China and Timor Leste have upgraded their bilateral ties to a comprehensive strategic partnership, aiming to give Beijing more influence in the region, while also satisfying the young half-island nation’s desire for stronger ties with major economies.

The agreement to enhance relations came after China’s President Xi Jinping met with Timor Leste’s Prime Minister Xanana Gusmao in Hangzhou ahead of the opening ceremony of the Asian Games, the Chinese foreign ministry said in a statement.

“Both sides will increase mutual support and strengthen international cooperation,” Mr Xi said.

Last year, when Jose Ramos-Horta was inaugurated as Timor Leste’s fifth president since the country’s independence in 2002, the Nobel laureate pledged to forge closer relations with China, especially in energy, agriculture and infrastructure.

He said he would continue to foster a relationship with the United States, but added that Timor Leste would not be implicated in any rivalry between Beijing and Washington.

Timor Leste welcomes strong ties with all countries, including its southern neighbour Australia, Mr Ramos-Horta said last year.

Upgrading their ties, China and Timor Leste agreed to cooperation under the Belt and Road Initiative championed by Mr Xi, that could open the way for investment in infrastructure.

In a joint declaration, released on state run China Central Television (CCTV) on Saturday, China said it would provide help for Timor Leste’s economic and societal development.

Both sides agreed on close high-level military interactions, an expansion of bilateral investment, and cooperation in areas including infrastructure and food, the statement said.

The statement also said “mutual support on issues involving each other’s core interests” is important for the strategic relationship between the two countries.

Timor Leste “reaffirmed the firm commitment to the one-China principle” and “Taiwan is an inalienable part of China’s territory and oppose any forms of ‘Taiwan independence'”, the statement said. 

China and Timor Leste have a long history of relations, and China was the first country to establish diplomatic relations with Timor Leste when it declared independence in 2002. 

Before its independence,Timor Leste was colonised by Portugal until 1975 and was under Indonesian sovereignty until 1999. 

Over the years, Chin has provided aid to Timor Leste and financed constructions of important buildings such as the Presidential Palace and the Foreign and Defence Ministries. 

China sent its military-run hospital ship to the Pacific in July to visit countries including Timor Leste and the Solomon islands.

What does the deal mean for Australia?

China has built ties with small nations in the Pacific during recent years, worrying Australia and its allies, who have long seen the region as their sphere of influence.

Australia is the “largest development and security partner” of Timor Leste, according to the Department of Foreign Affairs and Trade. 

Australian government has allocated $118 million in Official Development Assistance for 2023-24 to East Timor, supporting areas such as economic development, education and health services. 

However, the Timorese government has been in a lengthy stand-off with energy giant Woodside over its plan to pipe gas from the Greater Sunrise fields to its south coast.

The Greater Sunrise fields are situated nearly 450km north-west of Darwin and 150km south of Timor-Leste. 

Mr Ramos-Horta has used a series of media interviews last year to warn that his country may turn to a Chinese company to fund the project if the Australian government does not “intervene”.

The joint statement from Timor-Leste and China said the two governments “agreed to strengthen energy policy exchanges and explore the possibility of cooperation in oil and natural gas development”.

Timor Leste is heavily dependent on oil and gas revenue and is looking to start producing natural gas from its Greater Sunrise fields around 2030.

The development of the Greater Sunrise field is critical to the south-east Asia island nation’s economy as its main source of revenue — the Bayu Undan oil and gas field — stopped producing gas earlier this year.

ABC/Reuters