Eric Olander, Editor-in-Chief of the China Global South Project, offers a nuanced perspective on China’s engagement with developing countries across Africa, Southeast Asia, Latin America and the Pacific. Drawing on 40 years of experience as a journalist covering China, including stints at the BBC, Associated Press and CNN, Olander challenges dominant Western narratives about Chinese development finance, including the much-discussed “debt trap” thesis.
Eric Olander, Editor-in-Chief of the China Global South Project, offers a nuanced perspective on China’s engagement with developing countries across Africa, Southeast Asia, Latin America and the Pacific. Drawing on 40 years of experience as a journalist covering China, including stints at the BBC, Associated Press and CNN, Olander challenges dominant Western narratives about Chinese development finance, including the much-discussed “debt trap” thesis. He examines the evolution of the Belt and Road Initiative toward “small yet beautiful” projects, explores how developing countries are exercising agency in navigating great power competition, and discusses China’s construction of a parallel international governance architecture. In a frank assessment of China’s presence in the Pacific Islands, Olander argues that Australian anxieties about military threats are disproportionate to actual Chinese capabilities, while suggesting pathways for more constructive engagement between Western donors and China in development cooperation.
The conversation begins with Olander’s journey to covering China, having started studying Chinese in 1985 as a teenager in California when China was still poorer than most African countries. His career progressed through internships at radio stations in Taiwan and Hong Kong to positions at the BBC, Associated Press in Beijing, and CNN. It was during travels to Africa from the mid-2000s that he witnessed the explosive growth of Chinese presence — from one Chinese restaurant in Kinshasa in 2005 to a boom of construction crews, Huawei signs and Chinese enterprises by 2009. When he asked his Congolese employees what they thought of China, their nuanced, complex answers contrasted sharply with the polarised narratives in Western and Chinese media, sparking the insight that would eventually become the China Global South Project.
The China Global South Project, which evolved from the China Africa Project, operates as an independent, non-partisan research and analysis service serving governments, universities and corporations across 15 to 20 countries. Funded through a mix of grants, university partnerships and subscriptions, the project maintains strict editorial independence — a stance that regularly draws accusations of being both a CIA spy and a CCP shill, sometimes within the same week. Olander notes that the project has faced sophisticated cyberattacks and has been targeted by Chinese state media, reflecting the sensitive nature of coverage that refuses to adopt binary positions on China.
On the much-debated “debt trap diplomacy” thesis, Olander presents a detailed rebuttal drawing on research from institutions including Boston University, Johns Hopkins, Chatham House and the AidData Institute at William and Mary College. He argues that the narrative, first proposed by Indian pundit Brahma Chellaney in 2017, does not hold up to empirical scrutiny. Chinese loans to Africa at their peak represented only 18% of the continent’s debt, concentrated mostly in five countries with Angola alone accounting for a third. More importantly, Olander contends that the Chinese were never seeking assets — as Western imperial powers historically did — but rather repayment and cash. The infamous Hambantota port case in Sri Lanka, he explains, resulted from the incompetence and corruption of the Rajapaksa family rather than Chinese asset seizure, with the 99-year lease arising because the Chinese had no interest in taking back the port and pushed for a solution to recover their investment.
The interview explores the evolution of the Belt and Road Initiative from massive infrastructure lending to “small yet beautiful” projects. Olander identifies four key drivers of this transition: China’s reduced excess capital due to slower economic growth and domestic debt problems; domestic political pushback against large overseas expenditures; borrower countries’ reduced capacity to take on debt following the pandemic; and Beijing’s shift toward private sector and provincial-level engagement rather than central government lending. The Belt and Road’s deliberate lack of institutional structure — no secretariat, no headquarters — has proven to be a feature rather than a bug, allowing it to adapt to changing circumstances.
Challenging another common assumption, Olander argues that developing countries exercise considerable agency in navigating great power competition rather than being passive victims buffeted by China-West rivalry. He points to Kenya’s success under President Uhuru Kenyatta in maintaining robust relations with both China and the West, becoming a non-NATO major ally while hosting major Chinese infrastructure projects. Cambodia under Hun Manet represents an even more surprising example, pivoting away from his father Hun Sen’s China-heavy approach to welcome US naval vessels at Chinese-built ports while maintaining engagement with Beijing. Countries like Vietnam have mastered “bamboo diplomacy” — being an enemy to none and a friend to all — a model now emulated across ASEAN.
On technology and manufacturing, Olander presents a sobering assessment of China’s dominance. Chinese investment in critical minerals, electric vehicles and new energy represents a 10-15 year head start that Western countries may not be able to overcome. The refining of critical minerals — the most complex and polluting part of the supply chain — is concentrated in China, which has paid an enormous environmental price for this capacity. Chinese electric vehicles entering markets at prices US$20,000 below competitors pose an existential threat to Western automakers, with one Vietnamese analyst predicting Ford, Toyota and Kia will be essentially eliminated from the market within five years. For developing countries, Olander raises provocative questions about whether aspiring to critical mineral processing makes sense given the high environmental costs and limited job creation.
Regarding the Pacific Islands, Olander offers a frank assessment that Australian anxieties about Chinese military threats are disproportionate to reality. China lacks the command and control capacity, resupply ships and logistical network to project force this far south — its military is focused on the first and second island chains in the South and East China Seas. Chinese naval exercises near Australia are better understood as signalling — a message that if Australia operates in the South China Sea, China can reciprocate — rather than evidence of genuine invasion capability. The more significant Chinese interest in the Pacific stems from Taiwan diplomacy, as three Pacific Island states still recognise Taipei. Olander argues that China took advantage of a period when Australia, New Zealand and the United States neglected the region, and that more sustained Western engagement, as pursued by Foreign Minister Penny Wong, reduces the incentive for Pacific nations to turn to Beijing.
The conversation examines China’s construction of a parallel international governance architecture, including the Asian Infrastructure Investment Bank, the BRICS New Development Bank, and what Olander calls the “Five Gs”: the Global Development Initiative, Global Security Initiative, Global Civilisation Initiative, Global AI Initiative, and most recently the Global Governance Initiative. While dismissing BRICS as essentially a “grievance forum”, Olander argues that grievance is itself a powerful political force that should not be underestimated — the same force that propelled Donald Trump to power. When Chinese ambassadors can offer developing country leaders participation in multiple new international frameworks while Western ambassadors speak only of preserving the “rules-based international order”, China’s forward-looking pitch proves more appealing.
Olander concludes with advice for Western donors seeking constructive engagement with China. He suggests that Australia find neutral ground — perhaps in Africa or Latin America — to develop working relationships and interoperability with Chinese development actors before attempting cooperation in contested spaces like the Pacific. Drawing on the French model of partnership with China on infrastructure projects in the Global South, he argues that middle powers like Australia and Canada need to develop alternatives to pure reliance on increasingly unpredictable US leadership. The key is to build experience in low-stakes environments where mutual suspicions are less acute, then gradually work toward collaboration in more sensitive regions.
Links:
Eric Olander delivers the Mitchell Oration at the 2025 Australasian AID Conference (Devpolicy YouTube)
The China in Africa Podcast (Apple Podcasts)
Global Public Diplomacy Dashboard by AidData China
Boston University Global Development Policy Center
China Africa Research Initiative at Johns Hopkins SAIS
Griffith Asia Institute Belt and Road Tracker
Please note: We provide transcripts for information purposes only. Anyone accessing our transcripts undertake responsibility for assessing the relevance and accuracy of the content. Before using the material contained in a transcript, the permission of the relevant presenter should be obtained.
Eric Olander (opening): I was in the Congo, and I asked my employees, “What do you think of the Chinese?” I said, because I’m seeing all these extreme narratives — China’s colonising Africa. And then I’m seeing in the Chinese press that it’s win-win, and everything’s great. You tell me what you think. And they gave me these long, complex, nuanced answers. That was for me the light bulb that went off that said, that’s the story. It’s the complexity, it’s the grey, it’s not the binary narratives.
Acknowledgement: We wish to acknowledge the Indigenous people of Australia, the wider Asia-Pacific region and other parts of the world, and express our respect for their traditional knowledge and practices, which stem from a deep connection to the lands and waters they have inhabited for millennia.
Robin Davies: Welcome to Devpolicy Talks, the podcast of the Development Policy Centre. We’re part of the Crawford School of Public Policy at the Australian National University, on Ngunnawal and Ngambri country in Canberra.
I’m Robin Davies.
This is our twelfth season, and we’re bringing you a mix of interviews, event recordings, and in-depth features on topics central to our research — Australia’s overseas aid, development in Papua New Guinea and the Pacific, and other regional and global development issues.
In this episode, I speak with Eric Olander, Editor-in-Chief of the China Global South Project. It’s an independent research and analysis service that has spent 15 years examining China’s engagement with developing countries — across Africa, Latin America, Southeast Asia and the Pacific.
A journalist by training, Olander began studying Chinese in 1985. He has since worked for some of the world’s leading news organisations, including the BBC, the Associated Press and CNN, with a focus predominantly on China. His travels to Africa from the mid-2000s revealed a gap between the polarised narratives of Western and Chinese media and the more nuanced realities on the ground. That insight eventually led him to found what has become the China Global South Project.
What started as a passion project, pursued on nights and weekends, has grown to a staff of 15 to 20 people publishing in three languages. The project serves governments, universities and corporations seeking analysis that sits outside the binary framing dominating most China coverage. That positioning — neither panda hugger nor dragon slayer — has made Olander a target of Chinese state media attacks and accusations of being a CIA spy, often in the same week. It has also made him a valued interlocutor for policymakers trying to understand what China is actually doing in the Global South.
