Terence Wesley-Smith

Center for Pacific IslandsStudies

University of Hawai`i atManoa

 

 

 

Paper prepared forpresentation at the seminar

“The Pacific Islands inTransition: Opportunities and Challenges"

Center for Pacific IslandCountries Studies

Guangdong University ofForeign Studies

17 June 2016

 

(draft of 6/03/16)

 

DRAFT ONLY NOT FORDISTRIBUTION OR CITATION WITHOUT PERMISSION

 

TheChina Alternative

Geopolitics,Islander Agency, and Changing Regional Order in Oceania[1]

 

More than a decadeago, Joshua Cooper Ramo argued that China's rise was already "reshapingthe international order by introducing a new physics of development andpower" (Ramo 2004, 2). Nobody doubts that China has had an impact on theinternational order. However, the debate about the nature of what Ramo labeled theBeijing Consensus--and whether it exists at all--has continued unabated eversince, with many commentators concluding that this "new physics" doesnot represent a coherent alternative to the Washington Consensus, a neo-liberalmodel of reform for the developing countries of the global south (see e.g.Williamson 2012; Huang 2010, 2011).[2] However, in arecent intervention Francis Fukuyama suggests that there may be something toRamo's new physics proposition after all. Fukuyama, whose own pronouncementsabout "the end of history" added impetus to the quest to discreditthe idea of the Beijing Consensus in the first place, now argues that Beijingseeks to export its development model to the many countries embraced by themassive One Belt, One Road initiative first proposed by President Xi Jinping in2013. According to Fukuyama, "a historic contest is underway overcompeting development models" (Fukuyama 2016, 1,2; 1992).

         

Partof the confusion derives from the impulse among western analysts like Fukuyamato frame the debate about China's rise in zero-sum, ideological terms--in otherwords to imagine a new version of the Cold War.[3] Perhaps more compelling,however, is an argument put forward by John Wagner Givens that the nature ofChina's impact on the international order is misunderstood precisely because itis non-ideological, and therefore unfamiliar: "The 'Beijing Consensus'does not represent an ideologically coherent alternative to dominantinternational norms, and China makes no serious effort to promote the Chinesemodel as a template for other countries to follow" (Givens 2011, 10). SimilarlyReza Hasmath argues that "the Beijing Consensus represents a philosophicalmovement towards an ultra-pragmatic view of conducting policy deliberations"(Hasmath 2014, 5-6).

          Inthis paper, I argue that China's rise has had a profound impact on the regionalorder in the Pacific Islands, and that China's increased profile in the regionis best explained with reference to pragmatic foreign policy decision-making inBeijing, and on the part of the Chinese corporations that increasinglyrepresent the face of China in Oceania.[4] I also argue thatPacific Island actors play a key role in determining the shape of this emergingorder, not because they seek to emulate the Chinese model of development, but becausethey wish to avoid pressure by their western partners to implement neo-liberalreforms. If China's "electric power of example" has relevance inOceania, it stems from a shared commitment to the value of self-determination, "onusing leverage to move big, hegemonic powers that may be tempted to tread onyour toes" (Ramo 2004, 12). China's presence provides just such leveragefor Pacific Island leaders, and opens up the possibility of another developmentpath for Oceania, "one where integration of global ideas is firstrigorously gut-checked against the demands of local suitability" (Ramo2004, 34). This is particularly relevant in a region long under the political,economic, and ideological influence of a handful of western powers, where largenumbers of people still enjoy the relative security of subsistence attachmentto the land, and where key neo-liberal ideas about growth, tradeliberalization, and privatization sometimes appear to promise little more than short-termdislocation without any assurance of long-term gain.

China in Oceania

Although China has a long history ofinteraction with Oceania, its involvement in the region has increaseddramatically in recent decades. Beijing has formal relationswith eight of the 14 independent or self-governing Pacific Island states, andis increasingly active as a trade partner, source of investment capital, andaid donor. The expanding relationship has been marked by three regional summitsover the last ten years. At the first China-PacificIsland Countries Economic Development and Cooperation Forum in Fiji in April2006, Chinese Premier Wen Jiabao pledged to make available preferential loansworth $376 million over three years, establish a fund to encourage Chinesecompanies to invest in the region, cancel or extend debts maturing in 2005, andremove tariffs on imports from the least developed island nations (Wen Jiabao2006).  At a follow-up meeting in Guangzhou in November 2013, Vice PremierWang Yang announced, among other things, an additional $1 billion inconcessional finance over four years, and a further $1 billion innon-concessional loans to be made available through China Development Bank(Yang 2013; Hayward-Jones and Brant 2013). Even if President Xi Jinping had“very little new to announce” to Pacific leaders during his visit to Fiji inNovember 2014, he did declare the relationship a "strategic partnership,"and the occasion itself carried considerable symbolic importance (Hayward-Jonesand Brant 2015).

