(Bloomberg) -- The U.S. and its key Pacific allies on Sunday announced plans to build an electricity grid in Papua New Guinea, in the latest bid to counter China’s growing influence in the region.
Australia, Japan and New Zealand joined the U.S. in signing the partnership accord, which aims to connect 70 percent of the population to electricity by 2030. The project will require “large scale investment by both the public and private sectors,” according to a statement released in the capital, Port Moresby, where leaders are attending the Asia-Pacific Economic Cooperation summit.
The project is part of a wider push by the Trump administration to check China’s economic and diplomatic thrust into the Indo-Pacific region and offer an alternative to President Xi Jinping’s Belt-and-Road Initiative. Still, the sums of money offered by the U.S. and its allies are dwarfed by Xi’s infrastructure lending plan, which Morgan Stanley says may total $1.3 trillion by 2027.
Addressing business leaders at an APEC CEO summit on Saturday, Vice President Mike Pence said the U.S. offered countries in the region a “better option” than China. He warned against taking opaque Chinese loans, saying the U.S. “doesn’t drown our partners in a sea of debt” nor offer “a constricting belt or a one-way road.”
Xi defended the Belt-and-Road Initiative in his speech at APEC, saying it’s “not a trap as some people have labeled it.”
The U.S. has been increasingly critical of China-backed infrastructure projects, saying many aren’t properly planned, financially sustainable and of questionable use. A new six-lane highway built by China in Port Moresby, for instance, has been dubbed the “road to nowhere” in media reports.
The language in the electricity agreement signed Sunday is a nod to such criticism. The partnership is “intended to focus on the importance of principles-based, sustainable infrastructure development that is transparent, non-discriminatory, environmentally responsible, promotes fair and open competition, upholds robust standards, meets the genuine needs of the people of Papua New Guinea and avoids unsustainable debt burdens.”
Earlier this month, Australian Prime Minister Scott Morrison unveiled a A$2 billion ($1.5 billion) infrastructure fund for the South Pacific, while New Zealand announced a NZ$10 million ($6.9 million) fund to help foster sporting and cultural engagement with Pacific island nations.
To contact the reporters on this story: Jason Scott in Canberra at jscott14@bloomberg.net;Isabel Reynolds in Tokyo at ireynolds1@bloomberg.net
To contact the editors responsible for this story: Daniel Ten Kate at dtenkate@bloomberg.net, Edward Johnson
©2018 Bloomberg L.P.
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