In our conversation, we examine some of the dominant narratives about Chinese development engagement and test them against available evidence. We discuss the much-debated “debt trap diplomacy” thesis, and the evolution of the Belt and Road Initiative — from large-scale infrastructure lending to what Beijing now calls ‘small yet beautiful” projects. We explore the agency that developing countries exercise in navigating great power competition. We look at China’s technological dominance in critical minerals and electric vehicles, and what this means for countries seeking to industrialise. And we turn specifically to the Pacific Islands region, where Olander offers a frank assessment of Chinese capabilities and intentions — along with some suggestions for Australia on constructive engagement.
Amita Monterola: We wish to acknowledge the Indigenous people of Australia, the wider Asia-Pacific region and other parts of the world, and express our respect for their traditional knowledge and practices which stem from a deep connection to the lands and waters they have inhabited for millennia.
Eric Olander: Eric Olander, Editor in Chief of the China Global South Project. We’re an independent, non-partisan research and analysis service that’s been around for about 15 years, really trying to push back against the hyper-polarised narratives about China. We don’t take a view on China that it’s good or that it’s bad. We take a view that it’s complicated. It’s a complex actor.
Our primary audience are practitioners in corporate, government, and academic spaces, who are really looking for these big voids in the discourse about China that, for the most part, focus on Australia—China, US—China, Europe—China, China and the G7 for the most part, and these big spaces about the Pacific Islands, Africa, Latin America are under-explored. That’s the space we’re trying to fill.
Robin Davies: Before we talk about the project, can you just tell me a bit about your background? You’re a journalist by trade?
Eric Olander: Journalist by trade, and I still consider myself to be a journalist at heart in what we do and what I do as an editor in chief. I started studying Chinese at 15, long before it was popular, in 1985 — China was still a poor developing country, poorer than most African countries at that time. Not entirely sure why I got into it, but I grew up in California, where there was a large ethnic Chinese population, so it didn’t seem that exotic.
I started going to China in the late 80s and the early 90s, when China just experienced the massive takeoff that led us to where we are today — the economic reforms, Deng Xiaoping’s southern tour. The big engine of the Chinese economy started to roar at that time, and I just got caught by it. It captured me. I started, at the same time, doing internships at radio stations in Taiwan and Hong Kong and broadcasting. That led to an early job with the BBC, which eventually led to the Associated Press in Beijing, later to CNN. So I’ve just had this progression over the past 30 to 40 years in journalism at many of the world’s leading news organisations, all focused predominantly on China.
Then I started travelling to Africa in the mid-2000s, and the first time I went to Africa, in the Congo, I didn’t see a large Chinese presence. In 2005, I didn’t expect to see one. There was one Chinese restaurant in Kinshasa. And I thought, okay. 2006 there were two Chinese restaurants. But by ‘07, ‘08 and ‘09, it just went boom. There were Chinese restaurants, construction crews, Huawei signs. It was just enormous. And it really started getting me to think that something is happening here, something that’s big.
Eventually, in 2010, I moved to Kinshasa to run a company there, and I asked my employees, "What do you think of the Chinese? What’s your view on it?" I said, because I’m seeing all these kind of extreme narratives in the New York Times, Le Monde and others — they’re saying China’s colonising Africa. And then I’m seeing in the Chinese press that it’s win-win, and everything’s great. You tell me what you think. And they gave me these long, complex, nuanced answers about what they liked and disliked. That was for me the light bulb that went off that said, that’s the story. It’s the complexity, it’s the grey, it’s not the binary narratives.
That then led to the China Africa Project, which is where we are today, which is now a service that publishes in three languages. We’ve got a staff of 15 to 20 around the world, and we’re serving quite a few governments and universities and corporates, providing information, news, intelligence and research.
Robin Davies: How did the China Africa Project sustain itself?
Eric Olander: Originally, it started as a passion project, nights and weekends. So for the first nine years, it was a passion project. I was the editor in chief of France 24 for quite a time. I was working in Vietnam, running a TV station at the time, and it was just a passion, just an outlet for me to write about and to podcast and to do social media on a topic that I just found interesting.
Like a lot of content creators, it was a side hustle, nothing intended to make money, but it took off. We really got to a million social media followers in the first few years. There was a demand for people to talk about China in this more nuanced, less extreme, polarised way.
Then in 2019, I decided to take this huge social media following that we had of a million and a half followers, and try and do something with it. That’s when we started launching a paid newsletter and putting a paywall up to try and make a career out of it. Then we started to engage with some foundations and some universities, and we started building partnerships. It just kind of grew to the point where it is today, where we have a mix of grant funding, university partnerships, and at the same time subscribers. That kind of funding mix allows us to be 100% independent.
We do not take money from anybody under any circumstances that has an agenda of any kind. We need to have that journalistic, academic independence and autonomy, and that’s what’s led today to a sustainable business for the past seven years as a paid service.
Robin Davies: At any point have you had to defend yourself against accusations that you were funded by people with an agenda?
Eric Olander: Literally, if you look on our YouTube channel on a Monday, they accused me of being a CIA spy. On a Tuesday, then I’m a CCP [Chinese Communist Party] shill. On a Wednesday — every single day. The nature of the way we cover this is that people have difficulty putting us into a box.
Most China coverage today is either partisan, binary. You’re either a panda hugger or a dragon slayer, you’re either on one side or another. So we will come out on a Monday with a show or a report that challenges some of the embedded narratives about China, for example, on the debt trap. We follow where the research has gone — from Boston University, Chatham House, Deborah Bräutigam at Johns Hopkins, any number of institutions that have scanned the globe, looking at the debt and saying there is no evidence of the debt trap. We say that is an argument for us, then, to say the debt trap, as it’s been put forward by media in the West, just isn’t true.
So a lot of the kind of pro-China folks online go, yeah, that’s our guy. And then the next day, we’ll talk about the surge of Chinese exports and the impact that it’s having on developing countries and how trade deficits are damaging the economies of developing countries. And they’ll go, hey, I hate that guy. And it means that we’re doing our jobs well if we’re getting that kind of feedback.
That being said, I have been the target of a state attack by Chinese state media. This was in 2021—22 — not fun. Russia Today has come after me. That’s just the nature of being a content creator in this very, very sensitive space. So we have now insulated from some of it. We’ve put defences on our site, but we’ve had hostile site attacks from what our security advisors tell us are very sophisticated actors, without knowing who it is. So we assume that those are people who are maliciously trying to kind of disrupt our service. That is the nature of the business that we’re in today in the media content space on an issue as sensitive as China.
Robin Davies: And you are still able to visit China? You don’t have any difficulties?
Eric Olander: No, I haven’t been back to China in six years. My concern is, again, I don’t think they think of me as being hostile to them. We’re not hostile. We’re not hostile to really anybody. We follow the data, the empirical information that comes our way.
That being said, it’s a difficult time for researchers and journalists and scholars to engage in China without being concerned about whether they’re going to have exit difficulties or other types of problems. For the most part, I’m not scared, but I’ve been told there’s not a 0% chance that I won’t encounter some difficulties, and that may only be a 1 or 2%, but at this point, right now, that is too high of a risk.
That doesn’t change how I perceive China. It doesn’t change how I cover China. It doesn’t change anything. I maintain very regular contacts with Chinese sources and Chinese scholars and Chinese academics. For the most part, other than the online trolls who are very aggressive — but online trolls everywhere are annoying — within the diplomatic and academic space, they don’t see us as part of the kind of Western media that’s attacking China. So they do engage with us, and they do subscribe to us, and they do follow us, and they’re very eager to follow our discourses, because they know that diplomats at DFAT [Department of Foreign Affairs and Trade] and diplomats at the State Department and diplomats at FCDO [Foreign, Commonwealth and Development Office] and about 20 different governments subscribe to us and listen to what we have to say. So I think they’re very keen to be part of those conversations as well. We do have conversations with them, but it’s gotten so much more difficult in recent years.
We used to have Chinese diplomats on our podcast. We used to have Chinese scholars on our podcast. None want to come anymore, and it’s nothing to do with us. You will see there’s no Chinese participation in the international media. They will participate in academic exchanges and discourses. So if Australian National University has a forum that invites Shanghai Jiao Tong University or Fudan University, that’s institution to institution. Then that provides a cover of safety. But to come on an unscripted broadcast where they don’t know the questions, they just don’t come, and it’s frustrating for me, because we feel that it’s very important that the Chinese voice be heard.
We have conversations about China today in Australia, in the US and around the world that are absent the Chinese. That’s not productive. It’s not constructive because we don’t understand the mindset. You’ll hear in some of our earlier podcasts that we had 45 to 50 minutes with a top Chinese diplomat, and it was one of the few opportunities you get to hear a diplomat really unfold some of their thinking on some of these issues. We just don’t get to hear that anymore. There’s no space in the Anglophone media where the Chinese participate in that kind of way, and that is unfortunate. It’s a stupid mistake by the Chinese to not participate in these discourses, because they let other people shape the narrative for them.
