Australia to spend £1 billion to counter China influence in Pacific

Australian prime minister Scott Morrison pledged to spend £1.1 billion in the Pacific to shore up ties with small island states threatened by China’s growing influence in the region.

In efforts to secure Australia’s interests in “our patch”, Mr Morrison said he would boost military engagement with Pacific forces to put the region "front and centre" of Australia’s foreign affairs.

The effort will also see a push of soft power infrastructure programme to fund local transport, water and other projects, while Australia will create diplomatic postings in tiny Pacific nations such as Palau and Niue, which, respectively, have populations of about 21,000 and 1,600.

“It’s time to open, I believe, a new chapter in relations with our Pacific family,” Mr Morrison said in a speech at a military base in Queensland.

“Australia has an abiding interest in the Southwest Pacific that is secure strategically, stable economically and sovereign politically.”

The announcement follows concerns about China’s expanding ties and loans in the region, which have raised fears that small nations could fall into a debt trap and become subservient political pawns to Beijing.

Chinese loans in the Pacific region have increased in recent years, but remain much lower than Australian aid in that part of the world.

China shows no signs of slowing its overseas investments and aid as Beijing expands its global influence. On Thursday, El Salvador said China had pledged $150 million (£115 million) in aid to fund social and technological projects.

Asked whether he was concerned about China’s expansion in the Pacific region, Mr Morrison said only: “We are getting on with business with China. That’s what we’re doing.”

Mr Morrison said Australia wanted to work with other significant players in the region, including New Zealand, the United States, Japan, China, France and Britain. On Sunday, the French territory of New Caledonia voted against independence in a referendum.

The Pacific announcement came as Australia’s foreign minister Marise Payne visited China on a two-day trip, with both sides describing a thaw in relations.

For more than a year, China has frozen Australian ministerial visits – an apparent response to Canberra’s introduction of measures to curb foreign interference in domestic affairs. The laws were seen as squarely aimed at China. Australia has also been vocal in criticising China’s human rights record amidst growing evidence of detention camps in a western province home to many Muslim minorities.

Key US military bases in the Pacific

But the meeting between Ms Payne and her Chinese counterpart Wang Yi appeared to go smoothly.

“In a relationship as dynamic as ours … there will be from time to time differences,” Ms Payne said after the meeting.

Mr Wang said: "While China and Australia do not always agree it is vitally important that we always match our words with actions. We are confident Australia will translate its positive will of growing relations with China into actual actions.”

The two foreign ministers met just hours after Australia revealed it was likely to block a £7.2 billion takeover by a Chinese firm of Australia’s largest gas pipeline business. Canberra said it was concerned about undue concentration of foreign ownership by a single entity.

Analysts in Australia have suggested the thaw was prompted by Beijing’s concern about becoming isolated in the face of Donald Trump’s tariffs and  threats and other recent diplomatic skirmishes.

Richard McGregor, from the Lowy Institute, said China “can’t afford to be fighting on too many fronts".

"Beijing is facing not just a showdown with the US, but push-back on a range of fronts and on lots of issues around the world – in Germany, on the acquisition of technology, and in Malaysia on fears of debt-trap diplomacy, to name just two,” he told The Australian Financial Review.

Mr Morrison’s announcement came as his party secured the support of an independent MP to regain it’s majority after a crushing by-election last month. General elections are due next year.

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