          Accordingto Vice Premier Wang Yang, bilateral trade has grown at an annual rate of 27percent since 2006, and is now valued at more than $4.5 billion, making Chinathe second largest trade partner for the region as a whole and the largest forsome island countries (Yang 2013).  Led by China MetallurgicalCorporation’s $1.6 billion Ramu Nickel mining venture in Papua New Guinea,Chinese commercial investment in the region has also increased rapidly andconstruction contracts to Chinese firms now total in excess of $5billion.  Aid flows are more difficult to calculate, largely because ofdisagreement about which transfers to count. Although in 2013 Vice Premier Yangcited a cumulative $9.4 billion for “all kinds of assistance,” Australianresearcher Philippa Brant estimates that China has distributed a much moremodest total of $1.4 billion in development assistance to the island statessince 2006 (Yang 2013; Brant 2015). Nevertheless, the growth of Beijing’ssupport to the Pacific Islands is impressive, and China is now the thirdlargest aid donor to the region, rapidly catching up to the United States, but along way behind Australia. China is the largest aid partner for Fiji, and the second largest for Papua New Guinea, Cook Islands, Samoa,and Tonga.

          Contrary to some western commentary, Beijing’s activitiesin the Pacific Islands over the last decade provide little evidence of a grandstrategy driven by hegemonic aspirations. Indeed, Yongjin Zhang describes Chinaas a “regional power by default,” and even analyst Fergus Hanson, sometimesaccused of inflating the strategic significance of China’s rise, notes that“the Pacific is still peripheral to China, despite the hype” (Zhang 2010;Hanson 2011). Certainly, the notion of “hard balancing” US influence withmilitary power seems far-fetched, at least as it might implicate the PacificIslands region. The dramatic increase in the capabilities of thePeople’s Liberation Army Navy to operate in the Near Seas  (i.e. insidethe “first island chain”) has significant implications for the interests of theUS and its allies in the Asia-Pacific region, especially coupled with Beijing’snew assertiveness in pursuing its objectives in the South China Sea. It isclear that the long-standing ability of the US Navy to operate “whenever andwherever it wants” in the Western Pacific is now compromised, and this representsa potentially serious axis of friction between the two powers, as well asbetween China and regional neighbors like Japan, Vietnam, South Korea, and thePhilippines (Kaplan 2010, 34). But the implications of all of this for theisland countries of Oceania are less clear.

          Mostof the Pacific Island states do not lie close to the strategic sea lanes thatservice China’s burgeoning trade in raw materials and energy, or to marinechokepoints, such as the Straits of Malacca. Few would appear to offer strategicassets in the event of conflict with Taiwan, and those that might, like Guamand the Commonwealth of the Northern Marianas, are already firmly under USstrategic control and, in the case of Guam, heavily militarized. And none aredirectly implicated in the ongoing disputes associated with China’s contestedNear Seas periphery. Some commentators have suggested that China is activelyseeking port facilities in the region for its naval vessels, citingChinese-funded wharf and port development projects in Tonga, Papua New Guineaand elsewhere (see e.g. Yanada 2013). However, there is no evidence that theseprojects have been instigated for anything other than commercial purposes—andno apparent reason why China’s military planners focused on a narrowly definedset of strategic objectives in the East and South China Seas would prioritizeinitiatives in this part of the ocean any time soon.

          Noris there convincing evidence that overt competition with the western powersactive in Oceania is a priority for Beijing. China’s bilateral agreements donot require island states to modify or relinquish their ties with theirtraditional partners, and recent multilateral initiatives appear specificallydesigned not to replace the existing architecture of regional cooperation.Indeed, Beijing has been careful to work within established Pacific regionalorganizations, and to avoid any direct challenges to existing patterns ofleadership. Perhaps in part to assuage Australian fears that a rising China wouldderail ongoing attempts to enhance regional cooperation and encourage goodgovernance, Beijing pledged support for the Pacific Plan, a major blueprint forsuch efforts when it was first introduced in 2005.  In February 2008, italso signed the Kavieng Declaration on Aid Effectiveness, a local version ofthe Paris Declaration on Aid Effectiveness, which provides guidelines for donorcountries involved in Papua New Guinea (PNG 2008). Indeed, in recent yearsChina has embarked on collaborative projects with New Zealand in the CookIslands (on water supply infrastructure), and with Australia on malariaprevention efforts in Papua New Guinea.

