Prime Minister Scott Morrison touched down in Timor-Leste in August 2019, for his first visit to the country since taking office. While there, Morrison announced a fresh start for the bilateral relationship following a messy maritime boundary conciliation process which concluded the previous year. Two months later, Chinese training ship Qi Jiguang received a gala welcome into Dili Harbour, preceding talks between Timorese Defence and Security Minister, Filomeno Paixao, and Rear Admiral Yu Wenbing of the People’s Liberation Army Navy. The visits come at a crucial time for the Timor-Leste economy, as it attempts to make the transition away from oil dependency.

Key points:

• The economy of Timor-Leste is largely dependent on oil reserves and faces shortfalls in the infrastructure funding necessary to develop the non-oil economy.
• Australian development assistance funding, which recently reached $100 million annually, could be overshadowed by possible Chinese investments in petroleum infrastructure projects, which could reach billions of dollars.
• China’s interests in Timor-Leste are broadly underpinned by the national objective of expanding its influence in South-East Asia.
• Australian interests are two-fold, and include shared security interests while recognising the need to counter potentially competing foreign influences in Timor-Leste.
• There is little evidence that China’s influence in Timor-Leste is currently harmful to Australian interests. In the long-term future, however, that may change, and Australian policymakers will need to be alert to that possibility.