Robin Davies: So what’s happening there? Because, yeah, I remember a few years ago it was quite clear that senior Chinese diplomats had been given a licence to engage quite freely, and scholars too. Often they did that in quite aggressive ways — that was the wolf warrior part. You were talking to people who were not wolf warriors. You were talking to just your normal China—Africa scholar who was doing research on trade or migration or other things, the same kind of things that they do here at ANU. And you would talk about their paper in a very interesting way, the same way I would if you joined us on our show, very non-confrontational. It was not exceptional, but it was interesting because we got a different perspective. What happened?
Eric Olander: That started to change in the wolf warrior era. In part because the wolf warrior time was also a response to Trump One. Trump One came out very aggressive. Let’s not forget Mike Pompeo, the former Secretary of State, pounding China, pounding really hard at every turn. And they felt the need that they had to punch back.
They got to a point where they recognised, and this was towards the end of the Trump administration, that this wasn’t working for them anymore. In fact, their ambassadors in France and Sweden were causing enormous damage to Chinese credibility by being so obnoxious, rude, disrespectful to even countries that weren’t even in the fight in some cases. So in that sense, they started to pull back on this.
Zhao Lijian, who was the famous Chinese Foreign Ministry spokesperson who accused the Australians of horrific war crimes in Afghanistan, for example — he gets reassigned. We saw the new Chinese foreign minister who’s now been discarded. He came up, and he was part of this more moderate approach to foreign policy. But what happened in the wake of that is that all those scholars and diplomats who used to speak with us, everything shut down. It coincided at the same time when foreign journalists and scholars were leaving China as well. We’re not getting visas renewed. There was a general chill that we started to see.
To be clear, we are seeing that chill in the United States today as well. I call up US scholars to say, will you come on the show? And they say the same thing that the Chinese scholar said: no, it’s just not worth it for me. I’m afraid of saying something that will then potentially have a ramification for me professionally. So I want to say this started in China, but it’s not unique to China anymore.
Robin Davies: At a certain point, the China Africa Project evolved into the China Global South Project. What was the significance of that change?
Eric Olander: A couple of different things. So we started for nine years as the China Africa Project because there was so much Chinese engagement in Africa, from basically the period of 2010 right up into about 2018, and a couple of things started to happen.
Remember that China first went to Africa as part of the "going out" initiative. It really started going back to President Jiang Zemin in the early 2000s but really kicked up under Hu Jintao in the mid-2000s and 2010s. In part because they looked around the world and said, we have too much capacity at home. We need to create new opportunities for our state-owned enterprises. We have excess capital that we don’t necessarily want to put all into US Treasury bonds. What do we do with it?
They looked to Southeast Asia, and they said, you know what? We’re already in Southeast Asia. Deep ties, strong diaspora relations. Don’t need to be there. They look to the Pacific Islands further south — not big enough opportunities. They look to India — too complicated, relations too fraught. They looked to South America, and they said this is a culture that’s too far away from us. We also don’t want to provoke the United States in their backyard. Let’s stay away from there. Then they looked to where the money is. They went to the G7 countries, but then the regulatory barriers were very high, and the cost of entry into those markets too much.
And there was Africa, this huge continent that the West, after the Cold War, basically said, we’re done. The United States doesn’t need Africa anymore for oil and energy, because it found its own with shale resources. Europe basically turned its back and said, the only thing that matters to us about Africa is keeping the brown and black people on their side of the Mediterranean. It started to turn to Islamic terrorism. It starts becoming about aid. It starts becoming about this war in the Congo, and it’s just horrible.
The Chinese roll up, and they find African interlocutors who were really excited that they came. And they said, listen, we are tired of the old paternalistic dynamics of development, of charity and aid — a trillion dollars of charity and financial assistance that, for the most part, hasn’t had the desired outcomes. The Chinese come in and they say, great, we don’t do aid. We do trade. Are you ready to trade? And Africans said, let’s do it. Bring it on.
So this is before the Belt and Road. China starts to source a lot of its oil, mineral and timber for this expanding economy from Africa. In 2008, three of the ten largest oil suppliers to China were African countries. But then something changes. In the following ten years, China starts to diversify its sourcing of oil, mineral and timber. Xi Jinping launches the Belt and Road in 2013 and it doesn’t need Africa anymore for resources. It’s going to Russia, to Brazil, to the Gulf for energy. It’s going to Southeast Asia and to Brazil for timber. Africa cannot supply the quantity of resources that a country like China needs at the volumes.
So we start to see the trade really become smaller and smaller as a percentage of the whole. In fact, Africa’s trade with China is the second lowest regional trade in the world, second only to the Pacific Islands. So they’re right there at the bottom. About US$300 billion of trade this year will go back and forth between China and Africa, which is about 3% of the US$6 trillion that China does worldwide. So you can see this is very small.
One of the things we started to see was, all of a sudden, the engagement starts to go down, the number of stories starts to go down. Then the pandemic hits, and all of the flows of people, the flows of Chinese state-owned enterprises just stops. So we looked at it and said, we’re running out of stories to tell. There’s just not as much engagement.
Then there was a second idea that said looking at a continent in isolation of the rest of the Global South, of the world, is not really that productive, because so much of what China is doing across Latin America, the Middle East, the Pacific Islands, Africa, is transversal. When we look at debt, we look at BRI [Belt and Road Initiative], we look at Huawei, we look at EVs [electric vehicles], now we look at critical mineral supply chains — all of these now are happening across regions, and what happens in one region, like debt restructuring, ends up sometimes unfolding in another region. So if you are looking at only your one region and not understanding the matrix of how this is all working, then you don’t understand what the Chinese are doing in these parts of the world, because they are experimenting in one region.
We see debt restructuring, for example, that started in Ecuador, that’s now playing out in dozens of countries around the world. We see some of the small state diplomacy that they’ve done in Africa that’s now playing out here in the Pacific Islands. We see the Chinese deploying armed peacekeepers in South Sudan for the first time, something they could never have done in other parts of the world. But if you’re only looking at the one region on the X—Y axis, you miss the scatter. And the scatter is what tells the trend and the stories, and that’s what we’re trying to do.
Robin Davies: This is more of a footnote, but the term "Global South" —
Eric Olander: Terrible, terrible term that I don’t really like. We spent a lot of time going through this. The problem is, there isn’t a better framing. Some people said "the global majority", and that’s one that’s often used. The reason why we went with the Global South is that when you talk to Chinese and you talk to Indonesians and you talk to people in these regions, they will oftentimes talk about South-South cooperation. They will often talk about the Global South. They will use this language themselves to describe this engagement among Africa, Asia, Latin America. So we decided to go with the Global South in part because this is the framing that they use most commonly.
In many respects, it is the best of a lot of bad choices in framing such a diverse grouping of countries that in many instances don’t have a lot in common, but in many instances do. Many are deprived of access to capital. Many are deprived of access to many of the things that the Global North take for granted. Many have a brutal colonial history in common that is very much part and parcel of China’s engagement now in these parts of the world. If you look at Chinese statements now of Xi and Wang Yi the foreign minister, they will often reference their shared colonial history. That is something that is a commonality among them and a very important part of the narrative today.
So we chose the Global South after really diving into the topic of how do you best describe this very diverse group of countries. But because they themselves use the South reference, that’s why we thought that was the best choice.
Robin Davies: The reason I ask is that China itself talks about South-South cooperation, describes its own engagement as South-South cooperation. But it wasn’t clear to me whether China would see itself as part of the Global South, because that term often connotes the developing world —
Eric Olander: 100%. China sees itself as part of the Global South, and this is a very difficult situation right now for the Chinese at this very moment. They’ve reclassified themselves in the World Trade Organization as not a developing country. But at the same time, at the COP30 Summit, they very much assert themselves as a developing country.
Much of the language is rooted in this development narrative that they’ve had where, over the past 40 years, we brought more people out of poverty. We’ve eliminated extreme poverty. But yet still, China has 100 million people who have basically the same economic level as people from Botswana, which is still in the higher level of Africa but still on the lower level of global development.
It’s part of their origin story that they are a developing country. They do not want to be perceived as an advanced industrial economy akin to Australia or France or the UK, because they derive so much of their legitimacy as a global power rooted in this developing China narrative. And also, when you become a kind of G7 country, that puts you on a different framework of the oppressor versus the oppressed narrative that is very much part of their story as well. They’ve built their narrative on being the oppressed. This is the 100 years of the century of humiliation. This is very much tied into the tensions we see with Japan today. And if they then become an advanced economy, akin to the United States and others, that makes that narrative very, very complicated.
It also brings with it a certain level of accountability that I think they’re keen to avoid, whether it’s on the environment or military deployment or other things that advanced economies often are held to account for, and they don’t want to be a part of that. But the origin story of China is a developing country story, and they want to retain that.
Robin Davies: A fairly large proportion of what the China Global South Project does is in the category of myth busting. You referred to one of those myths at the beginning. Let’s go back to it — the idea that China engages heavily in debt trap diplomacy, effectively makes countries dependent upon it through creating debt overhangs. There are anxieties about this in the Australian Government in relation to the Pacific Island countries. Could you just talk a bit about the reality?
Eric Olander: The debt trap narrative, as it’s been presented, is an intentional strategy to load up developing countries with unsustainable amounts of debt so that they can either extract political influence or physical access or territory. That’s the way it’s been framed. This was a theory put forward by Brahma Chellaney, an Indian pundit, in 2017 in a Project Syndicate article, and really one of these narratives that has just taken off and is so durable.
Going back to what the research tells us — William and Mary College, the AidData Institute there, Deborah Bräutigam at Johns Hopkins, Chatham House, the Global Development Policy Center at Boston University — I can go on. A number of the leading development policy centre institutes in the world have carefully looked at this and have said the way that it’s been presented does not have evidence. We can talk about Hambantota in a second, because everybody will bring up Hambantota.
