World

US diplomat warns of China using ‘payday loan diplomacy’

SYDNEY China is using "pay-day loan diplomacy" to exert influence in the Pacific, the new US Ambassador to Australia said yesterday, in comments that threaten to inflame regional tensions.

The US and its regional allies have been battling China for greater influence in the Pacific - a region that has votes at international forums such as the UN and controls swathes of a resource-rich ocean.

The geopolitical competition has seen both sides increase foreign aid to the region in recent months, which the West said is needed to prevent the Pacific from falling into financial distress and becoming susceptible to diplomatic pressure from Beijing.

Last year, US Vice-President Mike Pence accused China of catching tiny nations in foreign aid "debt traps".

US Ambassador to Australia Arthur Culvahouse said Mr Pence's criticism was not strong enough.

"I would use stronger language - I would use payday loan diplomacy," he said.

"The money looks attractive and easy upfront, but you better read the fine print."

Lenders of payday loans typically charge a higher interest rate. China's Ambassador to Australia last year said Beijing does not place undue debt on the region.

The arrival of Mr Culvahouse, the first US ambassador to Australia in 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 meddling in domestic affairs.

Last year, Canberra banned foreign government-linked companies from investing in a nascent 5G network, effectively blocking China's Huawei Technologies.

China denied the allegations and called on Australia to shed its "Cold War" mentality.

Analysts believe Beijing may now be using trade to punish Canberra for its criticism.

- REUTERS

WORLD