Australia should consider setting up a new infrastructure fund for Pacific Island nations amid concerns about China’s increasing lending in the region, Labor foreign affairs spokeswoman Penny Wong has said.
Last year Department of Foreign Affairs and Trade secretary Frances Adamson raised concerns about unsustainable lending to Pacific nations, and China has made large loans used for building infrastructure which some nations are struggling to repay, The Australian reports.
Government sources told The Australian that Tonga recently asked the Chinese government for debt relief when the King of Tonga visited China earlier this year, but this was refused.
Tongan media reported earlier in the month that their government will now have to start repaying a Chinese USD$100 million dollar loan.
Senator Wong said there was an obvious need in the region for greater infrastructure investment and late last year the US Government’s Overseas Private Investment Corporation signed a deal with the Japan Bank for International co-operation to increase investment in infrastructure throughout the region.
“I welcome these announcements as important steps to addressing the deficit in infrastructure investment in the region,” she told Sydney University’s US Studies Centre.
“The Australian Government would do well to seriously consider similar initiatives.”
Senator Wong, who has just returned from a trip to the US, said there “was growing anticipation that further development of this aspect of US policy was imminent” which would be “an important and valuable signal to Asia”.
Senator Wong said that the region now needed to work together to maintain US engagement in the region and Asian nations were “looking for the reassurance” from America.
“US policy to support the objective of a free and open Indo-Pacific is, to some extent, a work in progress.”
Labor has not fully committed to the reworked TPP, called for the potential benefits of the deal to be modelled by the Productivity Commission and Trade Spokesman Jason Clare even said he would like to see China, the US and “the rest of Asia” join the TPP-11.
But Senator Wong said US President Donald Trumps’ decision to pull out had left a cloud over US economic policy in the region.
“The Trump administration’s decision to withdraw from the TPP begs the question of how the US plans to define its economic engagement with the region. We look forward to further elaboration on this point from the US,” she said.
Senator Wong also praised Canada’s Foreign Minister Chrystia Freeland who has recently given sharp speeches criticising Mr Trump’s approach to international affairs.
The federal government recently announced they would set up a new ASEAN-Australia Infrastructure co-operation initiative to “develop a pipeline of high-quality infrastructure projects”. But no funds for the initiative have been allocated so far.