China slashes its aid to the Pacific

Tuesday 5 October 2021 | Written by RNZ | Published in Pacific Islands, Regional

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China slashes its aid to the Pacific
China flag Photo: AFP

China has dramatically scaled back its aid to the Pacific in the past two years.

An assessment by Australian think tank, the Lowy Institute, showed while various Western nations were raising concerns about Chinese influence in the Pacific, Beijing was cutting back its involvement.

The Institute said Chinese aid, in the form of grants and low interest loans, peaked in 2016, at US$287 million.

Lowy's Pacific programme director, Jonathan Pryke said by 2019 that aid was down to US$169 million - its lowest level in seven years.

"Total aid in 2019 was about US$2.44 billion, so they [China] are by no means a bit player, but they were certainly not the dominant force that many people would believe, and yes the story is very much one of decline," he said.

The institute also found that a greater proportion of that reduced aid is in the form of concessional loans rather than grants.

Within this period two Pacific nations, Kiribati and Solomon Islands transferred their allegiance from Taiwan to China.

In addition, both New Zealand and Australia launched Pacific re-set campaigns with the apparent aim of targeting the perceived rise in Chinese influence.

There is no immediate explanation for the cutback.

Pryke said it's not clear why, but maybe a sign the aid had served its purpose, because China still retains its influence.

He said low cost lending, in particular, had been used as a vehicle to get Chinese business enterprises into the Pacific.

"And these organisations have put down deep roots in the Pacific now and are no longer reliant on Chinese aid to engage in commercial activity, prosecute China's interests. You know, no one in the Pacific will tell that in 2020 or 2021 that China's presence felt less impactful or less significant, but it is just that aid was less of a driver for it than it has been in the past," he said.