https://www.thetimes.co.uk/article/a...ress-mxzc9j9fr
Fears over Pacific ‘debt colonies’ as Tonga struggles to repay China
Fears that China is using loans as leverage over Pacific nations to expand its military footprint have sharpened after the island state of Tonga admitted it was in “debt distress”. Critics say that credit extended by Beijing and by Chinese state banks to impoverished developing nations with limited ability to repay them constitutes a form of “debt colonialism” and is a pretext to advance China’s wider strategic aims, including new bases allowing it to project military power deep into the South Pacific. Tonga’s prime minister said yesterday that he was concerned that Beijing was preparing to seize assets in exchange for unpaid debts and urged neighbouring Pacific countries that also owe money to band together and press for the loans to be written off.
Tonga’s prime minister, said that repayments it has to make to China’s Export Import Bank on two loans totalling $116 million will put severe financial pressure on his nation of 109,000 people. The loans are worth more than a quarter of its GDP. “It has become a serious issue. We have debt distress,” he told the Australian Broadcasting Corporation before next week’s meeting of Pacific leaders, including those from Australia and New Zealand.
He raised the prospect that China might seize Tongan assets if the island nation defaulted on its repayments — citing as a precedent Beijing’s recent takeover of a Sri Lankan port after Colombo struggled with a spiralling debt. “If it happens in Sri Lanka, it can happen in the Pacific — so it is entirely an option for China to consider,” Mr Pohiva said. “It is no longer an individual issue for countries to consider. It has become now an issue for all countries who have loans from China. I think these small countries will eventually come together to find a way out.”
Beijing defended its lending to small Pacific states as “sincere and unselfish” and said that it only provided loans to nations that could afford the repayments.
For years Beijing denied that it was militarising the South China Sea but it has fortified islets and reefs that it claims with runways and missile batteries. Now it appears to be expanding its aims much farther into the Pacific. Tonga is one of several nations in the region that have obtained finance from China, prompting fears within the Australian government that some of the money has been spent on highly questionable projects. In January Australia’s minister for the Pacific, Concetta Fierravanti-Wells, said: “We want to ensure that the infrastructure that you do build is actually productive and is actually going to give some economic benefit or some sort of health benefit. We just don’t want to build a road that doesn’t go anywhere.”
Sydney’s Lowy Institute think tank, which has closely monitored China’s activities in the Pacific, has calculated that Beijing has poured nearly $1.8 billion into Pacific countries since 2006. Canberra expressed alarm in April that China had apparently approached Vanuatu, about 1,200 miles northeast of Brisbane, about establishing a permanent Chinese military presence on a key gateway to Australia’s east coast.
Among the projects that China’s $243 million in aid to Vanuatu has built is the largest wharf in the South Pacific, considered capable of accommodating aircraft carriers.
