Although there isn’t much detail as yet, all three countries are signalling they want to offer countries throughout South East Asia an alternative to Beijing. The new infrastructure partnership doesn’t have a name yet but in a joint statement, the three countries say they want to “mobilise investment in projects that drive economic growth, create opportunities, and foster a free, open, inclusive and prosperous Indo-Pacific”.
No details of the dollars Australia will commit to the scheme nor how it would operate were publicised, with Foreign Minister Julie Bishop saying the framework was still being negotiated with the United States Overseas Private Investment Corporation and the Japanese Bank for International Cooperation.
Australia is already venturing into the region having allocated A$136.6 million for a deep sea cable between Papua New Guinea and Solomon Islands, designed to replace a project headed by Huawei, the Chinese telco.
China’s Belt and Road Initiative (BRI) is a massive global network of infrastructure projects with experts estimating that more than US$1 trillion (AU$1.35 trillion) will be poured into ports, bridges and roads across the globe in the coming decade.
BRI links China by land and sea to many of its major markets, laying down new arteries for the global economy. Many of the nations benefitting from the BRI would struggle to build these major infrastructure projects without money from Beijing.
US and Australian officials appear suspicious about the Belt and Road projects and argue it’s a vehicle for China to exert its influence in the region. They are particularly worried about “debt-for-equity swaps” where local governments have handed over infrastructure as they have been unable to pay back loans.
An example of this was seen earlier this year when the Sri Lankan government signed a framework agreement for a 99-year lease of the Hambantota port with a company in which China will have 80% ownership. Officials also plan to set up the nearby industrial zone where Chinese companies will be invited to set up factories.
US officials argue these debt traps will allow China to slowly build a network of strategic assets across Asia and the Pacific. And they worry that those assets could quickly be turned into footholds for the Chinese military in the future.