China is trying to increase its influence in the countries of the Pacific region by offering them low interest loans, which many states will find it difficult to return, believes the Australian analysis group, Lowy Institute for International Policy, informs AFP.
As stated in this analysis, the loans offered by China are equivalent to a significant percentage of gross domestic product (GDP) of countries such as Tonga, Samoa and Cook Islands.
Australian experts warn that the Chinese loans, which are interest free for five years, could give Beijing a diplomatic advantage if the recipient countries will be unable to repay.
“China has committed over $600 million in the Pacific since 2005, and the debt burden will become increasingly pressing as the grace period expires”, said representatives of the Lowy Institute for International Policy.
Currently, China’s loans offered to Tonga are equivalent to the country’s 32% of its GDP, while the Samoa’s and Cook Islands’ loans are equivalent to 16% of GDP.
The details of this aid program are considered a state secret in China. Beijing’s interest in the Pacific region is mainly generated from the diplomatic struggle for influence between China and Taiwan.