In September of this year, the governments of the Solomon Islands and Kiribati severed ties with Taipei in favor of establishing formal diplomatic relations with Beijing.
The Solomon Islands initially recognized Taiwan in 1986, with their decision in September effectively ending 36 years of diplomatic relations. Kiribati ended its prior diplomatic relationship with Beijing in 2003 and recognized Taiwan; Kiribati now contends that reestablishing diplomatic relations with Beijing is in its “best national interest.”
The following post reviews the decisions of Pacific islands countries to revisit their diplomatic relations with China and Taiwan.
Taiwan now maintains formal diplomatic relations with only fifteen countries, many of which are small, developing states in Central America and the Pacific. Of Taipei’s remaining allies, four of them are South Pacific states: Nauru, Tuvalu, the Marshall Islands, and Palau.
Kiribati and the Solomon Islands’ decisions are particularly problematic ahead of Taiwan’s national elections in January 2020. Kiribati and the Solomon Islands are two of seven countries that severed diplomatic relations with Taiwan since current president, Tsai Ing-wen took office in 2016. The 2020 elections are expected to present Taiwanese voters with a stark choice. Tsai, the incumbent from the Democratic Progressive Party, has been very vocal in criticizing Beijing’s attempts to squeeze and isolate Taiwan. Her challenger, Kuomintang nominee, Han Kuo-yu has advocated for closer relations with mainland China.
With Kiribati’s decision following so close on the heels of the Solomon Islands’, Taiwan is and should be wary of a regional domino effect. The Marshall Islands has been quick to reaffirm its support for Taiwan, but continued Pacific Island support for Taiwan is by no means guaranteed. Nauru and Tuvalu have recently elected new leaders, the Marshall Islands will hold elections in November, and Palau will return to the polls next year.
Taiwan provides some amount of aid to each of its Pacific allies, and Taiwan’s Ministry of Foreign Affairs plans to redirect aid intended for the Solomon Islands and Kiribati to its remaining allies. However, if choosing between Beijing or Taipei truly does come down to dollars and cents (or RMB and TWD), then, of course, China can outspend Taiwan without issue. China made sweeping promises of economic investment to convince Kiribati and the Solomons to sever ties with Taipei.
So, what exactly did China promise the Solomon Islands and Kiribati?
Details of the offers have not been confirmed. However, reports speculate that Beijing promised the Solomons some 500M USD in financial aid and offered Kiribati planes, ferries, and “unprecedented development opportunities.” To put these offers in perspective – between 2011 and 2019, Taiwan provided roughly 117.5M USD to the Solomon Islands and 84.3M USD to Kiribati. For these Pacific Island states, establishing diplomatic relations with Beijing seemingly opens doors to immediate economic opportunity. Both Kiribati and the Solomon Islands have signed onto China’s Belt and Road Initiative, and in late September, a Chinese corporation with close ties to the Chinese Communist Party signed a renewable 75-year lease with exclusive rights to develop the island of Tulagi in the Solomon Islands.
As a region, Oceania has become increasingly reliant on Chinese aid, in part because of what China is funding. Chinese funding is going toward “much-desired transport and utility infrastructure.” Chinese firms are building ports, roads, wharfs, water networks, etc. In contrast, aid coming from the US and Australia has historically gone toward “bolstering governance, health and education services.”
However, regional reliance on Chinese aid should serve as a cautionary tale for Kiribati and the Solomon Islands. The vast majority of Chinese aid to Pacific Island countries is given as concessional loans – loans with interest rates around 2-3% with 5-7 year grace periods and 15-20 year repayment schedules. In a decade, Chinese lending has gone from nearly nothing to over 1.3B USD across 11 Pacific Island states. Tonga’s debt to China exceeds $115M, or roughly one-third of its annual GDP. China holds nearly half of Vanuatu’s external debt and over one-quarter of Papua New Guinea’s external debt. Today, though Australia remains the largest provider of aid overall, China is the region’s largest lender.
So why has China increased its spending in Oceania so exponentially? Moreover, what does China stand to gain from its new allies in the South Pacific?
While each ally taken from Taipei is a win for Beijing, this is about more than isolating Taiwan. China’s campaign to win over Pacific Island allies from Taiwan speaks more broadly to China’s myriad and growing interests in Oceania. The region represents opportunity – an opportunity to grow the Belt and Road; to explore massive, relatively untapped exclusive economic zones; for broader strategic and military engagement; and to expand China’s pacific power.