China in the Pacific Using Pay-Day Loan Diplomacy, Says US Diplomat

China in the Pacific Using Pay-Day Loan Diplomacy, Says US Diplomat

On Wednesday, the new U.S. ambassador to Australia stated that China is using “pay-day loan diplomacy” to exercise influence in the Pacific. His comments basically threaten to arouse already existing regional tensions.

The United States along with its regional allies have been fighting China for greater influence in the Pacific – a region that has votes at international forums, such as the United Nations and manages vast territory of a resource-rich ocean.

The geopolitical rivalry saw both sides upsurge foreign aid to the region over the past months, which the West states is needed to avert the Pacific falling into financial pain and becoming immune to diplomatic pressure from Beijing.

Late last year U.S. Vice President Mike Pence blamed China of seizing tiny island nations in foreign aid “debt traps”.

New U.S. Ambassador to Australia Arthur Culvahouse stated Pence’s denunciation was not strong enough. Hence, he would be using stronger words; thereby, he is using payday loan diplomacy. Culvahouse informed reporters in Canberra after presenting his diplomatic documentation to Australia’s Governor-General.

Lenders of pay-day loans generally charge a higher interest rate.

China’s embassy in Australia did not instantly respond to requests for comment, but China’s Ambassador to Australia last year stated that Beijing does not place undue debt on the region. The arrival of Culvahouse, the first U.S. ambassador to Australia in over two years, comes at time of bilateral tensions between Canberra and Beijing.

In 2017, then Australian Prime Minister Malcolm Turnbull blamed China of interfering in domestic affairs. In 2018 Canberra outlawed foreign-government associated companies from investing in a nascent 5G network, efficiently blocking China’s Huawei Technologies.

China denied the accusations and has asked Australia to cast off its “Cold War” mentality.

Sources told last month that Australian coal imports are facing longer wait times to clear customs than other supplies, and the northern port of Dalian was halting Australian coal shipments.