Beijing has signed an MOU with Port Moresby to build a seafood processing complex on an island about 200 km from the Australian mainland. The agreement is part of a range of Chinese investment in the developing country, with debatable success.

China’s plan to build a fishing facility on a Papua New Guinean island could have gone largely unnoticed. The 527 million kina (US$146 million) project is one of a long list of Chinese overseas investments in developing countries planned under the Belt & Road Initiative, China’s multibillion-dollar plan to build international links through investment and infrastructure.

The idea is to build a “comprehensive multifunctional fishery industrial park” project on Daru Island and in mid-November, the two countries signed a memorandum of understanding to go ahead with the concept.

If it is built, the project could help Papua New Guinea maximise its commercial fishing capacity in the area, with a Chinese-built plant serving as a hub for fishing boats and processing catches.

But the complex would also be just 200km (125 miles) or so from the Australian mainland.
And as relations between Beijing and Canberra descend to their lowest levels in decades, a fishing complex is more than just a fishing complex.

The signing of the MOU in November came just five months after China gave dozens of Papuan companies permission to export their seafood products directly to the Chinese market instead of sending via Hong Kong or Singapore for clearance.

Yu Lei, a chief research fellow at Liaocheng University’s Research Centre for Pacific Island Countries, said China interest in the fishing industry was not restricted to Papua New Guinea it extended throughout the region to give Chinese consumers more choice. Yu said that interest had generally been appreciated by the island communities.

“There are many Chinese fishery projects like this in the Pacific. This actually says a lot about how the Pacific Islands welcome Chinese investment in helping them improve their economy,” he said.

But Yu also said China was not the biggest player in the market.

“China’s demand for PNG’s major fishery export, which would be tuna, is still far less than Japan and the US,” he said.

Even so, the Daru Island project has definitely caught attention in Australia, the dominant power in the region. An article published by the Australian Strategic Policy Institute this week said it was not in the country’s strategic interests to have a major Chinese government resource exploration project on its northern doorstep.

While the plan to build the fishing facility offers little detail, it is a clear sign of Beijing’s continued interest in Papua New Guinea and the Pacific Islands region despite previous hiccups.

It also sits against the backdrop of Canberra’s increased commitments to Pacific Island nations under its “Pacific Step-Up” banner, which pledges to start “a new chapter in relations with our Pacific family”.

The approach, introduced in 2016, was widely seen as Canberra’s response to China’s growing influence in the region by providing alternative funding for investment, infrastructure building and more recently, providing vaccines for Covid-19.

But Australia’s efforts to boost ties have faced setbacks, as Pacific Island nations have urged Canberra to do more to tackle climate change, an issue they see as an existential threat.

Graeme Smith, a fellow at the Australian National University’s department of Pacific affairs, said it was too early to say much about the fishing project.

“An MOU signing ceremony in Papua New Guinea means almost nothing, they’re a dime a dozen,” he said.

“A lot of things need to come together the [Chinese] company needs to have the competence to run a large project in PNG big question mark on that. Even with state backing, these things can flounder,” he said, adding China had invested in another fishing project in northern Papua New Guinea, but with little result.

Michael Fabinyi, who researches fisheries governance in the Asia-Pacific region at the University of Technology Sydney, said Chinese overseas fishing and aquaculture interests were often closely linked with strategic interests.

“This can be seen both in terms of soft power, for example, investments in fisheries and aquaculture in countries participating in the Belt & Road Initiative and in terms of hard power – for example, using armed fishers the maritime militia in disputed waters of the South China Sea,” Fabinyi said.

However, China’s interest in Papua New Guinea, the biggest island country in the Pacific, extends into other areas.

According to ANU researcher Sarah O’Dowd, at the end of 2018, of the 15 Chinese investments of over US$100 million in Papua New Guinea, 60 per cent were in transport, real estate and metals.

Formerly administered by Australia, Papua New Guinea has increasingly turned to China for financing.

In November 2018, not long after Papua New Guinea signed up for the Belt & Road Initiative, Chinese President Xi Jinping made a state visit and promised US$300 million in concessional loans.

Despite this, economic ties have not flourished, with loans reportedly not materialising and challenges in some of the huge projects

In August last year, Papua New Guinea failed to receive urgent financial support from China to prop up its budget. The request was first made public in a statement by Prime Minister James Marape, but later withdrawn after a meeting Chinese ambassador Xue Bing.

Australia later agreed to loan US$332 million in direct funding to be paid back with a 2.5 per cent interest rate.

Another major initiative that did not go to plan was Chinese tech giant Huawei Technologies’ project to build an undersea internet cable connecting the Solomon Islands, Papua New Guinea and Australia. Australia stepped in to fund and completed construction of the cable last year.

Ian Kemish, a former senior Australian diplomat who studies Papua New Guinea, said that after seeing many Chinese deals fall through he was not convinced the latest Chinese fisheries project would “actually translate into anything concrete”.

“I have yet to see a Chinese entity invest the resources required to successfully engage stakeholders in Papua New Guinea or the Pacific in a sustained way,” Kemish said.

“There tends to be a ‘top-down’ assumption by Chinese organisations that successful implementation will follow if agreements are made at the highest level. This is wrong.

“In fact, PNG and other Pacific cultures operate on a consensus-based approach, where individual landowners and other local stakeholders will reject deals made at the national level if they have not themselves been consulted and if there are no clear local benefits.”

Author: Kinling Lo
Editor’s Note: The article reflects the author’s opinion only, and not necessarily the views of the editorial opinion of Belt & Road News.