Thirty-six executives from major Chinese energy, forestry, fisheries, tourism and construction businesses are in PNG this week to look for investment and development opportunities. Pacific Trade Commissioner David Morris is leading the delegation.

Trade Commissioner, David Morris

This week’s trip to PNG reflects ‘very strong’ Chinese interest in supporting infrastructure development and in PNG’s capacity to supply China with goods and services, says Beijing-based Pacific Islands Forum Trade Commissioner, David Morris.

It also reflects China’s policy of ‘carving out a place in the Pacific,’ he told a briefing at Sydney University last week.

‘China is investing in its links to the South Pacific,’ Morris said, ‘just as it is building bridges to other parts of the developing world.’

Commercial opportunities

Morris says that, in addition to Chinese fishing boats paying licence fees to Pacific Island Countries to go fishing, there are opportunities for more value adding in the region, including sustainable aquaculture.

‘Beneath the sea bed there are significant resources only discovered in recent decades and only now able to be accessed with new technology.

‘China Minmetals Group was the first Chinese firm to obtain rights from the International Seabed Authority to explore the seabed for minerals over a 73,000km2 area of the Eastern Pacific.

‘…  in ten years time, the Chinese economy will be about double the size it is today.  About double the size of the United States economy. It’s up to us to navigate how we build links to China.’

‘Like the fishery resource, the sea bed environment will need to be carefully managed, but this is a major opportunity for economic development for Pacific Island Countries from Papua New Guinea to Tonga.’

Morris says tourism is perhaps the best service industry sector — not just for PNG, but the Pacific — as more than 100 million Chinese tourists travel overseas each year.

Tourism can provide ‘employment in hospitality, local production of food, handicrafts and other products,’ he said.

‘They win and they win again’

Morris says ‘the jury is still out’ on whether or not recipients of Chinese investment and aid are benefiting from a ‘win-win’ situation.

‘Some believe it is more like ‘they win and they win again’ because the infrastructure is being built by Chinese firms with Chinese labour and assets (and is then) being picked up by Chinese firms and many of the benefits are flowing in one direction.’

He also says governments taking advantage of Chinese loans to develop infrastructure need to be wary of taking on too much debt; they must ensure that the infrastructure is designed and delivered for the public good.

These matters, he said, are in the hands of local governments.

‘The signs so far are that China wants to engage in practical projects that will aid the development of those Pacific Islands with which it has diplomatic relations.

‘In PNG, China is helping to fund the national broadband roll-out and water and sewage projects.’

Morris says Pacific governments need to ‘take stock’ of their competitive strengths if they are to take advantage of China’s growth, which is expected to be about 6.5-7 per cent per annum over the next decade.

‘That means in ten years time the Chinese economy will be about double the size it is today.  About double the size of the United States economy.’

‘It’s up to us to navigate how we build links to China,’ he said.