Pacific Islands Face Daunting Debt Crisis with China: Can They Find a Way Out?
By José Carlos Palma*
In recent years, Pacific Island nations have experienced a dramatic increase in debt to China, as the Asian superpower becomes the region's largest lender. While infrastructure projects funded by these loans, such as roads and bridges, have spurred local development, the growing debt burden is raising concerns about long-term financial stability and economic sustainability.
The Heavy Price of Progress
Take Vanuatu, for example. In 2019, a $63 million loan from China funded the construction of a new tar-sealed road on Tanna Island, easing travel and boosting the local economy. Martha Kapalu, a resident, praises the road for making travel easier and improving access to markets and tourist attractions. However, Vanuatu’s financial situation is now strained, as the n...
