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China is using “payday loan diplomacy” to exert influence in the Pacific

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

The United States and its regional allies have been battling China for greater influence in the Pacific – a region that has votes at international forums like the United Nations and controls vast 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 says is needed to prevent the Pacific falling into financial distress and becoming susceptible to diplomatic pressure from Beijing.

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

New U.S 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 Australia’s governor-general.

“The money looks attractive and easy upfront, but you better read the fine print,” he said, a reference to the high interest rates that lenders of payday loans typically charge.

China’s embassy in Australia did not immediately respond to requests for comment, but China’s ambassador to Australia last year said Beijing does not place undue debt on the region.

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

In 2017, then Australian prime minister Malcolm Turnbull accused China of meddling in domestic affairs. In 2018, Canberra banned companies linked to foreign governments from investing in its nascent 5G network, effectively blocking China’s Huawei.

Australia blocks China’s Huawei, ZTE from 5G development on security grounds China has denied the allegations and called on Australia to shed its “cold war” mentality.

Sources at Chinese ports told Reuters last month that Australian coal imports are facing longer waiting times to clear customs than other supplies, and the northern port of Dalian was halting Australian coal shipments, which some analysts say shows how Beijing is using trade to punish Canberra for its criticism....


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