Last week Chinese President Xi Jinping sat down with a host of Pacific Island leaders just before the APEC summit in Papua New Guinea.
The much-anticipated gathering was held against the backdrop of growing competition between China and the West in the Pacific, with lurid rumours swirling that Beijing would unveil huge new infrastructure projects to boost its influence.
Despite the hype, prying eyes weren’t welcome.
Local and international journalists were kicked out, and only Chinese state media were allowed in.
Chinese officials announced after that they had signed “new agreements” with several Pacific Island nations, but they refused to answer even basic questions about what was in them.
Now the details of those deals are starting to seep out.
The ABC and the Vanuatu Daily Post newspaper have obtained seven agreements signed by China and the nation of Vanuatu just before the APEC meeting.
They reveal just how much time, money and energy China is throwing into the Pacific as it continues to assert its presence in the region.
You can see the benefits that this intensifying competition brings Pacific Island nations like Vanuatu.
But you can also see the geopolitical tripwires and risks these countries face as they navigate increasingly turbulent waters and try to keep a firm grip on their independence
‘It’s clearly a buyer’s market for Pacific nations right now’
Chinese largesse continues to flow to Vanuatu.
The documents show that China has agreed to hand Vanuatu $60 million for a mysterious new initiative called the Container Inspection Equipment Project.
This is a big grant — about one third of annual aid to Vanuatu — and there’s no public information about what the Container Inspection Equipment Project is, or what the money will be used for.
The documents also reveal that Beijing will lend Vanuatu about $70 million to upgrade roads on the islands of Tanna and Malekula.
A former Australian minister once fumed about China funding “roads to nowhere” throughout the Pacific, but locals seem to like the highways Beijing has already built, and want more of the same.
Still, there are plenty of questions over the terms of the concessional loan.
Vanuatu won’t have to repay it for seven years, and when it does, interest will be charged at 2 per cent a year.
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“The USA, Japan and Australia are committed to funding major infrastructure projects in the Pacific in the near future. Why couldn’t we [Vanuatu] wait even six months?” he said.
“At the risk of sounding cynical, it’s clearly a buyer’s market for Pacific nations right now. We might well have saved millions of dollars — or even tens of millions — if we had shopped around.”
Finally, China also agreed to “forgive” one of Vanuatu’s “debts” — in this case a 2004 loan worth almost $4 million.
Australia’s Pacific pivot
The only problem is that Vanuatu believed that the money — used to build new offices for the Melanesian Spearhead Group — was actually a gift from China.
“We [the Daily Post] checked with finance, and [they] said they’d only learned about the matter three weeks ago,” Mr McGarry told the ABC.
“They insist that they have no loan agreements, contracts or related documents pertaining to this ‘debt’.
“Finance sources told me they’re worried that this might affect Vanuatu’s reputation internationally if it were said to be delinquent, when in fact it’s been paying down debts ahead of schedule.”
More broadly, it’s also surprising that Vanuatu is taking on debt once again — in recent years it’s taken a cautious approach to its finances, and hasn’t taken out a new loan since 2016.
MoU statement could mean anything or nothing
The United States has been warning that China’s Belt and Road Initiative (BRI) is a vehicle for predatory lending from Beijing, with US Vice-President Mike Pence labelling it a “constricting belt” and a “one-way road”.
But Pacific nations aren’t convinced, and on November 9 Vanuatu joined the ranks of Fiji, Samoa, PNG and Tonga, and signed a “Memorandum of Understanding” with China on the flagship policy.
Like most Belt and Road MoUs the language in this four-page document is eye-wateringly dull.
The two parties have agreed to “jointly promote” the BRI and “explore mutually beneficial models to support the implementation of major programs such as infrastructure”.
“In accordance with the concept of cooperation, development, and win-win progress under the initiative of jointly building the Belt and Road, the two participants will make full use of existing bilateral cooperation mechanisms,” it reads.
That could mean anything or nothing.
Lowy Institute Pacific Aid Map
Defenders of the BRI will say it’s an anodyne document that doesn’t commit Vanuatu to doing anything that it doesn’t assess to be in its national interest.
But critics will argue the language is so broad that it could be used as a mechanism to expand China’s influence and activities in Vanuatu.
For example, the MoU says the two countries will “conduct cooperation and exchanges of infrastructure connectivity in areas of mutual interest such as roads, bridges, civil aviation, ports and energy, telecommunication”.
Does that mean China could be granted access to Vanuatu’s critical infrastructure or telecommunication networks in the future?
China hawks will call it a reasonable suspicion. Others will call it a conspiracy theory.
Either way, it’s worth noting that Victoria’s contentious BRI agreement with China included a very clear statement at the end — “this MoU does not create legal relations or constitute a legally binding contractual agreement”.
That paragraph doesn’t appear in the document signed by Vanuatu.
More evidence Beijing is engaged in full-court press
The final three documents are not page-turners, but they’re still worth reading closely.
They show just how China — like Australia — is exercising soft power through the painstaking work of building personal connections between elites.
Like many nations which have signed up to the BRI, Vanuatu will get a Sister City style relationship with a Chinese province — in this case the economic powerhouse of Guangdong.
‘Wisening up’ on China
Guangdong will encourage its businesses to invest in Vanuatu, and provide “mobile medical treatments” to the Pacific nation.
There’s also an agreement for “cooperation on human resource development” with China promising to host Vanuatu officials for “training programs, workshops and seminars”.
Finally there’s an MoU signed to set up a China-Vanuatu Joint Economic and Trade Commission.
It will be chaired by senior officials from both countries and meet every two years.
None of this is earth shattering. But it’s more evidence Beijing is engaged in a full-court press on the Pacific and taking every opportunity to expand and reinforce its networks in the country.
It’s no wonder Australia has promised to lift its game.