China seeks loans and demonstration projects in the Pacific Islands

PORT MORESBY, Papua New Guinea – As world leaders land in Papua New Guinea for a Pacific Rim summit, the welcome mat is especially important for the Chinese president.

A huge sign in the capital, Port Moresby, greets Xi Jinping, looking at him with a friendly glance at the leader of Papua New Guinea, and his hotel is adorned with red Chinese lanterns. China's footprint is omnipresent, from a prestigious boulevard and an international congress center built with the help of China to bus stops that announce their origins with "China Aid" plaques.

On the eve of Xi's arrival for a state visit and meeting of the Asia-Pacific Economic Cooperation, the country's newspapers issued a full-page statement of the Chinese leader. He urged the Pacific Island States to "undertake a new journey" in their relations with China, which, in the space of a generation, has been transformed into a major economic power by passing from the bottom of the world's most populated seas.

With his actions and words, Xi sends a compelling message to the fragile island states of the South Pacific, long supported and pushed by the ally of the United States, Australia: they now have the choice between benefactors. With the exception of Papua New Guinea, these island countries are not part of APEC, but many of their leaders have traveled to Port Moresby and will meet Xi.

The APEC meeting, meanwhile, should be dominated by Xi. Leaders in the headlines, such as Russian Vladimir Putin and US President Donald Trump, are not present. Trump's Vice President, Vice President Mike Pence, is in Cairns, North Australia, and travels to Papua New Guinea every day. The new Australian Prime Minister, Scott Morrison, the country's fifth leader in five years, is barely known abroad.

"President Xi Jinping is a good friend of Papua New Guinea," Prime Minister Peter O'Neill told reporters. "He has been very involved in Papua New Guinea and I have visited China 12 times in the last seven years."

The Pacific island nations, generally tiny, remote and poor, rarely occupy an important place on the world stage, but have for several years been diligently courted by Beijing as part of its global efforts to finance infrastructure that serves its economic and diplomatic interests. . Papua New Guinea, with a population of about 8 million, is by far the most populous and, with its vast tropical forests and oil and gas reserves, is an obvious target for economic exploitation.

Six of the 16 Pacific Island States still maintain diplomatic relations with Taiwan, a sizeable group within the dwindling number of nations that recognize the island as a renegade province by Beijing. Chinese aid and loans could send these six people back to his camp. A military anchorage in the region would be an important geostrategic asset for China, although its alleged willingness to have a base has been hitherto thwarted.

The assistance provided by Beijing does not need the supervision and conditions imposed by Western countries and organizations such as the World Bank or the International Monetary Fund. $ 4 billion in funding is pledged for the construction of the first national highway system in Papua New Guinea, which could transform the mountainous country. But experts warn that there could also be big costs thereafter: unsustainable debt, white elephant centerpieces and social tensions of a growing Chinese diaspora.

"China's commitment to infrastructure in PNG should not be overlooked. This needs to be encouraged, but the PNG government needs to keep a close watch on how it works to be effective in the long run, "said Jonathan Pryke, a Papua New Guinean expert from the Lowy Institute, a think tank based on in Sydney.

"The benefits of these projects, because many of them are financed by borrowing, come only from an improvement in economic output over a long period to be able to justify the repayment of these loans", a- he declared.

"The history of infrastructure investments in PNG shows that all too often, maintenance is inadequate," said Pryke. "There is a paradigm of construction, neglect, reconstruction in PNG, as opposed to construction and maintenance that are much more efficient."

Some high-profile Chinese projects in Papua New Guinea have already encountered problems. A promised fish cannery did not materialize after several years and the extension of a port at Lae, the main shopping mall, was sloppy and required extensive rectification work . Two Chinese state-owned companies operating in the country, including the port extension company, have recently been blacklisted for World Bank-funded projects due to fraud or corruption.

Xi's press reported that China is the largest foreign investor in Papua New Guinea, a more ambitious than real statement. Its stake is being negated by the investment of a single company, ExxonMobil's $ 19-billion natural gas extraction and processing facility.

Australia, the former colonial power in Papua New Guinea, remains the largest donor of classical foreign aid. Its assistance, spread across the country and aimed at improving basic public services and government capacity, is less visible.

But his approach is changing in response to China's moves.

In September, the Australian government announced that it would pay for what is usually a commercial venture: a high-speed submarine cable linking Australia, Papua New Guinea and the Solomon Islands that promises to make Internet and telecommunications faster more reliable and cheaper.

Earlier this month, Australia announced funding of more than $ 2 billion for infrastructure and trade funding for Pacific island countries and also decided to jointly develop a naval base in Papua New Guinea. New Guinea, starting from the dreaded participation of China. It also strengthens its diplomatic presence by opening more embassies in all Pacific island states.

"The APEC meeting announces as a confrontation between China and Australia for an influence in the Pacific," said Elaine Pearson, Australian director of Human Rights Watch.

This may seem like a positive development for the region, but Pearson warned that competition for Papua New Guinea's vast natural resources had had little positive impact on the lives of its people.

"Unfortunately, exploiting resources in PNG has fueled violent conflict, abuse and environmental damage," she said.

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Jim Gomez, an Associated Press reporter, contributed to this report.

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