DILI/BEIJING -- Chinese influence in East Timor, a Southeast Asian nation near northern Australia that marks the 20th anniversary of its independence Friday, is plain to see with just a walk through the capital city of Dili.
The country's largest mall prominently features advertising for China's Oppo -- the most popular smartphone brand there, according to a store employee. The shopping center also has an ethnic Chinese-owned supermarket with a wide selection of food imported from China.
Chinese characters appear on a sign at a construction site in Dili's administrative district, where a Chinese company has been contracted to build a city courthouse. Beijing previously helped construct major government buildings including the presidential palace and the headquarters of the ministries of defense and foreign affairs.
Such projects helped solidify the deep-rooted ties between East Timor and China -- a relationship that raises concerns for Australia and the U.S., which see consequences for the security environment in the western Pacific.
As Western nations tacitly accepted Indonesia's forced integration of East Timor in 1976, China supported its independence, and was among the first to establish formal diplomatic relations with the country when it became independent in 2002. Cooperation between the two increased in the 2010s as Beijing undertook its Belt and Road infrastructure initiative.
Chinese Ambassador Xiao Jianguo called East Timor an "important 'Belt and Road' partner country" in an article run by a local newspaper in March. He touted support from Chinese companies for core infrastructure including the power grid, an expressway and a container terminal.
Nearly 20 Chinese companies were involved in construction contracts there at the end of 2021, according to Xiao.
East Timor is a risky market for most private-sector companies due to its poor connectivity and weak financial and regulatory frameworks. The tight integration of China's public and private sectors under one-party rule has enabled Beijing to take advantage of this opening.
The highway between Dili and Baucau, East Timor's second-largest city, is a prime example.
Japan provided 5.3 billion yen ($41.1 million at current rates) in yen-denominated loans for upgrades to the road 10 years ago, but no Japanese companies bid for the project, which was awarded to a state-owned Chinese company. Roadside signage outlining the project is emblazoned with Sinohydro's name alongside that of the Japan International Cooperation Agency.
The southern part of the country, less developed than the more heavily populated north, illustrates China's strategic goals.
This area includes East Timor's first highway, connecting the coastal towns of Suai and Beaco. The first stage of the Chinese-built project was completed in 2018. East Timor is building up the area with an eye toward attracting a planned pipeline from the nearby Greater Sunrise offshore oil field being developed together with Australia.
But Dili and Canberra have yet to agree on which country will receive the piped oil.
"Without any certainty that the highway will be used, there's no way Japanese companies could participate" in the project, said a worker at a Japanese business in East Timor.
Dili looks to settle the matter by having infrastructure already in place, and is being encouraged by China, which also proposes turning Beaco into a port.
China's presence in the country fits President Xi Jinping's campaign to expand Beijing's influence in the western Pacific. East Timor sits just over 600 km from the Australian city of Darwin, which houses an Australian military base and a rotational force of U.S. Marines.
"A port on East Timor's southern coast with Chinese involvement would be a major security concern," a Japanese government insider said.
The Solomon Islands, which sit on the other side of northern Australia from East Timor, offer Beijing another potential vantage point from which to monitor American and Australian forces moving into the western Pacific. Beijing and the Solomons inked a security agreement in April that, according to a draft leaked before the signing, allows for deployments of Chinese military personnel and stopovers by naval vessels.
Xi may have alluded to China's influence-building in the western Pacific during a virtual meeting with U.S. President Joe Biden in November when he said the world is large enough for countries to cooperate on development with both Beijing and Washington.
As concerns grow over the possibility of a conflict in Taiwan, East Timor may become part of the tug of war for regional influence between China and the West.
Additional reporting by Bobby Nugroho in Jakarta.