The immediate challenges AUKUS faces in our immediate region

While the immediate focus and coverage the AUKUS pact is on the shift to nuclear powered submarines for Australia, the enormous and growing challenge China's expansionist approach in our immediate region must be addressed comprehensively and urgently.

In this contribution I want to try and summarise the full extent of China's prevailing interest in the South Pacific nations of greatest strategic importance to Australia – Papua New Guinea, The Solomon Islands, and Vanuatu – as well as look briefly at China's presence in Kiribati in the Central Pacific, and Timor Leste to our immediate north.

Last week I wrote about the Noble Center building in Port Moresby, China's flagship project in Papua New Guinea. Since then I have been deluged with other examples of failed and dubious China projects in PNG, some under the Belt and Road initiative and some as part of direct agreements with provincial governments and state owned corporations.

The most troubling, but unsurprising, is confirmation that China, through the PRC Embassy in Port Moresby and state linked corporations, is pushing ahead with a number of projects in the Western, or Fly River, Province, which has a sea border with Australia, and a land border with the Indonesian Province of Papua.

Last year I wrote extensively about China's plan to build a "fish factory" and large port in Daru, which is just a few kilometres from the Australian islands in the Torres Strait. My latest information is that the project is NOT dead at all, and is in fact being pursued by the PRC embassy, and fisheries companies, with the provincial and local level government in the Western Province.

The Western Province has become the most immediate focus of China's engagement for now in PNG. In discussions with provincial and local officials, a figure of K!0 billion (about $A3.7 billion) for infrastructure and other projects under the "Belt and Road" program have been suggested. Loans to that extent would bankrupt the province and would require national government involvement and guarantees.

The Chinese presence right across the Western Province is substantial – motels, retail outlets etc. The provincial government has moved its Daru offices from state owned property to a building owned by a Chinese company!

Australia has simply not given enough attention, or priority, to Daru and the Western Province as a whole. Nothing short of a multi-billion dollar investment in health care, education, infrastructure and lifting the living standards of the people of the province, and especially Daru, will go even half way to meeting the growing China challenge.

Elsewhere in PNG, the China presence is on the march. The PNG construction industry has been decimated by the domination now enjoyed by China construction companies. The capacity of local businesses, and even the once strong Australian construction sector, to tender for government and state owned corporation work is just about extinguished.

The Asian Development Bank inexcusably continues to pursue contracting processes that favour Chinese companies, led by China Railway Construction. From what I can see PRC companies now win virtually all ADB-funded work, despite the fact the largest ADB contract, the redevelopment of Lae Port, was judged even by the ADB itself to have been a "failure".

Australia has been a "failure" when it comes to requiring the ADB, of which Australia is a senior member, to end the PRC construction sector stranglehold, and give a "fair go" to PNG and Australian companies.

Right across PNG the China presence is growing almost daily. In a number of communities gated and heavily secured compounds housing Chinese workers and their families have been built. More are on the way.

As I have reported, this year alone the PNG Government and its state owned entities have signed up to infrastructure projects with PRC companies worth at least K6 billion – all funded by loans from the Exim Bank and other finance houses.

China Rail is constructing the new Supreme Court complex. The project has been delayed by funding delays (it is being financed by the PNG Government), cost over-runs and other issues. Will it be the next "Noble Center?"

And what has Australia done to "counter" this expansion? Not much – and not enough!

The AIFFP scheme – supposedly our trail blazer to expand our Pacific engagement and counter China – has in almost three years of existence so far approved two relatively small projects in PNG. Projects under Belt and Road continue to swamp it.

And now there are indications the Australian Government Is going to give PNG another "cash handout" allegedly to help finance the 2021 budget deficit. I will comment on that in the near future, but if it happens again - after handouts in 2019 and 2020 – it just confirms how hopeless our policy approach to our closest neighbour has become!

So in summary the China influence in PNG is much greater than is generally understood, and it is growing as rapidly as ever. The AUKUS alliance is going to have to urgently confront reality – and reality tells us that what we are doing, and what the US in doing, has not made a real impact on China's expansionism.

The position in the neighbouring nation of The Solomon Islands is arguably even worse than that in Papua New Guinea. The Solomons is a former UK colony, so one hopes as part of AUKUS the Johnson Government might urgently look at what can be done to counter China's march through this small, but strategically important, island nation.

The domestic construction sector in The Solomon Islands has been crushed in the same way as its PNG counterpart has been done – but in a lot less time!

There are now a whole series of infrastructure projects under way in Honiara and other centres, all undertaken by PRC companies led by China Rail. Some are Belt and Road initiatives with loan repayment clauses attached.

While there is resistance in at least one province to China's growth in the SI, the national government is firmly backing the growing engagement, diminishing Australia's role in the country's development.

And when you look at Vanuatu, even closer to Australia, the Chinese presence is really expanding. Only this week, the Government of Vanuatu signed an agreement with the Chinese Embassy in Vanuatu for mandarin to be taught in Vanuatu's schools.

The program will receive direct support, and involvement, from the PRC Embassy, potentially increasing the Chinese influence in the Vanuatu community.

Vanuatu has been a major destination for Australian tourists, and tourism investment. I won't be at all surprised if that is quickly replaced by Chinese tourists – the Chinese investment is already happening!

The other country I need to refer briefly to is Kiribati in the Central Pacific, and relatively close to the Hawaiian Islands. Kiribati is one of China's strongest allies in the region, something that the United States is reportedly, and rightly, concerned about.

As I wrote some time ago, China is looking at restoring a disused world war two airport in the middle of the Kiribati Islands group. Given the very small local population, and total absence of industry one has to be suspicious as to China's intentions!

China has been active in Timor Leste, to Australia's immediate north. Several thousand Chinese have settled in Timor Leste since it gained independence in 2022 and have become an important part of the small nation's economy.

China has had a relatively small but increasingly visible presence – including financing the construction of the new Presidential Palace!

There really is a common "theme" in all the countries in our immediate region of strategic interest. China's presence and influence are growing – and Australia's response is making little if any difference.

Belt and Road, and other debt laden initiatives from China are having a massive impact on the economies, and budgets, of our immediate neighbours. It was not said in the joint announcement by Australia, the UK and the US, but Belt and Road and the wider PRC influence is of massive concern and forms a key reason for the new alliance.

We have to hope that a strong and better resourced alliance with the United States and with the United Kingdom (AUKUS) does not just focus on a nuclear submarines program, important though it is.

The new alliance need to have an urgent, forensic look at the true extent of China's influence in our immediate region and learn from foreign policy mistakes that have really benefited China's expansion.

As I have written on any number of occasions, Australia has to go "bigger and bolder" in our immediate region. Our new strategic agreement ought to be the opening to begin doing so.

Time is NOT on our side. China will be fully aware that AUKUS is targeting its growing influence in our immediate region. We can reasonably expect its Belt and Road and other expansionary moves to escalate.

Any suggestion that we have been successful in not just countering China's influence, but rebuilding our own, is simply not supported by the facts!

A larger, more powerful and better resourced – and hopefully focussed – alliance is probably our last chance to do much better!