PAt the top of Vanuatu’s seaside capital, Port Vila, stands a gleaming red-and-white building gifted by China to the Pacific nation last month. The new presidential palace sits atop one of the town’s most popular hills and overlooks the prime minister’s residence, which was also renovated with a huge Chinese donation nearly a decade ago.
Millions of dollars The complex is the latest in a series of gifts and infrastructure projects that Beijing has given to Vanuatu that are transforming several towns and villages in the tiny island nation of just over 300,000 people. These projects include a series of new government buildings, a parliament building, road construction projects on several islands, a rebuilt sports stadium, a new wharf and the donation of a huge convention center that often sits empty in the town center.
Vanuatu’s Finance Minister John Saron, whose new Chinese-built government buildings were handed over to the government along with the palace last month, said the project was a boon for a developing country that often struggles to cover the costs of construction work. The Lowy Institute estimates the cost of the presidential palace and new government buildings at $20 million.
“We use diplomacy as a way to leverage the resources we have to build the institutions we need,” Sallon said.
These large-scale constructions serve as visible monuments to China’s deepening influence in the region, not just as a development partner but also as an emerging political player. Major Chinese-funded construction works are being carried out in nearly every Pacific island nation, coinciding with China’s expanding security and police trade in the region and strengthening diplomatic ties between Beijing and Pacific governments.
Just days after attending the opening of the new presidential palace, Vanuatu Prime Minister Charlotte Salwai flew to China with a government delegation and met with President Xi Jinping. Joint statement In a statement released after the meeting, China said it welcomed Vanuatu’s “active participation” in the Belt and Road Initiative, Beijing’s multi-billion-dollar project to connect the world through infrastructure construction.
“China has provided aid to Vanuatu without any political conditions,” said Li Minggang, China’s ambassador to Vanuatu. In a speech broadcast by Chinese state media The Chinese embassy in Vanuatu did not respond to a request for comment shortly after the new palace was handed over.
But some Pacific islanders have voiced criticism of the rise in Chinese-backed infrastructure projects in their countries.
Jean-Pascal Wahe, a community leader on Vanuatu’s Tanna island, said a China-funded road network has given islanders easier access to markets, health services and the local airport, but he is also concerned about the more than decade-old presence on the island of the China Civil Engineering Construction Corporation (CCECC), a company wholly owned by the Chinese government.
Wahe said CCECC had “also received all the subcontracts for road works that were not part of the original road project”.
China’s aid spending in the Pacific is small compared to other countries, estimated to account for just 9 percent of the region’s total development spending. Lowy Institute Aid MapIn contrast, aid spending by Australia, which remains the region’s largest aid spender, accounts for 40% of the Pacific’s total development receipts, equivalent to approximately $15 billion as of 2021.
But Beijing’s investments in major infrastructure construction, often unveiled to Pacific governments through lavish ceremonies, have distorted public opinion about the scale of China’s contribution.
“Australia is giving four times as much aid to the Pacific,” said Graeme Smith, a senior research fellow at the Australian National University who has studied Chinese aid and infrastructure development in the region.
“But the perception in the Pacific is, when you do these surveys, people think China is the major donor because there is a physical symbol of the gift from China.”
“These loans are scary.”
Of further concern is the heavy financial burden that some of China’s infrastructure projects impose on Pacific nations. China is the region’s largest lender, and while many of Pacific nations’ government buildings are donations, much of the infrastructure is made possible through large loans from the China Export-Import Bank.
“I’m scared of this loan and wondering how I can pay it back,” said Wahe, who knows the government has received huge loans from China to fund construction on the island.
“This project is great, but I keep reminding our leaders that there is no free lunch in this world.”
Tonga this year Repaying huge $119 million loan to ChinaMeanwhile, Vanuatu is struggling to repay major road and other infrastructure projects to China, and there are fears it could face a debt crisis.
“Our country’s debt sustainability is at risk of a moderate to high debt crisis,” Sallon said.
“We have to check ourselves and make sure that infrastructure is not just infrastructure for infrastructure’s sake, but infrastructure that helps grow our economic base to keep our country running.”
As Chinese investment continues to transform many Pacific nations, other development partners are also stepping up their support for the region. Weeks after Vanuatu’s Chinese-built palace was unveiled, the United States opened an embassy in Port Vila, and the U.S. recently announced it would provide an additional $10 million in funding to the region through its Pacific Islands Infrastructure Initiative.
Saron said such support is welcome, but ultimately the government will decide which projects to approve.
“We realize that we make our own decisions and set our own priorities,” he says.