          Thereare, of course, significant differences in approach between China and thelong-established western powers in the region. Jonathan Pryke identifies a boomin aid to the Pacific Islands region from OECD sources (i.e. excluding China)in recent decades, with Australia accounting for the lion’s share (65 percent)of the total increase since 2002 (Pryke 2013). This surge in aid reflects theemergence of a new conventional wisdom that makes connections between securitythreats and “failed” and “failing” states (Wesley-Smith 2008).  Consistentwith what expert Shahar Hameiri calls the “securitization” of regional aid programs,a large portion of Australia’s aid has gone to support an interventionist statebuilding effort in Solomon Islands, which experienced significant domesticconflict in the early years of the century, and to regional programs alsoheavily focused on good governance and state capacity-building initiatives(Hameiri 2008; Fry and Kabutaulaka 2008).  Multilateral efforts are anessential part of this threat-reduction strategy. In particular, theSecretariat of the Pacific Islands Forum, the premier regional organization,has been seen as a key conduit for promoting reform efforts, guided untilrecently by the Pacific Plan, a “master strategy” for regional integrationheavily influenced by neo-liberal ideas (Hameiri 2009; Pacific Plan Review2013).

          Themajor concern for Australia and other established powers active in the regionis that the rise of China will disrupt the extensive structures of regionalinfluence carefully constructed over many years to reflect a range of westerninterests, many of them security-related. At issue is, first of all, Beijing’slong-standing practice of providing support to its aid partners withoutpolitical conditions, except adherence to the “one China” policy.  Thisprovides Pacific leaders at least the possibility of avoiding some of theunwanted pressure associated with the aid-leveraged, Western-led reform agenda.If this is an ideological competition, then most of the agenda-setting is onthe western side of the equation. China's approach represents an ideology of omission,one based on studiously avoiding giving advice about domestic events anddevelopments.

          YongjinZhang argues convincingly that China’s recent engagement with Oceania is bestunderstood as “an integral part of its new diplomacy toward the global South"(Zhang 2010). Certainly its pattern of behavior in the Pacific shares many ofthe hallmarks of initiatives in other parts of the developing world, including apragmatic emphasis on trade and investment to support China's domestic economy (seeWesley-Smith 2013).  Two factors—the search for natural resources, andefforts to expand its political influence—help to define the specificcharacteristics of China’s relations with the island nations of the Pacific. Oceaniais important to China as a source of key natural resource inputs for itsburgeoning economy. China already imports significant quantities of timber andfish from Pacific Island countries, including Solomon Islands and Papua NewGuinea. It has a particular interest in Papua New Guinea’s vast energy andmineral resources. In March 2005, a major government-owned construction andoperating company, Chinese Metallurgical Construction (Group) Corporation,purchased a majority interest in the giant Ramu nickel and cobalt miningproject in Madang. The mine went into operation in 2012 and at full production in2016 is expected to yield 32,800 tons of nickel annually, much of which is exportedto support China’s stainless steel industry (Ramu Nickel 2014).  In 2009,the China Petroleum and Chemical Corporation (Sinopec) agreed to purchase twomillion tons of liquefied natural gas (LNG) annually from Papua New Guinea’smassive LNG project, making it the single largest customer for this ExxonMobil-led initiative (Seattle Times 2009). In 2015, through its acquisition ofPanAust, Guangdong Rising Asset Management acquired a majority stake in theFrieda River copper and gold project in Papua New Guinea, one of the largestknown undeveloped copper deposits in the world (Garrett 2015).[5] Chinesecompanies also have significant stakes in resource extraction in Fiji, and arelikely to be major actors in seabed mining when this important new industry getsunderway in the near future (Hannan and Firth 2015, 869-871).

          Although China’s quest for reliable access to naturalresources helps drive its relations with particular island states—most notablyPapua New Guinea (which, with Solomon Islands, became the largest supplier oftropical timber to China in 2011)—efforts to build political influence are region-wide.Indeed, political motives probably best explain the relatively large number ofChinese diplomats posted to the region, the “visit diplomacy” that brings manyisland leaders on goodwill trips to Beijing every year, as well as some of thehigh-profile aid projects producing sports complexes, government buildings, andother public facilities in island countries. Along with similar efforts in theCaribbean and smaller countries in Africa, China hopes to mute internationalcriticism of its record on human rights, advance its economic goals ininstitutions like the World Trade Organization, and block Japan’s aspirationsto play a more active international role. In recent times, China has beenencouraging its Pacific Islands allies to support Beijing's position on itscontested claims in the South China Sea, but so far only one, Vanuatu, hasobliged (Tahan 2016). Until 2008, China’s efforts to isolate Taiwan were of keyimportance in structuring its activities in the region.