What happened is there was this surge of lending in the beginning of the Belt and Road Initiative, this just flood of lending. China itself was a terrible creditor. Did not engage in proper due diligence. There was a push to get money out the door. I equate it a little bit to the global war on terror in the Bush administration, where if you said that this was a project against al-Qaeda — bam, we’ll double your budget. Later became ISIS — bam, we’ll triple your budget. Very little oversight. Money just flowing out the door. The lenders at that time were not measured on the success of the loans. They were measured on the volume of money going out. We put a loan here, we put a loan there.
But within three years, from 2013 to 2016, that all kind of comes crashing down. So if you look at the Belt and Road lending chart, it’s a mountain that goes up very sharp and then comes down very sharp. Considering that we have almost a trillion dollars of financial movement — again, some of it’s loans, some of it’s investment, it’s very complicated — but a trillion dollars of money moving through the system through the Belt and Road, the fact that they brought this under control within three to four years is quite interesting.
I do not say this... I can hear people right now rolling their eyes, thinking I’m some kind of apologist for the Chinese. And that’s not it at all. We just got to follow what the data is telling us.
Number one is that when we look at, let’s take Africa in particular, when we look at the share of Chinese loans relative to the total amounts of debt — that’s the important thing. What happens is that oftentimes in these discussions about debt, they’ll take a country like Kenya, and they’ll say China has 81% of the bilateral debt. And you think to yourself, what? That’s crazy. But then you start to realise that when you look at Kenya’s borrowing portfolio, they’re borrowing very little bilaterally. So the Chinese portion of it is really out of proportion. Kenya borrows about 50% from its own people through domestic borrowing. It then borrows huge amounts from the IMF and the World Bank and then from the Eurobond markets. Bilateral debt accounts for less than 10%. China’s share of that today is about 6%.
So the logic of all of this never made sense, that on these single digit amounts, when measured against the whole... and really at the peak in Africa, at the peak of Chinese lending, it amounted to 18%, mostly into five countries, with one country, Angola, taking up a third of that in oil-backed lending.
So when we look at these numbers under a microscope, you start to see that this narrative doesn’t make sense.
Secondly, the Chinese were never after the assets. This is the big misunderstanding that I think is rooted in our own Western imperial history, that we — the United States and Europe in particular — went overseas in imperial adventures seeking assets. We in the United States went to Latin America with United Fruit, with Dole, all these companies, loaded up countries on debt and then stole the assets from them in turn. This is a pattern of behaviour that we know ourselves because we did it. The British did it, the French did it. This was imperial acquisition. So I think part of this narrative made sense to us as Westerners because this is something we recognise in our own history.
When you look at what the Chinese were after, it was never the assets, it was always the money. So when you look at the standard gauge railway loan contract in Kenya, this is very important — the Comptroller of Kenya misread the contract and sparked an enormous amount of controversy when he said that the Port of Mombasa was put up as collateral in the event that the loan defaults. The part that he misread — which he apologised publicly for — is that revenue from the Port of Mombasa was put up as collateral. So in the event of a loan default, they would then take revenue from the Port of Mombasa as the lenders, the primary creditor. They would get the preference, and that would be it.
You look over and over through Chinese loans — it was always about repayment and cash, never about assets.
The second thing, when we look at the debt restructurings that have happened through the Common Framework in the G20 process, China has actually done more than any other country in debt restructuring. That’s a narrative that doesn’t get picked up.
The problems that Sri Lanka encountered, Zambia encountered, and Ghana encountered were not because of Chinese loans. All three borrowed heavily from the Chinese, but all three fell behind on the Eurobond debt. The Eurobond interest rates are higher and they have shorter repayment terms. The Chinese lending is about 2.5 to 5%, and they usually do one point above LIBOR [London Interbank Offered Rate], but usually in a range of 2.5 to five. The private creditor debt, five all the way up to 15, 20% sometimes, and those have to be paid back in five years or ten years, whereas the Chinese loans are 20 to 30 years. So again, we just don’t have the evidence to support it.
Now, this Hambantota issue — this is the one that everybody brings up. When you see how this unfolded, again, the Rajapaksa family that ran Sri Lanka at this time, when the loans were made, really were just incredibly stupid beyond all imagination. They wanted an airport, a port, a hospital, all this built in their hometown in Hambantota. None of it made any economic sense.
China’s approach at the time was, hey, listen, bud, if you want to put all this here, fine. It doesn’t make sense. You’re going to repay this loan one way or another. So knock yourselves out. And at the end of the day, all the burden on this narrative is on the Chinese side, and we don’t put enough on the incompetence, greed and corruption on the borrower side, which is often a big part of the story. The Rajapaksa family — this is really a case study for this.
When they fall behind on their debts, because of the Eurobond stuff — they had been servicing the Chinese debts just fine, by the way — all of this information is available from the Sri Lankan Ministry of Finance. This is not secret. Johns Hopkins has done some really beautiful research on how the Rajapaksas got us into this mess and how everybody got out of it.
So they go to the Chinese and they say, we can’t pay for the debt because we got to pay back the Eurobond. The Chinese go, listen, we don’t want the asset back. This is yours. This is not what we want. And they pushed it, and they had these negotiations, and they finally came up with a 99-year lease deal. But that was not because the Chinese seized it. It was because it was basically that or they lose it and they get nothing out of it. So they said, fine, we’ll take it back.
But this was an exceptional case. You have not seen any other cases like this. Again, there’s one other example in Laos of the power transmission system, but highly exceptional. If this was a debt trap strategy, then they have failed miserably at it, because they haven’t done it anywhere around the world. We just don’t have the evidence for it.
Robin Davies: And a related point, China has sort of transitioned to smaller, more grant-based projects under the Belt and Road Initiative — the "small yet beautiful" concept — which almost implies a sense of humour in that description. That’s particularly relevant in the Pacific. What was behind that? Was it so that Chinese development assistance could broaden its appeal, so that it could reach countries where the demand for debt was much lower?
Eric Olander: This is the beauty of the Belt and Road Initiative. The Belt and Road Initiative has no secretariat. You go to Beijing, there’s no headquarters of the Belt and Road. There’s no general secretary of the Belt and Road. The Belt and Road is just this thing, and it can be anything it wants.
Now, we used to think that the lack of precision in what the Belt and Road was, was a shortcoming of the BRI. A lot of people said, what is it? We can’t figure it out. Turns out that that’s the real feature of it, that they can adapt it to whatever you want it to be. So all of a sudden, the Belt and Road transitions from being this large infrastructure, state-backed lending from development finance institutions like the China ExIm Bank and the China Development Bank, to being something like what we call now the "small yet beautiful" — xiǎo ér měi [小而美] is what they say in Chinese.
This is driven by a couple of different things. Number one: 2023-24 China, nowhere near as rich as 2013-14 China. So all that excess capital we talked about — they don’t have that anymore. Their ability to issue these big loans simply isn’t there because their economy has entered into a new phase where it’s much slower. They have massive domestic debts, huge problems domestically in their financial system. So the ability to give US$6 billion loans to Laos or US$6 billion loans to Kenya for railways, just really isn’t there anymore. The capital just isn’t there.
Secondly, they have a domestic political issue. It’s not popular politically to hand out billions of dollars of loans, the same way it isn’t here, and the same way it isn’t in the UK and in the US. A lot of people were starting to push back on these huge outpourings of money for Africa and other places, saying, well, wait a minute, my neighbourhood school sucks. Why are you giving money to Africa again? That’s an argument that we’re all very familiar with here.
Even though China is an authoritarian, totalitarian state that doesn’t have a free press, public opinion is something that the leadership does take into account, and it has ways of expressing itself. In fact, after the 2018 Forum on China-Africa Cooperation, I was in China when they announced the US$60 billion financial package — so much blowback on WeChat. Immediately the censors kick in and start censoring all this stuff. Since 2018, they do censor most of these big aid and development packages that they do abroad because they know it’s sensitive.
The third issue is that not only is the creditor strained, the borrowers are strained. Most of the Global South coming out of the pandemic is short on dollars, recovering much slower than the Global North because we flooded our economies with cash, with quantitative easing. They couldn’t do that in Africa, Asia, Latin America. Trade disruptions really took longer to repair in the Global South. So there were real questions about debt sustainability, legitimate questions. Then we start seeing Zambia default on a US$42 million bond payment. Then all of a sudden Sri Lanka, and we start to see the dominoes fall. So China simply couldn’t have come back into the market again for a lot of different reasons with these massive packages.
The fourth thing that starts to happen is that the central government starts to pull back. The central government, the main creditors — the China ExIm Bank and the Development Bank — rather than focus on Africa, the Pacific Islands and other places, focus domestically. The message that comes from Beijing says, you know what, we’re going to step back. It’s time for the provinces, the cities, the private sector to start doing outreach.
So one of the things we see now — and Christoph Nedopil Wangat Griffith University does this fantastic tracking of BRI — we’re seeing a huge upswing in BRI financial outflows, mostly coming from the private sector, mining companies, Huawei, the auto companies. All of these companies now are doing this engagement. We’re seeing here in the South Pacific, but also in Africa, big cities like Chongqing and provinces like Shandong starting to take the lead now in doing a lot of the development deals and the outreach. So there’s been a change. But they’re not going to do billion-dollar deals. They’re going to do much smaller deals.
