China uses ‘payday loan diplomacy’ to exert influence in the Pacific


China is using “payday loan diplomacy” to exert influence in the Pacific, the new US ambassador to Australia said on Wednesday in comments that threaten to exacerbate regional tensions.

The United States and its regional allies are fighting against China for greater influence in the Pacific – a region that has voices in international forums like the United Nations and controls vast swathes of a resource-rich ocean.

Geopolitical competition has seen both sides increase foreign aid to the region in recent months, which the West says is necessary to prevent the Pacific from sliding into financial distress and becoming susceptible to diplomatic pressure from Beijing.

Late last year, US Vice President Mike Pence accused China of trapping tiny island nations in foreign aid “debt traps”.

New US Ambassador to Australia Arthur Culvahouse said Pence’s criticism was not strong enough.

“I would use stronger language – I would use payday loan diplomacy,” Culvahouse told reporters in Canberra after presenting his diplomatic credentials to the Australian governor general.

“Money looks attractive and easy at first, but you’d better read the fine print,” he said, referring to the high interest rates payday loan lenders typically charge.

The Chinese Embassy in Australia did not immediately respond to requests for comment, but the Chinese Ambassador to Australia said last year that Beijing was not imposing excessive debt on the region.

The arrival of Culvahouse, the first American ambassador to Australia for more than two years, comes at a time of bilateral tensions between Canberra and Beijing.

In 2017, then Australian Prime Minister Malcolm Turnbull accused China of interfering in internal affairs. In 2018, Canberra banned companies linked to foreign governments from investing in its fledgling 5G network, blocking China’s Huawei.

Australia blocks 5G development by Chinese Huawei and ZTE for security reasons.

Sources at Chinese ports told Reuters last month that Australian coal imports face longer waiting times for customs clearance than other supplies, and the North Dalian Port is halting Australian coal shipments, which some analysts say shows how Beijing is using trade to punish Canberra for its criticism ….


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