Australia faces growing dilemma over China's BRI

Govt sees merit in initiative but also worries about its financing

Australia faces a growing quandary about whether to sign on to China's Belt and Road Initiative (BRI) in a debate that has led to broader concerns about Canberra's failure to decide how it wants to handle ties with Beijing.

Prime Minister Malcolm Turnbull has refused to join Beijing's massive trans-continental expansion of ports, rail, airports and roads, even though China wants Canberra to align its A$5 billion (S$5.3 billion) plan to develop northern Australia with the initiative. In contrast, Australia's close neighbour, New Zealand, has signed up to the initiative.

Australia's ruling coalition says it "sees merit" in the BRI and is open to exploring collaboration, but has also indicated it does not believe joining is in the country's interests.

The Secretary of the Department of Foreign Affairs and Trade, Ms Frances Adamson, has insisted that Canberra "welcomed" the initiative but she also expressed caution about the financial arrangements.

"We're supportive," she said, during a question-and-answer session following a speech at the Confucius Institute at the University of Adelaide on Oct 7.

"As everyone gets enthusiastic about this, let's look at the financing arrangements... Because we know from our neighbours in the South Pacific in particular that infrastructure projects can come with very heavy price tags and the repayment of those loans can be absolutely crippling."

The decision about whether Australia should join has divided analysts, and is seen as a test of how Canberra will respond to Beijing's growing influence in the region.

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As everyone gets enthusiastic about this, let's look at the financing arrangements... Because we know from our neighbours in the South Pacific in particular that infrastructure projects can come with very heavy price tags and the repayment of those loans can be absolutely crippling.

MS FRANCES ADAMSON, Secretary of the Department of Foreign Affairs and Trade in Australia.

Some commentators have been fiercely resistant to Canberra joining the initiative, saying such a move ignored security concerns over Beijing's involvement in developing vital infrastructure.

Others, especially business leaders, say Australia stands to miss out on an initiative that could deliver huge economic benefits and enhance ties with China, already the nation's largest trading partner.

In her comments on the BRI, Ms Adamson did not mention security concerns or worries that it could add to China's influence in the region at the expense of the US.

But analysts believe the government harbours concerns about the security implications of the large-scale global initiative, which could involve China in vital or sensitive infrastructure projects.

Australia has previously blocked sales of land and utility assets to Chinese firms, saying the deals were not in the national interest. In 2015, officials approved the lease of a port in Darwin in northern Australia to a Chinese firm but this led to criticism at home and reportedly from some officials in Washington. The port is close to military facilities, including a base at which US Marines are stationed.

The opposition Labor Party, which is well ahead in the opinion polls, has taken a slightly more enthusiastic approach to the Chinese initiative, saying it will consider joining and will look at areas of cooperation, including via the development of northern Australia.

"We will come to office if we win the next election with an open mind as to how Australia and China can best collaborate on the Belt and Road Initiative, with a clear-eyed approach to our respective national interests," shadow treasurer Chris Bowen said in a speech to the Asia Society in Sydney on Sept 29.

According to Professor Nick Bisley, an Asian studies expert at La Trobe University, Australia's response to the initiative has been "surprisingly unclear" and it needed to make a stand on the issue.

"(The initiative) represents the kind of complex issues that will increasingly define the Australia-China relationship," he said on the Lowy Institute's Interpreter blog. "Trying to bracket off the hard political issues from the easy economic ones will no longer work."

A version of this article appeared in the print edition of The Straits Times on October 23, 2017, with the headline 'Australia faces growing dilemma over China's BRI'. Print Edition | Subscribe