CHINA has lost its temper with an Australian senator, accusing her of attacking it with ‘unwarranted invective’ and ‘blatant slander’.
On Friday, Liberal senator Concetta Fierravanti-Wells issued a grim warning in The Australian newspaper, saying China was using ‘debt-trap diplomacy’ to build its influence among the Pacific Island nations neighbouring Australia.
She claimed China was tempting poor countries with loans they couldn’t afford to repay — a strategy far less sinister than military expansion, but no less effective.
“Today, the sovereign threat is less confrontational but the debt-trap diplomacy just as insidious,” Ms Fierravanti-Wells wrote.
“Pacific countries need to use limited government reserves to meet their loan commitments to avoid defaulting. Domestic spending and important social programs are jeopardised.
“Consequently, the internal stability of these countries may be affected and greater demand is placed on overseas development assistance from countries such as Australia.
“In short, Australian taxpayers effectively will be subsidising repayment of loans to China.”
Ms Fierravanti-Wells has previously accused China of funding ‘useless buildings’ and ‘roads to nowhere’ in the island nations.
China has indeed showered countries such as Vanuatu, Tonga and the Solomon Islands with loans in recent years. Between 2006 and 2016, it invested $2.3 billion in the region, according to analysis from The Lowy Institute.
But in a scathing response to Ms Fierravanti-Wells, China rejected any implication that its motives were not pure.
“The ridiculous and absurd allegation, filled with Cold War mentality, reflected the senator’s prejudice, arrogance and ignorance,” the Chinese Embassy said.
“The senator this time, in repeating the cliche of the so-called ‘debt trap’, attempted to prove her baseless accusations by quoting Tongan Prime Minister Akilisi Pohiva and citing the case of Hambantota Port in Sri Lanka.
“Prime Minister Pohiva has already clarified his earlier remarks, making it clear that ‘China has never claimed to collect the debts or take the assets from Tonga in any way, and the governments of Tonga and China have maintained contacts regarding the repayment of the concessional loans.’
“Ranil Wickremesinghe, Prime Minister of Sri Lanka, has also publicly stated that ‘Sri Lanka was not falling into a debt trap caused by high-interest Chinese loans’ nor ‘ceding control of strategically vital ports to Chinese control’.”
The embassy insisted China wished to help the Pacific nations “with no political strings attached” and said any attempt to stymie its efforts would be “doomed to failure”.
“One can never win respect by smearing others. Whether China’s assistance is productive or not, and whether it is a pie or a pitfall, the people of the Island Countries have the best say,” it said.
“Over the years, China has provided assistance to relevant Island Countries within its capacity and with no political strings attached, based on fully respecting the will of the Pacific Island Countries’ governments and people and taking into full account of their development needs.
“China has also actively carried out mutually beneficial economic co-operation with these countries. All this has effectively promoted the economic and social development of Island Countries.
“Co-operation between China and the Island Countries is transparent and open. No one could deny the positive outcomes delivered by such co-operation with their assumption or imagination. Any attempt to obstruct the development of relations between China and the Island Countries is doomed to failure.”
This isn’t the first time China and Australia have sparred over the Pacific Islands issue. Earlier this year, Beijing’s state-run media went so far as to label Australia an “arrogant overlord”.
The biggest fear among China’s Australian critics is that it will use its financial leverage for nefarious means.
“Such indebtedness gives China significant leverage over Pacific Island countries and may see China place pressure on Pacific nations to convert loans into equity in infrastructure,” The Lowy Institute warned.
“It’s not win-win for China and the recipient, but simply win for China, which not only gets access to local resources and new markets, and forward presence, but can coerce the recipient state to pay a ‘tribute’ to Beijing by ceding local assets when it can’t pay back its debts.”