Australia and New Zealand have been stepping up coordination with Japan and the United States over Pacific island states in the face of growing Chinese influence in a region that has traditionally been considered within the Oceanian powers’ sphere of influence.

In recent years, Beijing has increasingly invested in the South Pacific with loans for infrastructure projects under President Xi Jinping’s massive “Belt and Road” initiative, a move Canberra and Wellington perceive as a direct challenge to their largely unrivaled clout.

Citing Sri Lanka — which has effectively ceded a new port to China to service an unsustainable level of debt from the country — as an example, analysts have expressed concern that Beijing might be using loans leverage to gain strategic concessions in the resource-rich, strategically important region.

They fear Chinese investments in ports and roads in the South Pacific could eventually turn into military bases, just like those Beijing has built in disputed areas of the South China Sea despite Xi saying in 2015 that his country had “no intention to militarize” the strategic waterway.

“Australia would like to see the United States, Japan, France, the European Union, a wide range of countries — and China — supporting good development and governance in the South Pacific,” said Rory Medcalf, head of the National Security College at Australian National University.

“What we don’t want to see is a direct competition between Australia and China for influence in the South Pacific,” Medcalf said.

“We don’t want to see a repeat in the South Pacific of the kinds of risks that we saw in Sri Lanka or other parts of the Indian Ocean, where China’s infrastructure and development assistance had negative consequences,” he added.

China significantly boosted its aid to Pacific island states to the amount of $1.78 billion from 2006 to 2016. The tally fell far short of the $7.7 billion from Australia, but roughly matched the $1.89 billion from the U.S., and eclipsed the $1.29 billion from New Zealand and $1.18 billion from Japan, according to the Lowy Institute, an Australian think tank.

In a pushback against Beijing’s rising regional influence, Australian Prime Minister Scott Morrison, New Zealand Prime Minister Jacinda Ardern, Prime Minister Shinzo Abe and U.S. Vice President Mike Pence agreed Sunday with Papua New Guinea on a project to increase electricity access in the South Pacific nation to 70 percent of its population by 2030 from the current 13 percent.

The four leaders signed the deal, estimated to cost $1.7 billion, with Papua New Guinea Prime Minister Peter O’Neill on the sidelines of an Asia-Pacific Economic Cooperation (APEC) summit in Port Moresby, an event Xi also attended.

During his trip to Singapore, Australia and Papua New Guinea through Sunday, Abe had separate talks with Morrison and Ardern and agreed to strengthen tie-ups with Australia and New Zealand over South Pacific affairs as part of efforts to realize “a free and open Indo-Pacific,” a vision also shared by the United States.

Abe and Morrison pledged to step up engagement with Pacific states and underscored “fiscal soundness, including debt sustainability and transparency, as essential for sustainable development and sovereignty,” in a veiled criticism of China’s infrastructure investment practices.

Given high demand for infrastructure in the South Pacific and the broader Indo-Pacific, Australia, New Zealand, Japan and the United States, among other countries, would welcome Chinese investment if it were transparent and cost-effective while taking into account recipients’ ability to pay back loans for such funding.

But in many instances, Chinese investment is opaque, leaves recipients such as Tonga and Vanuatu saddled with heavy debt, and privileges resource extraction over benefit to local communities in what critics call “debt-trap diplomacy.”

“China has the right to invest in infrastructure projects and many countries are now a part of the ‘Belt and Road’ initiative,” said Satu Limaye, director of the East-West Center in Washington.

“But there is a concern about countries’ sovereignty and debt trap,” Limaye said.

The Asian Development Bank estimates the Pacific region needs $3.1 billion in infrastructure investment per year up to 2030.

In an apparent rebuke of the initiative, a trillion dollar infrastructure project critics say is intended to draw countries deeper into Beijing’s economic orbit, Pence said at an APEC business forum Saturday in Port Moresby, that the U.S. will not offer “a constricting belt or a one-way road.”

Pence — who attended the APEC summit in lieu of President Donald Trump — said the U.S. offers “a better option” for infrastructure investment, in reference to the doubling of American development financing in the Indo-Pacific to $60 billion and a joint project with Japan to invest $10 billion in energy infrastructure in the region.

But unlike Pence, Abe has been cautious about overly promoting a free and open Indo-Pacific concept as a rival to the initiative, a move apparently aimed at not provoking China at a time when Tokyo-Beijing relations show signs of improvement.

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