Finally, the last point was that China’s production starts to shift away from heavy industry into new energy, vehicles, solar panels, telecommunications — this was the priority. So they want to be able to do projects that have an immediate return on investment. You build a solar farm, you flip the switch, revenue starts coming in as consumers start using the energy. You build a telecommunications network, you flip the switch, revenue comes in. It’s not the same as building a railway that has a 30-year return on investment, or a sewer system that is a public good that doesn’t have any return on investment. So they really started to focus on projects that the borrowers could really turn around very quickly and wouldn’t go into heavy debt. So those are kind of the forces that led to the small yet beautiful change.
Robin Davies: And the other thing that’s happened at the same time is the creation of the China International Development Cooperation Agency [CIDCA], and all of this begins to look like a convergence of approaches between the West and China on development. CIDCA — there was a lot of buzz when CIDCA came out. It hasn’t really materialised into much?
Eric Olander: We haven’t seen a lot of aid go through it. It’s really not, I mean there is some activity, but it’s nowhere near, I think, what the expectations were. China did not have an aid agency until CIDCA was created, as you pointed out. I think it’s a box they wanted to tick. But it’s not something that they’re that passionate about.
The Ministry of Commerce is still the most powerful ministry, and the Ministry of Finance as well, that controls the development finance institutions. Ministry of Foreign Affairs, relatively speaking, in the hierarchy of power of the Chinese political system, is lower down, and CIDCA is kind of in that bottom part of this. It’s not core to their foreign policy. It’s there, but it’s nowhere near as active as I think many of us expected it to be.
Robin Davies: So in that case, what was the point? Was it at least an effort to look like Western donors in China’s engagement with some developing countries?
Eric Olander: I think there’s some parallels to CGTN [China Global Television Network]. There was this sense that the British have the BBC, the Australians have the ABC, the Americans had Voice of America, France had France 24 — we, as a great power, we need a global television network like Russia Today and others. So they built this infrastructure around the world. They ticked the box. We now have a global television network that we can say is comparable to those other countries.
And then I think when they saw that, well, every major country also has an aid agency, and we don’t have an aid agency, I think they saw in their portfolio this was something that was missing. But just as with CGTN, where they built it up to a point but never really took it further — CGTN, no one really pays attention to it. It’s terrible programming, incredibly boring, very stilted type of discussion. Even for people like me who are fascinated by China, I can’t watch more than 30 seconds of it because it’s just so bad. But they have it. It’s a status thing. A portfolio of a major power has to have broadcasters, aid agencies, tick, tick, tick, all the other things. So I think they did it for that reason.
That’s my amateur understanding of it, but they never put their heart into it. I also think, remember, the politics of aid have changed. It’s not popular to just give money away. It’s not also in the Chinese ethos. A lot of the aid that we have in the West is really driven by a Judeo-Christian morality, that there is this idea of helping the poor, and there’s this idea that we as benevolent Westerners, white people, should go to other disenfranchised parts of the world and bestow upon them our knowledge and our food. You’ll see — USAID used to see "the gift of the American people" on it, right?
That’s not in the Chinese culture. If I borrow money from you and I can’t pay it back, you’re going to pay me back somehow. As a friend, you’re going to take me for — we’re going to use your car for three days to make up for it. You’re paying it back some way or another. Just giving money away is not core to the Chinese ethos. So I don’t think there was a lot of public enthusiasm for this concept. I don’t think they also have the instincts for it.
They do issue quite a few grants, but it’s a tiny percentage of their portfolio — in single digits. I think one to 3% in Africa, for example, is grant-based, very, very small. So again, I think that all contributes to the lack of enthusiasm for CIDCA. It is there. It is active. There are people working at CIDCA. So I don’t want to say it’s non-existent. It’s just not a major part of their portfolio. And it’s probably not going to be.
Robin Davies: However, China Aid — that’s the brand. I’m not entirely sure where China Aid fits in with CIDCA and the org chart. What’s happening with that?
Eric Olander: China Aid is changing now. Their rapid response humanitarian actions — we’re starting to see a very big uptick. Myanmar was a real important case study. We had this massive earthquake earlier this year in Mandalay, in Myanmar, and this was a turning point in humanitarian response. This was the first time in the modern era where the United States did not respond in a meaningful way. The Europeans did not respond. Yet we saw Chinese Y-20s — these are like the C-130 Galaxies — coming in with troops and supplies and technology and dogs in to do this massive rescue operation. This was something we had not seen before. The Chinese Y-20 jets showed up in Pakistan for the earthquake. In the pandemic, we saw quite a robust Chinese response for the distribution of vaccines to parts of the world that the West ignored and did not distribute. So this humanitarian response is starting to ramp up.
The optics of this in Asia are very important, because the Chinese, for decades, have talked about "Asia for Asians". This is about the narrative of pushing the US and the Western powers out of Asia, particularly beyond the first island chain. What we saw in Myanmar was a peek at what that looks like, because the response was from Malaysia, from Vietnam, from Indonesia, from China, from Cambodia. This was what the Chinese have been talking about in a post-American order.
So I think we’re going to see more humanitarian response. That’s very easy to manage. It’s short term. They can leverage this massive infrastructure that they have. But this aid that CIDCA does, which is longer-term food assistance and development assistance, I don’t think is going to grow massively.
Robin Davies: Coming to another one of those myths. There’s a view that the ever-increasing competition between Western donors and China is buffeting the governments of developing countries, and that it’s damaging for them, and that they’re essentially in a passive role in the crosswinds. Now I know you take quite a different view, that that understates the agency of a lot of developing country governments. Is there an example you would point to where a government has, in fact, turned that competition to its advantage?
Eric Olander: Not necessarily in an aid context, but I’ll give you two examples of two countries that I think have, up until recently, managed it relatively well. Now remember, Trump has made things far more volatile and more difficult than it was. But up until Trump, Kenya had done really quite a remarkable job at creating very robust relations with not only the US, but also Europe, becoming a non-NATO major ally. That is something that we hadn’t seen before. Also, they were close to negotiating a free trade agreement with the US during the Biden administration. There was a lot more technology exchanges, and the US—Kenya relationship was very, very vibrant.
At the same time, we saw the growth of Chinese infrastructure engagement in Kenya, the building of the SGR [Standard Gauge Railway], really the setting up of the headquarters of a lot of Chinese entities in Africa in Kenya, this very dynamic Chinese diaspora in Nairobi. And so you saw the way that then-President Kenyatta was dealing with both the Chinese and the West, the Europeans and the Americans, and really managing to keep both at ease and at a distance from one another, and not getting sucked into this mess of the great power competition.
The other country that I think, and this is going to surprise quite a few people, is interestingly Cambodia. Hun Manet is really pivoting away from his father, Hun Sen, who was very much leaning all into China. China was the largest trade partner, the largest source of investment, the largest source of development finance. China’s engagement in Cambodia was all-encompassing in many respects. If you go to Phnom Penh and you get off the airplane, boy, it hits you just like a ton of bricks. You see the presence is right there.
What people aren’t appreciating is the pivot that Hun Manet is doing. He’s drawing a little bit from Vietnam’s bamboo diplomacy strategy, which is trying to be an enemy to none, a friend to all. That is the Vietnamese approach. But interestingly, we saw the USS Savannah, which was a US naval warship, dock at Siem Reap in the new port that was built by the Chinese. We saw Lloyd Austin, the US Defense Secretary, go to Cambodia. Now Pete Hegseth, the Trump administration Defense Secretary, in Cambodia. A lot more engagement. Cambodia was successful in bringing down the tariffs. It’s engaging with the Japanese. It’s forming new security partnerships with other ASEAN [Association of Southeast Asian Nations] countries. And at the same time, still keeping a robust engagement with China, even though Chinese development finance in Cambodia has zeroed out.
But the Chinese are building the Funan Techo Canal, which is a key strategic project for Cambodia to reduce its dependency on using Vietnamese ports to get products out. So this is an interesting story to watch, that the narrative that Hun Manet and Cambodia are some kind of vassal states of the Chinese just doesn’t bear out on the facts. We see the levels of US and Japanese military engagement. Japanese warships also have been docking at Siem Reap. This is something very interesting.
And you see Vietnam the same way, really balancing the major powers very effectively in such a way that I think a lot of countries are looking to emulate. Ferdinand Marcos Jr in the Philippines, striking security arrangements with New Zealand, welcoming the Australians, the Japanese — a mutual defence forces agreement, status of forces agreement with the Japanese — in many ways trying to reduce their reliance on the United States by spreading out their security partnerships with others. In ASEAN, we’re seeing this play out really day by day — very effective and skilful management of the major powers.
Robin Davies: I wanted to ask you about the role that China is increasingly playing in a lot of countries in this region and globally in technological development, whether it’s in the energy sector or the telecommunications sector. It’s happening on such a scale that I think this is one of the specific things that creates anxiety among Western governments about Chinese influence. It’s not just political influence, it’s technological dependency, which then creates network risks over time. Do you think that’s a warranted concern?
Eric Olander: I do. I think, and not even if it was the Chinese — if it was anybody that had that much power over key strategic supply chains, key strategic industries like new energy, green mobility... The fact is that the Western countries and Japan, included with South Korea, have simply not made the investments in these technologies, and they’re paying the price for it right now.