The Taiwan Factor  

The competition between China and Taiwanfor influence in Oceania dates back to the 1970s, after US President RichardNixon’s visit to Beijing and loss of UN membership pushed Taiwan to seekdiplomatic recognition wherever it could. Although Taipei’s efforts yieldedsignificant results among the smaller states of Africa, Central America, theCaribbean and the Pacific, China’s growing political and economic influence hastaken its toll on Taiwan’s international recognition in recent years and since2003 Taiwan has lost nine of its 30 diplomatic partners. Taiwan remainsrelatively successful in Oceania where more than a quarter of its remainingallies are located. Today, six Pacific Island states (Kiribati, SolomonIslands, Palau, the Marshall Islands, Tuvalu and Nauru) recognize Taiwan, whilea further eight (Papua New Guinea, Samoa, Tonga, the Cook Islands, Fiji,Vanuatu, the Federated States of Micronesia, and Niue) have formal relationswith China (Atkinson 2010).

          Onceconsidered a key factor influencing China’s activities in the region, therivalry with Taiwan for recognition has been on hold since 2008 when PresidentMa Ying-jeou and his Kuomintang (KMT) party were returned to power in Taipei. Thesubsequent “diplomatic truce” between Beijing and Taipei marked the end of a controversialperiod of "check book diplomacy" in the region, and put a stop toattempts by Pacific Island states to play the competing powers off against eachother. China's increasing profile in the region during the eight-year tenure ofthe diplomatic truce demonstrates that competition with Taiwan is only one ofmany factors driving Beijing's interest in the region, and probably not themost important. However, this does not preclude the resumption of competitive activityif this arrangement comes to an end. With the resounding defeat of the KMT inthe 2016 national elections in Taiwan this has become a real possibility.

          Relationsbetween Taipei and Beijing have clearly taken a turn for the worse sincePresident Tsai Ing-Wen and the Democratic Progressive Party were swept to powerin Taiwan in January 2016. Although President Tsai has repeatedly promised notto seek formal independence, Beijing insists that she explicitly endorse the"1992 consensus," a loose understanding which in effect anticipatesan eventual reunification with China, and is exerting significant economic,diplomatic, and political pressure to that end. As part of that pressure, in March2016 Beijing established diplomatic ties with Gambia, a small African countrythat had severed its connections to Taiwan in 2013 (The Economist 2016; WallStreet Journal 2016; Rich 2015). Largely because much depends on newly-elected Tsai'sresponse to Beijing's pressure, it is too early to tell if this actually meansthe end of the diplomatic truce. If it does, then the implications in thePacific Islands region could be significant. Since 2008, the balance of powerin cross-strait relations has tilted significantly in favor of Beijing (Sutter2011), and some island states presently aligned with Taiwan might be tempted toswitch sides by the new economic opportunities associated with China's rise. Onthe other hand, as Simon Shen argues, winning over the remaining states thatrecognize Taipei may no longer be a priority for China. Instead, according toShen, the larger priority is "engaging all kinds of possible state andnon-state actors”--whether they establish formal ties with Beijing or not (Shen2015, 884).  

Corporate futures

A key factor often overlooked in the criticalanalysis of China’s rise in Oceania is that not every activity undertaken byChinese actors overseas is coordinated and controlled by state officials inBeijing. Especially since Beijing’s “going out” or "going global" strategywas launched in full form in the early years of the century, Chinese companiesof all sorts have significant incentives to invest abroad, and seem to beexercising an increasing degree of independence in doing so. Chinese companiesare now involved in a whole range of projects in the Pacific Islands, includinglarge-scale resource extraction, industrial initiatives such as tunaprocessing, infrastructure development, as well as smaller-scale retail andwholesale activities. Although the "going out” policy was predicated onclose collaboration between the state and Chinese corporations, and many ofthese companies are state-owned enterprises, often it is the corporationsrather than the state that takes the lead in overseas commercial ventures. Researchby Philippa Brant analyzing Chinese-led resource development projects in Fijiand Papua New Guinea finds that it is common for the companies to negotiateaccess with local actors before “bringing the state with them” to providegrants, and interest-free or concessionary loans and move the project forward(Brant 2014).  Increasingly the logic associated with the expandingChinese presence in the region has more to do with commercial factors thanforeign policy directives emanating from Beijing. This also suggests that theability of state officials to control disruptive commercial activity may belimited—even when that activity runs counter to China’s own diplomatic or softpower goals (Brant 2013).

