‘Clear risks’ for stability in China’s Pacific lending, Australian think tank warns

China's central bank, known as the People's Bank of China, is shown in this file picture. China has repeatedly been accused of offering lucrative but unserviceable loans to gain leverage or snap up strategically vital assets like ports, airports, or electricity providers. (Shutterstock photo)
Updated 21 October 2019

‘Clear risks’ for stability in China’s Pacific lending, Australian think tank warns

SYDNEY: China’s financial largesse in the Pacific carries “clear risks” for stability if left unchecked, a Sydney think tank warned, while saying allegations of “debt-trap” diplomacy are so far overblown.
In a study released Monday, the influential Lowy Institute warned that fragile Pacific nations risked borrowing too much and leaving themselves exposed to demands from Beijing.
China has repeatedly been accused of offering lucrative but unserviceable loans to gain leverage or snap up strategically vital assets like ports, airports, or electricity providers.
While Lowy said allegations that China was engaged in “debt-trap” diplomacy in the Pacific were overblown, the trend was not positive and countries like Papua New Guinea and Vanuatu were dangerously exposed.
Between 2011 and 2018, China committed loans to the region worth $6 billion — around 21 percent of regional GDP.
A majority of that money, $4.1 billion, was earmarked for Papua New Guinea.
Only a fraction, less than $1 billion, has so far been dispersed but China is still the single largest creditor in Tonga, Samoa, and Vanuatu.
“The sheer scale of Chinese lending and the lack of strong institutional mechanisms to protect the debt sustainability of borrowing countries mean a continuation of business as usual would pose clear risks,” the report said.
The South Pacific has become a forum for intense competition for influence between China, the United States, and Australia in recent years.
The island nations sit on a vital shipping crossroad, contain vast reserves of fish stocks, and provide a potential base for leading militaries to project power well beyond their borders.
Beijing has stepped up engagement in the region through a series of high profile visits and no-conditions lending via its Belt and Road Initiative.
The Solomon Islands and Kiribati recently announced they would switch diplomatic recognition from Taiwan to Beijing after a long courtship by the country’s Communist leaders.
Six Pacific governments are currently debtors to Beijing — the Cook Islands, Fiji, Papua New Guinea, Samoa, Tonga, and Vanuatu.
Lowy said many of China’s loans carry a modest two percent annual interest rate.
But it warned that China would need to adopt formal lending rules if loans were to be made sustainable as natural disasters like earthquakes, cyclones and tsunamis can quickly upend countries’ ability to pay back loans.
“Three small Pacific economies — Tonga, Samoa, and Vanuatu — also appear to be among those most heavily indebted to China anywhere in the world,” it said.


Six killed as avalanche buries Indian patrol on disputed glacier

Updated 18 November 2019

Six killed as avalanche buries Indian patrol on disputed glacier

  • The disaster was the latest on the Siachen Glacier at more than 5,000 meters
  • Hundreds of troops from both sides have died in avalanches and from the fierce climate

SRINAGAR: An avalanche on Monday hit an Indian patrol in the world’s highest militarised zone in the Himalayas, killing four soldiers and two porters, an army spokesman said.
The disaster was the latest on the Siachen Glacier at more than 5,000 meters (16,500 feet) that is claimed by India and rival Pakistan.
Hundreds of troops from both sides have died in avalanches and from the fierce climate in the region over the past three decades.
An Indian military spokesman told AFP that the avalanche engulfed eight people in the patrol at the northern end of the glacier in the Karakoram mountain range.
Rescue teams managed to dig the patrol members out of the snow, and they were taken by helicopter to hospital.
“Despite best efforts, six casualties which includes four soldiers and two civilian porters succumbed to extreme hypothermia,” said the spokesman, Col. Rajesh Kalia.
Avalanches are common on the 700-square-kilometer (270-square-mile) glacier, where temperatures regularly fall to minus 60 degrees Celsius (-76 Fahrenheit).
In 2016, 10 Indian soldiers were buried and killed.
About 900 Indian soldiers alone have died on the glacier since 1984, when Indian forces took complete control of Siachen.
The glacier is located at the northern end of the Line of Control that divides Kashmir, which India and Pakistan have fought over since 1947.

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