The China Syndrome

One goal of this diplomatic activity is to build an island's voting bloc that will support China in international forums. The Pacific islands may be small but they are also numerous and in some forums numbers count, particularly the United Nations with its one-country, one-vote system.

A related objective is to isolate Taiwan. Last year Vanuatu became the latest Pacific island country to switch allegiance from Taipei to Beijing after two weeks of flip-flopping during which the government broke with Beijing, recognised Taiwan and finally returned to Beijing. There have been similar reversals in recent times by Nauru, Tonga and Papua New Guinea. But Taiwan can still count on five Pacific island states for support, with Kiribati last year joining Tuvalu, Marshall Islands, Palau and the Solomon Islands in the Taiwanese camp.

Kiribati is a good example of the displacement effect discussed earlier. For a few weeks in 2004 this collection of coral atolls that some 100,000 people call home became the only state in the world to simultaneously recognise both China and Taiwan after the newly-elected Kiribati president suddenly switched allegiance from Beijing to Taipei. A familiar diplomatic tug-of-war ensued between the two Chinas, but there was more than usual at stake.

Kiribati lies close to the equator, the ideal location for launching rockets and parking satellites in geo-stationary orbits. Since 1997, China has maintained a missile and satellite tracking station on Tarawa atoll. Beijing has long denied that the station played any role in the development of a space warfare capability, or that it was used to spy on a US testing facility for its missile defence program in the nearby Marshall Islands. For Taiwan the station must have been of particular concern given that China has hundreds of missiles pointed at the country. The secrecy surrounding its function became a major issue in the 2004 Kiribati elections when both China and Taiwan were accused of trying to bribe their preferred presidential candidates. When the Kiribati president chose Taiwan over China he was no doubt hoping that the station would be too important for the Chinese to give up. But Beijing closed it down and packed up within two days.

It is unlikely that China will stop seeking such military outposts. We should consider that Chinese interest in East Timor - also close to the equator - might have this in mind.

For regional powers like Australia, the most immediate problem arising from the Pacific Cold War between Taiwan and China is that it further destabilises already weak and unstable governments and feeds the endemic corruption throughout the region.

Another problem is the largesse that flows from Sino-Taiwanese rivalry mostly funds prestige projects designed for maximum public relations impact rather than economic development. Thus China has paid for a parliament house for Vanuatu, government buildings for Samoa, and houses for the president and vice-president in Micronesia. Beijing has also provided new equipment, trips and training for security forces in Papua New Guinea, Fiji and Tonga and has bankrolled new sports stadiums for Fiji, Samoa, Micronesia, and Kiribati.

Apart from aid, China’s main economic attraction for Pacific island countries lies in tourism and investment. Roughly 3,000 state and private Chinese companies now do business in the Pacific, with nearly $1 billion in hotels, plantations, garment factories, fishing and logging operations. Thousands of Chinese have settled in the region, running grocery stores, restaurants and other small businesses. This continues a long history of Chinese traders in the Pacific, although the latest wave of emigration is starting to tip the ethnic balance in some countries.

For China the economic attraction of the southwest Pacific is as a source of natural resources such as minerals, timber and fisheries. The most significant development on this front is the $800-plus million, majority Chinese-owned nickel mine in Papua New Guinea’s Madang province. If it goes ahead it will be one of the biggest offshore mining developments undertaken by a Chinese company. China has no experience in open-cut mining in the tropics. It also has a very poor mine safety record. But the bigger issue is whether China will interfere in the internal affairs of Papua New Guinea to safeguard its investment and how the Australian Government would react if it did. China has already deployed some 4,000 troops to war-torn Sudan to protect its investment in an oil pipeline with the Malaysian firm Petronas. This is likely to be a precedent.

History never repeats, but …

American economist David Hale has argued that China’s need to protect its raw material lifelines will lead to major changes in its foreign policy, just as it did the US and Great Britain. While the sheer volume of trade alone should help promote good political ties, China can be expected to hedge its bets by developing the capability to project military power - most significantly, a blue water navy - to protect its access to resources. Indeed, China has already adopted a “string of pearls” strategy of naval bases and diplomatic ties stretching from the Middle East to Southern China to protect oil shipments, with Pakistan, Bangladesh and Burma being some of the “pearls” in this sea-lane strategy.

When a continental land power that occupies a central geographical position starts to show signs of blue water ambition, alarm bells begin ringing in the capitals of maritime powers. This is what happened in Tokyo recently after a Chinese submarine ventured as far out from the PRC mainland as Guam, the forward bastion of American power in the northwest Pacific.

Guam forms part of the “second island chain” that the Japanese occupied and controlled during World War II in their attempt to build a Pacific empire. While we are not going to see a repeat of the great air and sea battles that defined the American-Japanese contest for control of the Pacific Ocean, an American intelligence consultancy has warned that to compensate for its naval weakness China could turn its political influence into military capability by placing shore-based, anti-ship missiles on these islands. But although the Chinese have been active, they have not been aggressive.