          China'sinterest in gaining secure access to natural resources overseas to fuelcontinued growth and maintain domestic stability remains the central concern ofthe going out policy. But the policy has gained increased relevance in recentyears as a way of employing excess industrial capacity built up during decadesof massive domestic investment and growth, and to make good use of China's substantialforeign exchange reserves (Hannan and Firth 2015, 865-866). This provides someuseful insights regarding the way China conducts business in the developing world,including Oceania, usually insisting that infrastructure and other projectsemploy Chinese corporations, Chinese-sourced materials, and even Chinese labor.Although sometimes causing resentment in Pacific Island countries, this iseffectively China's side of the "win-win" relationships thatofficials have repeatedly promised since Premier WenJiabao launched a new era of regional engagement in 2006. The increasinglycommercial character of China's relations with Oceania, will likely gainfurther impetus from a major new initiative of the Beijing government known asOne Belt, One Road (OBOR).

Oceania and the New Maritime Silk Road

The accession of President Xi Jinping topower in 2012, marked the beginning of a new, more assertive, approach toChina's foreign policy. Xi's signature diplomatic and economic initiative, OBOR,often referred to as The New Silk Road, fits neatly into the "ChineseDream" narrative of national revival. Described by one commentator as the “creationof a highly integrated, cooperative, and mutually beneficial set of maritimeand land-based economic corridors linking European and Asian markets,” OBOR includesan extensive series of terrestrial trade routes across Central Asia and theMiddle East to Europe (the belt), as well as complementary marine routeslinking ports in the South China Sea, the Indian Ocean, through the Suez Canalto the Mediterranean Sea (the road) (Swaine 2015). Although not always shown onmaps representing OBOR, the New Maritime Silk Road also includes a branch swingingsouth through Southeast Asia and on to unspecified destinations in the SouthPacific.

          Althoughdistinguished by its massive scale and ambition, OBOR has much in common with the"going out" policy structuring China's overseas commercial relationsfor the last decade. China's economy will benefit from more secure access tooverseas resources, particularly energy, and from new markets for itsmanufactured goods and services. Trade will travel along new routes that arenot only more efficient but more secure. Chinese companies, expertise, andmaterials will be used to develop the infrastructure and connectivity that areat the heart of the concept. These companies, in turn, will have access tosignificant new sources of funding including the New Silk Road Fund, with aninitial capital of $40 billion, and the Asian Infrastructural Investment Bank whichis being launched with $100 billion in assets. The initiative will depend oneffectively coordinating development, financial, and trade policies of the 60or so countries involved to create what President Xi calls a "community ofcommon destiny," and officials indicate that familiar policies of"win-win" and "south-south cooperation" will be employed toachieve this end (Thakur 2015).

          OBORdoes incorporate some new policy elements. Fukuyama, for example, calls it a"striking departure in Chinese policy" because, unlike earlier initiatives,it seeks to develop industrial capacity and consumer demand overseas (Fukuyama2016, 2). Perhaps more significant are some strategic aspects seemingly designedto counter perceived attempts by the United States to contain China's rise andretain US supremacy in the international system. As Shen puts it:

          Theemphasis on interconnection stresses the construction of onshore energypipelines as   well as harbors. By importing energy through dispersedchannels, China can lower the  strategic risk of energy imports and enhancecontrol over Indian Ocean shipping routes.    At the same time, theconsolidation of trade relationships among China (with its exports          ofmanufactured goods), the Middle East and Central Asia (energy exports) and    SoutheastAsia (exports of raw materials) can counterbalance the rebalancing strategy of        theUnited States and reduce the economic dependence of China on the US (Shen 2016,       3).

 

Shen also notes that OBOR will allowChina to internationalize its currency (RMB) and challenge the supremacy of theUS dollar in the international arena, as well as erode the solidarity ofwestern-influenced international organizations such as APEC, the AsianDevelopment Bank, and the Trans-Pacific Partnership (TPP) (Shen 2016, 2-5).

