the Pacific. They are not backing down, and they are notbeing flat-footed in their engagement. So, geopolitics looks to have come home to roost in thePacific, and is here to stay. China is not going anywhere.
We do have the specific aid map too that the Lowy Institute has produced that tracks all aid
flows into the Pacific Islands region. The latest numbers we have for 2017 show that Australia
gave 45% of all aid to the region, in 2017, New Zealand gave 9%, China gave 8%, the US gave about
8% as well.
Total aid to the Pacific region is dominated by 6 donors―80% of it comes from Australia, NewZealand, China, the United States, Japan and the Asian Development Bank. So, China has nottaken over. But the point I try to make in my presentations these days is the China aid picture―
China aid has done its job. It has got certain enterprises into the region.
These certain enterprises have put down deep economic roots. They are now competingin commercial activity across the board. They are winning in more government contracts
and in other, just pure, commercial investment than they are relying on Exim Bank or ChinaDevelopment Bank. Exim Bank did its job, it got these businesses in the door and they can now
sur vive without the Chinese loans. So we really shouldn ʼt be talking about aid anymore, weshould be talking about what theyʼre doing in the commercial space.

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