In the last two years China’s engagement in the Pacific – particularly through its aid program – has sparked alarm in Canberra. The spiking orange line in 2017 is part of the story.
In 2017 China committed to spend almost US$5 billion in the Pacific. US$4.1 billion of that was to upgrade roads in PNG, a loan unlikely to ever be drawn upon.
Looking deeper, while China promises a lot, it actually delivers far less. This is particularly stark when you compare it to Australia, which delivers upon almost all of its commitments in a given year. Between 2011 and 2017, China only spent 20% of what it promised. Australia, by contrast, spent 96% of what it promised over the same period.
While the value of Australian aid is in decline in US dollars thanks to unfavourable exchange rate movements Australia continues to dominate the aid landscape in the Pacific. This will become even more apparent as commitments through the Pacific “step up” are captured. Australian aid to the Pacific has now never been higher, both in volume, and as a share of Australia’s total aid program.