          Noneof the novel factors associated with OBOR appear immediately relevant toOceania. The small size and remote locations of most Pacific Island nations reducesthe significance of Fukuyama's concern about exporting China's industrialcapacity, no island countries are included in the TPP and, as I have arguedelsewhere, the US pivot to the Asia-Pacific to date has had few implicationsfor the Pacific Islands region (Wesley-Smith 2013). Although the editor ofChina's Blue Book on Oceania, Yu Changsen, argues that the islands arestrategically important to China because the only sea routes to South America,Antarctica, Australia and New Zealand pass through the region, there is littleevidence that securing those lines of communication is a priority for Beijing(Yu 2015, in Smith and Zhang 2015, 1; 2016). For the foreseeable future, the likelyimpact of OBOR on the island countries of Oceania will be largely commercial.

          Mentionof the Maritime Silk Road is now a regular part of official communicationsregarding China's relations with the Pacific Islands, but to date there hasbeen no detailed explanation of what the initiative might involve in this partof the world. President Xi Jinping duly mentioned the Maritime Silk Road in hisaddress to Pacific leaders in Fiji in November 2014 but, apart from invitingthem to "take the train of China's fast development," offered no new specifics(Xi 2014). The March 2015 OBOR Action Plan contains just a single mention ofthe South Pacific, confirming it as part of the initiative but with no furtherdetails (OBOR 2015). However, it is reasonable to assume that OBOR will bringwith it a new emphasis on development projects that involve basicinfrastructure in island countries and enhance transport and communicationslinks across the region. New sources of investment capital, including the AsianInfrastructure Investment Bank, will be available to fund such projects and nodoubt Chinese companies will be eager to encourage island governments to accessthem.

Pacific perspectives

Some analysts have argued that China has exploitedparticular regional vulnerabilities to establish itself in Oceania and, in theprocess, encouraged corruption and instability in island states (see e.g.Dobelle 2007). Not only do these allegations remain unsubstantiated, but theyserve to obscure the possibility that bilateral relations with China areinfluenced as much by island leaders and national self-interest as byBeijing.  A 2010 collection of country-level studies of relations betweenPacific Island states and China and Taiwan belies any sense of externaldomination or manipulation (Wesley-Smith and Porter 2010).  What we seeinstead are Pacific Island leaders making rational decisions about what theyperceive as their best interests in the face of changing opportunities in theexternal environment. Although there may be concern about large and relativelyunfamiliar powers acquiring significant stakes in Pacific futures, there isalso clear appreciation of what those powers can bring to the table. Officialsacknowledge the fact that China pledges not to interfere in domestic policy,comment on governance or other development issues, or attach conditions to transfersof aid. Pacific leaders also respond positively to the egalitarian qualities ofcontemporary Chinese diplomacy, noting that they are treated with respectregardless of their nation’s size, resource endowment, or system of government.

          Perhapsthe most important element associated with China’s heightened presence is theopening up of new options. For the first time in generations, Pacific leaderscan make new choices regarding aid, trade and investment opportunities, as wellas contemplate alternatives to dominant aid and development paradigms oftenpresented as necessary, universal, and non-negotiable. In 2012 President AnoteTong of Kiribati noted the new level of engagement in the region by outsidepowers, and indicated that he found “these initiatives most welcome indeed….Itis nice to be relevant” (Tong 2012).

          Itis clear, for example, that the nature of China’s evolving relationship withFiji has been determined as much by decision-makers in Suva as by theircounterparts in Beijing. Fiji’s “Look North” policy emerged in the aftermath ofthe civilian coup of 2000 as an effort to diversify diplomatic and economicrelations away from traditional partners pressuring Fiji to restore democraticinstitutions. This coincided with China’s interest in raising its regionalprofile and the relationship between the two countries has grown significantly,especially since the 2006 military coup further deepened the divide with westerncountries (Tarte 2010). However, it is important to note that, while formermilitary commander and current Prime Minister Frank Bainimarama has repeatedlyemphasized the significance of these ties, China has not always reciprocatedwith pointed statements of its own. Indeed, Beijing has been at pains not toover-exploit this opportunity for regional influence so as to avoid any directconfrontation with Fiji’s traditional partners, particularly Australia. BeforeFiji’s return to elected government in 2014, Hanson and Hayward-Jones accused Chinaof “bankrolling a pariah military dictatorship” (Hanson and Hayward-Jones2009).  But Beijing’s decision to continue its relationship with Fiji whenothers decided to impose sanctions is entirely consistent with its pledge notto interfere in the domestic affairs of partner states.

          Furthermore,it seems that much of the increase in Chinese economic activity in Fiji inrecent years has nothing to do with any special favors from Beijing. Rather, intypical fashion, most of these resource and infrastructure development projectshave been initiated by Chinese companies, with funding either from the pool ofconcessional financing made available to the region since 2006, or on commercial terms from the China DevelopmentBank (Brant 2013).  Similarly, there is no evidence that recent interestfrom China in purchasing sugar produced in Fiji, as well as a possiblejoint-venture refinery project—both of which could be hugely significant forFiji’s economic future—reflect anything other than commercial motives(Chaudhary 2014).

