China’s “payday loans” attacked by Arthur B Culvahouse Jr, new US diplomat in Australia

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The new US ambassador to Australia has stepped up his attacks on China, accusing Beijing of “payday lending” diplomacy in the Pacific.

Arthur B Culvahouse Jr made the remark less than an hour after being formally greeted in Canberra by the Governor General.

US Vice President Mike Pence has repeatedly accused China’s “debt trap” diplomacy, claiming that Beijing is deliberately burdening small countries with unaffordable debt that it can use as leverage.

“I think it’s up to us, all allies and western or liberal democracies to educate people about the dangers of these loans.

“Money looks attractive and easy on the front, but you better read the fine print.”

Tonga last year called on countries in the Pacific to regroup and put pressure on China to cancel its debts, saying he would struggle to repay two loans worth $ 160 million from the China Export and Import Bank.

Beijing then postponed payment after Tonga subscribed to its flagship Belt and Road infrastructure program.

But there is a heated debate over whether Chinese debt poses a real threat to the region.

Graeme Smith of the Australian National University said debt was a real concern for many Pacific countries, but the ambassador’s language was “exaggerated”.

“For most of the Pacific, the biggest debt holders are the World Bank and Asian Development – they overtake China if you look at the region as a whole,” said Dr Smith.

“[And] I haven’t seen any real evidence that China is engaging in the tough tactics you associate with payday lenders. “

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Duty to China: Are Beijing's Big Loans to Poor Countries a Godsend or a Debt Trap?
Duty to China: Are Beijing’s Big Loans to Poor Countries a Godsend or a Debt Trap?(Sean Mantesso)

The ambassador’s warning comes as the United States steps up diplomacy in the Pacific region.

Last week two of the senior security officials pay rare visit to Vanuatu and Tonga, and the National Security Council created a new post focused solely on the Pacific.

Mr Culvahouse said the United States was increasingly focusing on the entire Indo-Pacific region, which was a huge engine of economic growth.

“The United States is re-evaluating – now that we have frankly the latitude. More and more people are realizing that we need to devote a lot of time and attention to this area,” he said.

The new ambassador also answered questions about the fallout for Australia of the US-China trade talks.

There is a risk that Australian exports will be affected if China agrees to buy large amounts of LNG and beef from the United States under a trade deal.

“Australia is doing its fair share”

Arthur Culvahouse stands in front of journalists and photographers.
Arthur Culvahouse Jr played down the prospect of a visit from Donald Trump.(

ABC News: Matt Roberts

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Mr Culvahouse said the United States was giving “real-time readings” to allies like Australia on the negotiations.

“But at the end of the day, it’s a presidential decision and a decision of my people in Washington, so let’s keep our fingers crossed.”

Analysts say Culvahouse will also need to reassure Australian officials that US President Donald Trump will not radically revise US foreign policy in Asia.

The Trump administration is considering a new plan to force countries that host U.S. troops to pay the full price for deployed troops.

But Mr Culvahouse said the United States would not impose additional costs on Australia for the US Marines currently based in Darwin.

“No, I have no reason to believe it. There has been no mention of this from those on the ground responsible for the Marine Force,” he said.

The new ambassador also downplayed the prospect of Mr. Trump’s visit to Australia this year, saying only that it was an “option” being considered.

But he said other senior administration officials would surrender soon.

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