But Wang’s visit still triggered a rapid uptick in bilateral deals signed with Pacific Island nations. The titles of these agreements suggest they contain elements of the regional deal, but some details of the contents have not been made public. He secured 52 bilateral economic and security agreements following the visit, consolidating Beijing’s status as a regional partner.
From aid to investment
China’s aid to the Pacific is substantial, but according to Australian think-tank the Lowy Institute, it peaked in 2016 in line with an overall decline in aid to the region. This could change dramatically if some aid mega-projects – particularly the Ramu 2 hydropower project or the PNG national road network – come to fruition. Despite the advent of a central aid coordination agency in Beijing (CIDCA), China’s aid to the region remains ad hoc and fragmented.
Between 1950 and 2012, Oceania received approximately US$1.8 billion in Chinese aid. China was the second-largest aid donor after Australia to the Pacific region in the latest available data between 2011 and 2018. Just over two-thirds of aid disbursed was as interest-free or concessional loans and the remainder was in the form of grants. Fiji received roughly a quarter of China’s regional aid, second to PNG, which received 32 percent. There has since been a 15 percent decline in Chinese aid from US$2.9 billion in 2018 to US$2.44 billion in 2019.
The line between China’s aid and investment is getting blurrier in the Pacific and elsewhere. One example is the Kumul Submarine Cable Network, majority funded by US$270 million preferential buyer’s credit from the Export-Import Bank of China (China Exim Bank), channeled to local state-owned enterprise PNG DataCo, a wholesale subsidiary of Kumul Telikom Holdings, with work contracted to Huawei Technologies, the Shenzhen-based technology multinational.
While China’s official aid is in decline, the presence of Chinese companies in the Pacific region is not. Investments by Beijing have been linked to office official visits, using state-owned enterprises as an arm of its foreign policy. In the year when PNG hosted the Asia-Pacific Economic Cooperation forum in 2018, the number of registered Chinese state-owned enterprises in PNG increased from 21 to 39. While researchers are compiling a reliable dataset of China’s companies, it is already clear Chinese enterprises have come to dominate the construction, energy and mining sectors of many Pacific Island states. There is a near monopoly of the retail sector by Chinese business migrants (largely from Fujian and Guangdong provinces).
From 2000 to 2012, a year before the inception of the BRI, the value of trade between China and its diplomatic Pacific partners increased from $US248 million to $US1.77 billion. The value of bilateral trade with Pacific Islands Forum members (excluding Australia and New Zealand) almost doubled, from US$4.5 billion in 2012 to US$8.6 billion in 2018. The Marshall Islands, PNG and Fiji are China’s top export destinations. Between 2012 and 2018, the number of Chinese tourists to Oceania increased from 55,000 to 225,000.
In the past 10 years, China has added two new diplomatic partners and maintains embassies in eight of the 10 countries it has formal relations with (the Cook Islands and Niue are the exceptions). There are currently six Confucius Institutes across the Pacific, two in Fiji and one in each of the Cook Islands, PNG, Samoa and Vanuatu. Suva, the capital of Fiji, is home to one of the world’s 20 China Cultural Centers – venues built to promote “cooperation and communication … by building a bridge for people around the globe to get acquainted with China”. China has also expanded the availability of scholarships and training for students and journalists in the past 10 years.