Oceania rising

China's increased engagement with Oceania comes at atime of rising dissatisfaction with the status quo in the region. In October2012, for example, President of Kiribati Anote Tong, expressed disappointmentat the lack of international action on important global issues and went on tocall for “a new paradigm shift where the Pacific needs to chart its own courseand lead global thinking in crucial areas such as climate change, ocean governanceand sustainable development” (Tong 2012).  Other indications of thisdesire to chart a more independent course include mounting regional resistanceto PACER Plus and other free trade initiatives actively promoted by externalpowers, the demise of the Pacific Plan in the face of the blistering critiqueof island leaders, and the successful 2013 effort to get French Polynesiare-inscribed on the UN list of non-self-governing territories to bedecolonized, despite strong opposition from France, and without the endorsementof traditional partners like the United Kingdom, Australia, and New Zealand. SandraTarte argues that some significant changes in Pacific Islands regionalism,including declining support for the Pacific Islands Forum (which includesAustralia and New Zealand as members), the increasing prominence of theMelanesian Spearhead Group, and the 2013 establishment of the Pacific IslandsDevelopment Forum, are “driven by the discontent of a growing number of islandstates with the established regional order and by a desire to assert greatercontrol over their own future” (Tarte 2014, 3).

          GregFry and Sandra Tarte suggest that in recent years there has been a"fundamental shift in the way that Pacific Island states engage withregional and world politics" (Fry and Tarte 2015, 3). The driving forcefor what they call the "new Pacific diplomacy" stems from anincreasing necessity to "develop effective diplomatic strategies to dealwith key issues of concern," including trade, fishing, decolonization, andclimate change, coupled with the realization that existing regional mechanisms,particularly the Pacific Islands Forum, were inadequate for the task (Fry andTarte 2015, 13). Apart from a generally more assertive posture on the part ofPacific leaders, two characteristics of the new diplomacy are of particularnote here. The first is a renewed emphasis on self-determination. At theopening of the Pacific Islands Development Forum (PIDF) secretariat in 2014, forexample, Fiji Prime Minister Bainimarama stated that the main purpose of thenew organization was to create "an organization that is more attuned toour development needs as Pacific countries. It is about creating anorganization that is relatively free of interference from outsiders"(Cooney 2014 quoted in Fry and Tarte 2015, 9). Indeed, Article 6 of the 2015PIDF charter states that “The Pacific should be governed by and for PacificIslanders” (PIDF 2015). The second significant characteristic is a new emphasison south-south collaboration to further regional positions on key issues,particularly climate change and sustainable development. Working through anewly-invigorated Pacific Small Island Developing States Group at the UnitedNations, Pacific leaders have been increasingly active in the Group of 77coalition of developing countries, as well as the global Alliance of SmallIsland States (Fry and Tarte 2015, 7-8; Manoa 2015).

          Ofcourse, China's increasing prominence in the region has not come withoutchallenges. Critics cite a number of shortcomings in the new relationshipincluding the unpredictability of aid flows from year-to-year, the lack ofprovision for the long-term maintenance of infrastructure projects, and a lackof transparency in dealings with Chinese government officials (Hanson 2009).  Someof the most common complaints concern the requirement to use Chinese companiesrelying on imported supplies and labor, thus minimizing the possibility offlow-on benefits for the local economy, as well as the way some Chinese companiesoperate on the ground. Given the factors structuring China's going out policydiscussed above, the concern with what is sometimes referred to as"embedded conditionality" is unlikely to change. However, problematicday-to-day operating practices could be remedied. Graeme Smith researched laborpractices during the construction phase of the massive Chinese-operated RamuNickel mine in Papua New Guinea and discovered a disturbing array of health,safety, and pay issues. Smith attributes these issues to a number of factors,including the inexperience of the Chinese company involved, working conditionsback home, and efforts to keep costs down. But he also found evidence of alearning curve, as new investors learn from their mistakes and find better waysof “getting things done” as a matter of corporate self-interest (Smith 2013 a,b).

