It was announced last week that Huawei would build 161 mobile towers in the Solomon Islands after receiving a $66 million loan from China.
Several reports have emerged in recent days accusing the country of trapping Solomon Islands in something resembling a debt trap, but this is something China strenuously denies.
The Chinese debt trap is a narrative in which China gives loans to underdeveloped or developing countries to develop their infrastructure. If a country cannot repay these loans, China takes control of its trade routes.
However, a spokesperson for the Chinese Embassy in the Solomon Islands retorted these claims. A statement said: “The people of the Solomon Islands are in urgent need of improved mobile communication services and to provide a service guarantee for the 2023 Pacific Games. [to be held in Solomon Islands].
“We respect relevant cooperation between local government and Chinese enterprises and financial institutions, which is based on equality and mutual benefit in accordance with business principles.”
The move was celebrated by the Solomon Islands government as a “historic financial partnership”. The loan will come from the Exim Bank of China which offered an interest rate of 1%.
The Solomon Islands has less than 30% internet penetration and the government has said it plans to increase this number in the future to serve public service institutions, schools and clinics across the country.
The two countries signed a controversial security agreement last year after the Solomon Islands switched allegiance from Taiwan to China in 2019.
In 2018, the Solomon Islands awarded Huawei a contract to build an undersea cable network, but the Australian government interfered in those plans, offering to fund the construction of the cable.
Huawei is not allowed to secure government contracts in Australia, with the country citing security concerns as the reason.