You just look at the automotive supply chain on critical minerals — China was 10-15 years ahead of this, and now one has to wonder, is it even possible to catch up at the scale that’s needed to feed these industries? Too often, we talk only about the extraction of these critical minerals, but we don’t talk about the refining. And the refining is the complex part of it. It’s incredibly polluting, very high energy demand, very high water demand — not things that a lot of countries either can or want in their backyards. The Chinese have today the worst air, land and water pollution in the world. They’ve paid an enormous price for this, by the way. But they’ve done it.
On technology, we feel it in Southeast Asia where I live. I order on Lazada, which is Alibaba, using Chinese software. Now those goods are coming directly from Chinese distribution centres, skipping the middlemen of the local stores and coming straight to my house, all in a Chinese ecosystem. If you’re a small business in Southeast Asia, this is potentially devastating for you, and it’s potentially devastating for Southeast Asian economies that are going to lose out on some of that tax revenue that’s generated from local sales.
How do countries fit in the Chinese supply chain? This is the fundamental question that everybody has to ask, because one of the things that Xi Jinping has made very clear, earlier this year in April and now in the 15th Five Year Plan that came out, is that he is not going to abandon any part of his manufacturing ecosystem.
Normally in the development cycle, you go from agriculture to producing tennis shoes and textiles. China is still producing tennis shoes and textiles while it also wants to produce chips, solar panels and cars. This is a problem for countries like Vietnam, Cambodia, Tonga — pick your country — because what are they going to produce that they will buy from China? Right now, the only thing that China wants from these countries is raw materials. That’s not sustainable in the long run, because they’re not going to be able to grow and to develop.
For the Western countries, this is the source of Donald Trump’s power. He came to power saying, enough — China has been raping us. That’s what he said. And the deindustrialisation of the Rust Belt, and also what we’ve seen in Europe in some parts, is what gives strength to this populism.
Is there a reason for concern? Yes. And the question is, is the West responding with major investments in infrastructure, engineering, process knowledge to compete? And I’m not convinced that they are. The Chinese have made massive investments, and they continue to subsidise a lot of that, but they’ve also created decades and decades of industrial clusters with intense process knowledge in these clusters.
How are you going to compete against that? How are you going to build a critical mineral supply chain here in Australia when you haven’t developed the technology and the expertise to refine this at anywhere near the scale to compete with the Chinese? And I’m not convinced that Australian taxpayers want the burden of the environmental consequence of doing this, which is devastating. The Chinese are willing to do this because maybe they don’t have a choice, and they’ve made it a strategic decision to do this.
So I look out there and I wonder, the same thing that your question wonders — what are they going to do? How are you going to break this dependence on China if you haven’t made the investments?
Let’s talk about cars. I drove into Canberra in a Haval, which is a Chinese Great Wall Motors car. And I asked the Uber driver, how much do you pay for this? He said US$40,000. He said a comparable car from Toyota is US$60,000. They’re going to wipe everybody off the map. This is going to be a consumer electronic device that when you’re coming in US$20,000 under the standard, there’s no profitability model that they’re ever going to be able to use to compete against this. That’s just the reality.
An auto analyst in Vietnam told me, he said, in five years, Ford, Toyota, Kia — they’re basically wiped out. This is what’s going to happen. We used to have phones made by Nokia, remember? And Ericsson? Not anymore. All the phones are made in China. Today, cars are going to be something very similar.
So how do you defend against this? This is existential for countries like Germany, absolutely existential for countries like Germany. And you think about the auto business in the United States — the United States has blocked them all from coming in, but that’s just bloating the auto industry. Now the median price of a car in the United States is US$50,000 US. People can’t afford that. So this is ultimately going to drive the auto industry in the US down as well, because they’re basically going to stay at these high prices.
I don’t know what the answer is, but I just don’t see the energy and enthusiasm for these industries that I see in China. I don’t see huge numbers of engineers coming out of the universities who want to get into petroleum engineering, critical mineral engineering, these kinds of very nuts and bolts types of engineering. We just don’t see it in the US and other Western countries, and that’s something that’s critical. And we don’t see the massive government support for some of these industries. This is basically the consensus in the United States now, is that if you’re going to create a critical mineral supply chain, it will not be done by the private sector. It needs public support. That is, I think, a reality that is settling in. But the question is, China has a 15-year head start on this. How quickly can Australia, the United States, Western Europe, Japan move to close that gap? Our politics are much more complicated in some senses than China’s because of the democratic nature, and spending billions and billions on this stuff may not go down well with consumers who don’t understand that.
Robin Davies: What about countries with significant manufacturing? Countries like Indonesia, Vietnam, the Philippines — do they stand to benefit in the coming decades from China’s increasing focus on high-end manufacturing?
Eric Olander: If we look at Indonesia, it’s still going to be a raw material exporter — nickel and timber and other things like that. This is the problem — will Indonesia move up the value chain selling nickel to China for EVs? There’s a growing consensus in Indonesia that this doesn’t make sense, because most of the nickel that’s used in Indonesia and exported out goes for metallurgical purposes, not for EVs.
So I even have this question that I’m starting to ask — should developing countries even aspire to process critical minerals? Does it even make sense? And at the same time, now that there’s this question about data centres for AI coming into developing countries — both are enormously energy greedy, water hungry, and they don’t produce a lot of jobs. And then the wealth generated from either data centres or from refining processes goes to a very small number of people, just like we see in the mining industry. It’s not going to be spread throughout the economy necessarily.
So I’m not even sure this makes sense when you see the downsides of refining, which again — draining electricity from other purposes, draining water from other purposes, creating enormous amounts of pollution and costs that don’t necessarily then translate into societal benefits, particularly in places like Africa, where the continent imports most of its refined energy from abroad. It exports raw crude and then imports refined. Refining more of that crude would be a better refining process than critical minerals.
This is a pretty controversial take that a lot of people that I talk to in the Global South get very angry about very quickly. And it’s not a judgement. It’s just saying, does this make sense? It’s not because people aren’t necessarily capable of doing it, even though in order to process critical minerals, it needs a lot of high-skilled labour, which is in short supply in many developing countries. So again, is this the right use of resources? This application of resources for something that may not produce societal benefits but may have very severe societal costs?
This is a question both for the Global South and also for the Global North. In the Global North, the regulatory barriers for this kind of pollution and this kind of energy consumption is quite substantial, and we’re seeing pushback in the United States now on data centres. People don’t want them. They don’t believe that they generate economic benefits for their communities. So this is not only a Global South issue, it’s also something I think we’re facing here as well.
China, for its part, has come to the AI issue in a very different way. It doesn’t have the capital markets to do what OpenAI is doing and generate billions of dollars so it can build massive data centres. So one of the things it’s doing in the Global South, which is very interesting, is it’s putting AI into products — into cars, into phones, into all sorts of manufacturing technologies. So its deployment of AI is both going to be much more localised but also open source. Qwen, which is Alibaba’s AI tool, and then obviously DeepSeek, both open source — doesn’t require massive server farms to work. So this is something that’s much more appealing in Southeast Asia and Africa that we’re starting to see, the deployment of Chinese AI. And then again, this is a very divergent path than what we’re seeing from the West, which is much more data centre hungry.
Robin Davies: I know you’ve had some interaction with Australia’s Foreign Ministry during this visit. I’m interested in your perspective on the role of China in the Pacific, in an extended sense of the Pacific — Timor-Leste, Papua New Guinea, and then the small island states of the Pacific. There is a lot of concern in our parliament and in our government departments about what China is trying to achieve, particularly in relation to military ambitions. What’s your take on the role of China in this region? Why are they here in the way that they’re here? And what is the best way to engage?
Eric Olander: A couple of different things. I’ve struggled to understand some of the Australian reactions, particularly on the conservative side, to the military presence. China does not have the command and control capacity to deploy its forces this far afield. It doesn’t have the bases, doesn’t have the resupply ships, doesn’t have the network, doesn’t have anything close to what the United States has. The United States has this massive ability to move material, weapons, people and technology anywhere it wants. China is nowhere near capable of doing that, and not for the foreseeable future.
China is building a military force that is really focused on the first and second island chains up in the South China Sea and the East China Sea. That’s their main focus. So when they come down here and do what they did earlier this year, live-fire exercises off the coast which sent this country into a panic, that’s more to be able to say, listen, if you’re going to send your ships into the South China Sea, we want to remind you that we can send a ship or two down here, the same way that Australia does not have the force projection capacity to do extended deployments and to really change the outcomes in the South China Sea in any meaningful way. The same is true for the Chinese down here. So there was a message from China to say, listen, if you’re going to play in our backyard, we’re going to play in yours.
I think that is misinterpreted in many respects, that China is going to encircle Australia one day, or China is going to have this massive deployment in the Pacific Islands that will fundamentally threaten Australian national security. I’ve struggled to understand that thinking, because I just don’t have the confidence that the Chinese have the capacity anywhere near — and will not have the capacity for a long time — to do that. Number one.
Number two, I don’t see the strategic value for the Chinese to challenge, militarily, a US ally where the United States has a presence here and has made it a point that it will contest China here. This is not a theatre that China wants to engage the United States the same way that it’s doing up off the coast of the Philippines. So again, the logic doesn’t make sense to me.
I see what’s happening in the Pacific Islands with the policing agreements. I think the concern is that a lot of these agreements are done in very opaque ways that Australia, New Zealand and the people of the Pacific Islands don’t understand. That’s a governance issue. There’s also concerns about dual-use ports in many of these countries. Again, I question whether the Chinese have the capacity or the will to leverage that, but I can understand the concern. The outrage or concern or anxiety here does not feel proportionate to the threat.