          Anemerging focus of concern for critics of China’s activities in the region isthe amount of debt assumed by island governments in Chinese-fundedinfrastructure projects. They point out that Samoa, Cook Islands, and Tongahave already taken on levels of debt from China’s ExIm Bank that areunsustainable in these small economies, even at concessional rates of interest.And they worry that the assistance package announced at the 2013 Guangzhou forumprovides for a further  $2 billion in concessional and non-concessionalloans over four years (see e.g. Pacific Institute of Public Policy 2013).  Theseare legitimate concerns because, if past patterns are any guide, the mostimportant actors facilitating access to these loans will be Chinesecorporations with little interest in the longer-term ramifications forgovernment debt loads or default. Furthermore, recent experience in Tongaindicates that, unlike in the past, attempts by government officials topersuade China to convert loans into grants are unlikely to be successful(Dornan and Brant 2014, 352-354).

          China’sincreased presence in Oceania has not created the new assertiveness of islandleaders, but it has facilitated a number of significant changes inlong-established patterns of power and influence in this vast sea of islands.It has opened up alternatives to long-standing political and economicrelationships, provided Pacific Island leaders the opportunity to push backagainst an unpopular aid-leveraged regional reform agenda, and to influence theshape of the emerging regional order in meaningful ways. China’s profile in theregion—especially its corporate dimensions—will likely continue to expand. Asit does, the challenges for Pacific leaders include debt management as well ascontrol and oversight of Chinese corporations whose practices may have negativesocial and environmental impacts.

The China alternative in Oceania

China's rise in the Pacific Islandsregion is but the latest chapter in its dramatic expansion into the globalsouth in recent decades, largely fueled by the commercial imperatives of rapideconomic growth at home. Until recently, the principle of "peacefulrise" or "peaceful development," first articulated by Hu Jintaoand Wen Jiabao over a decade ago, has been largely maintained as Chinamaneuvers within the norms and institutions of an international system dominatedby the United States, and engages pragmatically with overseas partners in thedeveloping world. While Beijing's foreign policy has clearly become more forcefulunder the leadership of Xi Jinping, there is no immediate indication that the uncompromisingpursuit of China's strategic and defense interests in the South China Sea willbe replicated elsewhere. If only because of its unprecedented scale and ambition,the implementation of the OBOR initiative raises questions about China's abilityto maintain its commitment to non-interference if its own corporate or other interestsare seriously challenged by the actions of numerous partner governments. Nevertheless,for the moment at least an approach centered on notions of collaboration and mutualbenefits remains in place.    

          Themost important characteristics of what Ramo called the "new physics of development and power"associated with China's rise in Oceania have been commercial in nature,creating opportunities for trade and investment that are likely to expandfurther as the South Pacific branch of the Maritime Silk Road takes shape. The softpower dimensions of the relationship largely take the form of visit and summitdiplomacy, scholarships for study in China, and cultural exchanges. China's aidis usually channeled into grants or soft loans to build infrastructureprojects, including government buildings, hospitals, roads, and other publicfacilities requested by host governments. With the notable exceptions of the "oneChina" policy the conditionality associated with all of this is not overtlypolitical.[6] Rather it lies inthe economic requirements embedded in development projects funded by China, includingthe use of Chinese companies, materials, and labor.

          Theevidence from the last decade suggests that China seeks to do business withPacific Island countries and win their support in certain situations. There isnothing to suggest that China wishes to remake island countries in its ownimage, or that Pacific leaders wish to emulate China's model of development,especially with its emphasis on centralized one-party control. Even renegadeFiji returned to a democratic form of government in 2014, albeit with some apparentlegacies of eight years of military rule. Nevertheless, by the sheer weight ofits economic presence and by facilitating initiatives formulated by islandleaders themselves, China has had a significant impact on a regional order longdominated by western powers.

          China'srise has coincided with the emergence of a new commitment to self-determinationin the region and effectively opened up space for its realization. The essenceof self-determination is the ability to make choices, including about thedesired nature of economic and social development. Although the leaders havepushed back against the neo-liberal orthodoxy advocated by their westernpartners, the main features of Oceania's alternative development path remainunclear. Environmental and cultural sustainability are clearly emerging prioritiesfor island governments. Thus the new Pacific Islands Development Forum has anexplicit focus on "green and blue economies," and a 2012 pilot study inVanuatu explored alternative development metrics for Melanesia featuringcultural and environmental indicators of well-being (National Council of Chiefs2012).

          Itis worth noting that by welcoming China's Maritime Silk Road initiative withits emphasis on infrastructure and connectivity, leaders are effectively optingto accelerate Oceania's incorporation into global systems of trade andcommunication. It remains to be seen if the fast train of development thatPresident Xi Jinping referred to in Fiji in 2014 can be steered to make its impactcompatible with the sustainable future that the leaders imagine for the peopleof Oceania.

 

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