That being said, what makes sense to me is that Australia has a vested interest in ensuring that sea lanes through the South China Sea are open and maintained. So by partnering with Canada and the United States and even New Zealand and now the Philippines and others, to ensure that China does not close off those lanes, does make sense.
The understanding that I have is that one of the biggest anxieties in Australia is this abandonment or isolation, and that has been amplified by the fact that the relationship with the United States has become much more complicated. The United States now is becoming a much more belligerent power than it was. I think that’s being evidenced right now in the Caribbean. So that’s probably of considerable concern to the Australians.
But that being said, it’s been interesting to watch the Australians over the years manage the relationship with the United States and putting down some red lines, saying we’re not going to cross these red lines on certain trade issues with the Chinese and others. So I’ve seen a very sophisticated articulation of foreign policy that balances the need to maintain trade with China at the same time as making sure that the United States remains an engaged partner. That is obviously core to Australia’s national security.
That being said, I think it’s important to be sober about the extent of the Chinese threat. The Chinese threat will not come militarily to Australia. The Chinese are meddling and intervening in other ways in Australia that I think are worthy of concern, obviously through United Front, and those are all well documented. But I don’t see an invasion of northern Australia coming from the PLA [People’s Liberation Army] Navy, or anything even remotely close to that, more because of the incompetence and incapacity of the Chinese to be able to deploy that, and again, no strategic value for them to do that. So a lot of these threats feel like they are generated here, and it makes sense that there’s concern and anxiety, but the hysteria doesn’t match the threat, in my view.
Robin Davies: So when you look across the Pacific Island countries, China is busy in various respects in each of them through its aid program. You mentioned the loans, the policing assistance. There are some loans. There are often activities that involve engagement with the local media, which can be another source of concern for Australia. But it all just bubbles along at a relatively low level. If anything, I think the level of Chinese aid activity in the Pacific has declined a bit in recent years. It has. So what would you say is going on here? Is this China just doing what it does everywhere — part of a template that it applies in all developing countries to maximise its diplomatic friendship to an extent?
Eric Olander: There’s one factor that’s a little bit different about the Pacific Islands than most other places, and that is that three of the Pacific Islands still recognise Taiwan. That will always make this region a key interest for China, because in China’s hierarchy of priorities, Taiwan is at the apex. None more than Taiwan. So I think it will remain engaged here in a bid to try and lure as many of those outliers as possible. But a small country like Palau is never going to abandon the United States, and recognising China would be a major irritant in its relationship with the United States. So I think that’s a futile exercise, for example, convincing Palau to switch its allegiance.
That being said, it will remain an area of priority because of Taiwan, in many respects. That being said also, China is very aggressive in its what I call small state diplomacy. So the leaders of Tonga were in China and get the same treatment as the Prime Minister of Australia. They close down Chang’an Avenue, they do the flag ceremony, the honour guard inspection. If you’re coming from a small country like Tonga that would probably not even get a vice-presidential visit in the United States, much less to get Xi for five minutes, that’s very important. And remember, ego and politics is always a part of it.
One of the things that I see in the Pacific Islands, and I said this to a couple of Australians and I can see them stiffen their back and they didn’t appreciate this, but I’m still going to stick with it — for a long time, Australians and the Americans took their eye off the Pacific Islands. There wasn’t a lot of attention. The Americans disengaged from that area. Penny Wong has made it clear that they’re correcting those ills by re-engaging, and this was again in response to China.
But I think China took advantage of an opening that it saw by the fact that the major powers, in this particular case New Zealand, Australia and the United States, really abandoned the engagement in these regions. And so China kind of came in, much like the same way we talked about with Africa, and said, what do you need? And they said, listen, we need loans, we need infrastructure, we need trade. And the Chinese said, okay. In some cases, they said, we need policing support. All the things that the major powers didn’t respond to.
Again, I think this is sensitive territory, but I do recall a lot of the complaints from Pacific Islands is that they weren’t getting the attention 10-15 years ago, and that’s when the Chinese did respond. Now we’re seeing the reaction to that by the Australians. And in many cases, up until Trump, the Biden administration was very sensitive to this and pushed back very hard, reopening the embassy in Solomon Islands, for example.
Now I think that because the Australians are far more engaged, there isn’t the need necessarily to go running to China the way there was 10 years ago. But I think that was common for a lot of developing countries who looked out into the world and said, listen, where am I going to get the capital? Because borrowing money was at 11, 12% sometimes from the private capital markets. We talked about that earlier. Getting development assistance was more difficult. The World Bank, IMF pulled back. China was oftentimes the only choice. There was no other choice. It was China or nothing. And so in many cases, they made that bet. They said, listen, we’re going to go with China because it is the only option available.
I’m not convinced now that when there are more options available, that China will be the first choice for a lot of them. So China has a compelling offer, but it’s not always the best offer. That’s why I think you’re seeing more really enthusiastic response to Penny Wong and to the Australian engagement, and it will continue so long as it remains that way. If a new government comes in and starts paring back on that, guess what — they’re going to throw their hands up and they’re going to go look at Beijing again.
Robin Davies: You mentioned earlier the heyday of wolf warrior diplomacy. We’ve had a controversy the last couple of years at the Pacific Islands Forum, where China has tried pretty hard to have Taiwan excluded as a so-called development partner of the Forum. In doing that, China has generated a lot of negativity towards it. Do you think that was a calculated tactic, that they deliberately burned a bit of credit, or was it clumsiness?
Eric Olander: Hard to tell, but I think people have to understand what an emotional issue this is. This is the red line for China. So if an ambassador or an envoy is seen to be soft on this, it doesn’t play well for them back home. So they are signalling, in part, back to Xi and back to the leadership that they as individuals are holding the line on this issue. So what may look like a setback in the Pacific Islands may actually be a benefit for that diplomat who made that fuss back home, because they get the credit for holding the line. You’re standing up.
We see this with Donald Trump as well. We see some of these bizarre outbreaks by American representatives that make no sense, but then Trump’s ego is flattered by it and he says, I like it. Then it starts to make sense. A lot of the wolf warrior theatrics oftentimes were to an audience of one.
But on this Taiwan issue, there is no compromise for them. There will never be compromise for them. So there’s never like, okay, let the Taiwanese in, but we want to express our disapproval. That’s not possible in Chinese politics. So for them, it has to be an all-or-nothing approach to it, because that is their core red line issue. It is more important than anything else. And two, because it signals back to their leadership that whoever’s on that front line, he’s on the wall looking out for us. So what may play poorly locally plays well back home.
Robin Davies: Turning to the multilateral stage, what’s your take on China’s ambitions to be a participant in the multilateral development financing system? It obviously, for lack of voice in the World Bank and the IMF, has set up the Asian Infrastructure Investment Bank [AIIB], very much along the lines of the Bretton Woods institutions and the other regional development banks.
Eric Olander: Australia’s a member of it too.
Robin Davies: Exactly, yeah. So it’s almost the membership of the World Bank or the Asian Development Bank replicated. And then there’s the BRICS Bank as well, in which China played a founding role.
Eric Olander: And the New Development Bank. And the SCO [Shanghai Cooperation Organisation] bank is coming.
Robin Davies: So China didn’t like the rules as they were set up?
Eric Olander: Remember that the Chinese approached the Obama administration and said, listen, the charter of the IMF and the World Bank says that the shares of these institutions should be commensurate with the size of the economy. We’re now the second largest economy, but Japan has the second largest number of shares. I don’t understand. Why is it this? They said, this isn’t fair. Obama then said, we’re not changing anything. And this is what prompted them to go back and say, okay, well, we’re going to create our own bank through the Asian Infrastructure Investment Bank.
Very important to note, and this is something that’s lost in the distinction — while the AIIB was initiated by the Chinese, they’re the largest shareholder and it is based in Beijing, it is not a Chinese institution, any more than the World Bank is an American institution, even though it’s headquartered and chaired by an American. So today, it is governed by its member states, and from what I can tell, it has a governance reputation that is on par or better than what we see from the Bretton Woods institutions. There’s not been many complaints about that.
Do the Chinese exert disproportionate influence in the AIIB? Yeah, probably. The same way that the Americans exert disproportionate influence in the World Bank. The same way that the Japanese exert disproportionate influence in the Asian Development Bank. That is the nature of these institutions — the largest shareholder does tend to do that.
However, one of the things that we’re seeing now, more broadly, is the creation of a parallel international governance architecture, very much around aid and development. So in addition to the New Development Bank, which is the BRICS Bank, the emerging Shanghai Cooperation Organisation bank, and of course the AIIB, we’re seeing what I call the "Five Gs".
We now have the Global Development Initiative, which is anchored into the UN’s Sustainable Development Goals. We have the Global Security Initiative, which is meant to be a parallel to NATO — to offset NATO. We have the Global Civilisation Initiative, which is focused on human rights and a redefinition of human rights away from universal human rights to sovereign human rights — that each country gets to decide its standard of human rights. That’s what this is about. Then the Global AI Initiative, which is something that is taking shape. And then finally, the brand new one that Xi announced in September, which is the Global Governance Initiative.
The Global Governance Initiative, I think, was added at the last minute to take advantage of the destruction of the United States as the norm-setter of global governance. There’s a void that they quickly dusted off their pens and filled out a new initiative to take advantage of this moment.
What they’re trying to say to developing countries — and we see quite a bit of enthusiasm from developing countries — is that you’re a part of our future. We’re setting up a whole new set of rules that are not anchored around preference for Europe and the United States. Again, only a European and only an American can head the IMF and the World Bank. They are saying we’re going to build a more inclusive system. Of course, China is probably going to have a paramount role in it.
This is very appealing. I want to go back to when a president or a prime minister sits down with the new Chinese ambassador in a country, and the Chinese ambassador says, Mr President or Prime Minister, what can I do for you? The president or prime minister says, what do you got? And he says, I’ve got the Shanghai Cooperation, I’ve got BRICS, I’ve got the New Development Bank, I’ve got AIIB, I’ve got these new governance initiatives, and you are a part of all of them.
That president or prime minister, he goes, listen, this is a sales job. You look at the Global Governance Initiative, you can’t figure out what it is, but it’s forward-looking, it’s inclusive, it’s anchored in multilateralism, it’s anchored in the UN system, which these developing countries all value because they depend disproportionately on it.
And then the ambassador from Australia, the United States, Britain sits down with that same president or prime minister. He says, what have you got? He says, we want to preserve the rules-based international order. That’s what we want to do. China is ruining this. And that president or prime minister from that developing country says, you know, that rules-based international order really hasn’t served us very well. That’s a backwards-looking vision. That’s saying you want to preserve the way it was. China is saying we want to change it to something new.
Whether or not China does may not matter. Seventy-some-odd countries signed up to the Global Development Initiative in 2022 on the sidelines of the UN General Assembly. There is an immense reservoir of ambition to change the system, and the frustration that these countries have with the status quo is enormous. China is very skilfully tapping into that grievance, and we live in the age of grievance-based politics.
I contend that BRICS is nothing more than a grievance forum. It’s nothing more for Russia, India, China, to some extent Saudi Arabia, certainly South Africa — all of these to get together. They don’t produce anything. I mean, they have small little initiatives here and there. There’s a BRICS Development Bank, to be sure, but then there’s a BRICS industrial park exchange and there’s some BRICS academic exchanges, but these are small things. The big things that come out of BRICS is: I hate the status quo. I hate the system the way it is. I hate the dollar-based trading system. I hate the inequity. I hate the hypocrisy. I hate the fact that Gaza is a problem.
A lot of people dismiss it. And I say that is a mistake. The same grievance that drove Donald Trump to power is a very powerful force. Grievance today is a force that should be reckoned with. So when we look at BRICS and say it’s a nothing organisation — well, when these countries are getting together, and by the way, lining up to get into BRICS, why? What does BRICS do? Why are they so eager to be a part of this thing? Because it gives Prabowo Subianto of Indonesia the chance to sit down with Putin in a forum where they can go, you know what, yeah, I don’t like those guys, in a way that doesn’t look unusual. A bilateral meeting between Putin and Prabowo might generate some problems, but at a BRICS forum, it doesn’t. So it gives this opportunity to collectively express their frustration.
China’s new parallel international governance architecture is absolutely riding that wave, and there’s huge demand for it.
Robin Davies: And what about the United Nations system? Where do you think China sees itself within that system in future?
Eric Olander: They’ve anchored the UN system deeply into some of these governance initiatives, particularly the development initiative. So it’s ironic that China is a deadbeat to the tune of about US$650 million on its dues to the UN, considering how much it has at stake if the UN effectively collapses.
The United Nations, in my view, is on the verge of complete bankruptcy. The United States, for the most part, has withdrawn from the United Nations. Now it is only showing up for the Security Council meetings. I have sources inside the UN and friends who work there who say that the US is not even showing up for the functional meetings, the normal day-to-day operations. They’ve basically withdrawn. Trump doesn’t believe in it, and not even Trump — it’s deeper. Americans, for the most part, have become incredibly sceptical of the UN as an entity.
So if the UN basically collapses — and we’ve seen now warnings from UN leadership that if the dues aren’t paid, they’re laying off large staffs, they’re cutting back big parts of their operations — there’s a real problem that if the UN basically shrinks to a small fraction of what it is, the impact on developing countries will be enormous.
China has said over and over again — Fu Cong, who’s the ambassador there — that the UN system is broken. Gaza and Ukraine both revealed that this is a broken system, and they’ve expressed their frustration with it. That being said, they see the UN as a very important vehicle for their legitimacy. You see their votes on many of these issues related to Gaza, Ukraine — they have lined up with the global majority, and that’s been very important to their credibility in the Global South.
So I think the UN is absolutely central to their doctrine of multilateralism, and they often say specifically “multilateralism with the UN at the centre of it". So the UN will remain incredibly important. But it is interesting that they’re not picking up the tab.
One of the things I think we should watch for is that if the US effectively withdraws, other than in name only, will the Chinese step up massively to increase the financial support? That is something we could see. With it will come more Chinese leadership of UN agencies, which they already have — four out of 15. They may want to seek more of that. Those are norm-setting bodies that are very influential in the Global South. So there’s a lot of value for the Chinese to keep the UN vibrant and robust. I think if they’re waiting to see what the US does, and if the US withdraws more, we may see a much more robust engagement there. But it is central to a lot of things that they’re doing.
Robin Davies: Just for my final question, coming back to aid to Southeast Asia and the Pacific. What’s your advice to donors like Australia, New Zealand, Canada, others, on how to engage constructively with China? We’re particularly in the Pacific, where we’re both there. At the moment, there is very little constructive engagement between Australia and China. How could things be different?
Eric Olander: The problem is that Pacific Islands are a contested space. So this is not going to be the region where you’re going to have constructive engagement between the Chinese and the Australians, because there’s going to be mutual suspicions of motives and intent.
What I’ve been suggesting — and again, this raises some eyebrows in Australia, and I’ve also suggested this to my friends in London at the UK as well — is that the French are doing some very interesting things. And every time you say the French, "oh God, the French!" Back in 2022, the French signed a partnership with the Chinese to do five major infrastructure deals valued at US$1.7 billion in the Global South, in Africa and other regions.
One of the things I think that Australia could do is to find some common areas of interest in neutral places, to do an aid initiative in Togo where, again, there’s no suspicion of intent. Learn how to interface, learn how to operate in a low-pressure, low-stakes environment, and then to bring those lessons and to work up to closer to the Asia-Pacific region.
It is difficult for Australia to be sailing warships in the South China Sea, to be doing defence agreements with Indonesia, and then to turn around with China and say, we want to be a development partner. That’s going to be a very hard circle to close, because the Chinese will rightfully say, wait a minute, you have literally a warship challenging us there, but now you want to work with us in Myanmar? That’s going to be a hard thing for them to understand.
But again, South America, Middle East, any number of places that are not contested would be just to get the communication going, to develop the skills of how do they operate — the interoperability. The same reason why Australia will do training with the Philippine Navy to basically land a helicopter on their ship, and then to land a helicopter on our ship and go back and forth, is so that they can interoperate with one another. The same thing is true in aid and development as well. What is the language? What are the modalities? How do they work? What are these things? It all takes time. So find an uncontested space in a small project.
Look at what others are doing. The French, in many respects, have done these deals, and from what I understand from French stakeholders, they’ve been rather successful. One of the things that the French are also able to do much better than I’ve found the Anglo countries to do is they’ve been able to compartmentalise their relationship with China in quite effective ways.
Former US Secretary of State Anthony Blinken said the US needs to compete, contest and cooperate with China. Okay, so the compete is on industry — we see that happening. The contest is what we see security-wise, and we see that happening in the Pacific Islands. And then the cooperation part is in the development, in the ODA [official development assistance] side, and that cooperation part is being neglected a little bit. I think there are opportunities to do this, particularly for middle powers like Canada and Australia that do need to reconsider their traditional alliances given the unpredictability of the United States. So finding these small venues of cooperation with the Chinese, like what the French have done, I think would be constructive.
Robin Davies: And if it weren’t cooperation far afield — Togo or whatever — could it be cooperation, perhaps, in humanitarian assistance?
Eric Olander: It certainly could be. Humanitarian assistance is a vector. But remember, humanitarian assistance needs that interoperability experience as well, particularly because things are done under short notice and very harsh conditions. So if you don’t understand how the Chinese Y-20s are operating and what they’re going to do — increasingly, we’re seeing Southeast Asia, now these storms are going to be larger, more devastating, more powerful. So this is an area that is an opportunity for growth, to be able to work on it, to do the rapid response humanitarian assistance where the two sides can work together. But that will require civil society engagement, military to military, and certainly aid agency to aid agency engagement. That’s a big ask in our current environment, which is why, again, start small and then eventually ramp up.
Robin Davies: Okay, well, you’ve been very generous with your time.
Eric Olander: Oh, it’s wonderful. Thank you.
Robin Davies: Thank you for sitting on the other side of the recording desk.
Eric Olander: It’s a lot more fun on this side than it is on your side.
Robin Davies: I look forward to your presentation at the conference as well.
Eric Olander: Thank you. Thank you very much. Appreciate your time.
Outro: Devpolicy Talks is the podcast of the Australian National University’s Development Policy Centre. Our producers are Robin Davies, Amita Monterola and Finn Clark. You can read and subscribe to our daily blogs on aid, international development, and the Pacific at devpolicy.org, and find the transcript and show notes for this episode on our website. Follow us on Facebook, LinkedIn, Instagram, and Twitter. Send us feedback or ideas for episodes to devpolicy@anu.edu.au. Join us in a fortnight for the next episode of Devpolicy Talks.