Opportunities for trade with China
The Minister of Commerce Industry and Labour, Lautafi Fio Selafi Purcell, opened the China-Pacific Economic Cooperation Forum in Apia last week. Held at Sheraton Samoa Aggie Grey’s Hotel, the meeting was held on the sidelines of the 48th Pacific Islands Forum Leaders Meeting. This is what the Minister said:
Lautafi Fio Purcell
Minister of M.C.I.L
Remarks at China-Pacific Economic Cooperation Forum
It is a great pleasure for me to be here this morning to attend the opening of this important Pacific Islands Economic Development Forum. On behalf of the government of Samoa I convey to you all our warmest welcome to our shores and I sincerely hope you enjoy your brief stay here.
I would like to congratulate and thank our partners in China, the Forum Secretariat, the Ministry of Foreign Affairs and Trade, and our Embassy in Beijing for organizing this forum as a side event for the Pacific leaders meeting this week.
An exchange of views and perceptions with our industry partners from China on some of the key issues that are important to our Pacific island countries in our economic relations with China is therefore timely and important, particularly on trade, investment, and tourism sectors which are the main topics of discussion at this Forum.
Perhaps more particularly so today as we witness the continuing rise of China and Asia as a whole, and as the fastest growing economic region in the world. China has achieved outstanding economic advances and now exerts a very strong influence on the performances of the rest of the economies of the world.
According to International Consultancy PwC the aggregate gross domestic product at purchasing power parity of 5 major ASEAN economies, Indonesia, Malaysia, Philippines, Thailand, and Vietnam will reach US$ 22.6 trillion in 2050 (currently 6.5 trillion in 2016). China and India are estimated to reach $56 and $44 trillion respectively.
It is important therefore that we take note of these projections and trends as we navigate our small and vulnerable economies in the years ahead.
Bilateral trade between China and the Pacific island countries last year reached US 8 billion. This accounts for US$2.5 billion in exports by Pacific Islands to China and US5.5 billion in Chinese exports to the Pacific Island countries. In the first half of 2017 bilateral trade between China and the Pacific Island countries has reached US4.3 billion, an increase of 10.5% from last year.
Whilst we welcome the gradual increase in bilateral trade, we should also take note that exports from China to the Pacific islands doubled that of exports from the Pacific islands to China last year.
Pacific exports to China are limited consisting mainly of fish, marine resources, logs, natural gas, copper and water. There are a number of issues to ponder over during your discussions today:
What are the opportunities for the Pacific island countries to diversify into other products to take advantage of the huge Chinese market? What avenues are there to assist exporters in terms of financing, partnership with Chinese companies, marketing and exporting?
Have Pacific island governments put in place the necessary frameworks required to assist exporters? What are the governments doing to address transportation concerns both sea and direct air links?
A number of Pacific island countries like Samoa no longer enjoy the benefits of zero tariff access for its products to China after having recently graduated from UN LDC status.
This has placed pressure on our agriculture exports to China like Nonu juice and other products being subject to duty and tax. I note that some Pacific Island countries like Fiji are already pursuing bilateral Free trade Agreements (FTA) with China for their products like Fiji water which continues to do well in China. Unfortunately for the Pacific islands a regional FTA proposal with China that was in the pipeline a few years ago, has not materialized.
The inclusion by the Chinese government of the Pacific region as a natural extension of the 21st Century Maritime Silk Road initiative is welcome.
We welcome however advice from the Chinese side at this forum how trade and economic cooperation with the Pacific islands will evolve under the Belt and Road initiative.
This follows the announcement made at the Belt & Road High Level Dialogue held in Beijing in May of this year, where China announced that in the coming three years, it will provide assistance worth RMB 60 billion to developing countries and international organizations participating in the Belt and Road Initiative to launch more projects to improve people’s well-being.
There have been some early signs of cooperation under the Belt and Road Initiative in bilateral cooperation between Pacific island countries and a number of cities in Guangdong Province.
Cities like Shenzhen and Huizhou for example who have sister cities with Apia have commenced culture, health, education and economic cooperation projects in Samoa while other cities are engaging in similar projects with other pacific island countries. The presence of CCPIT (China Council for Promotion of International Trade - Beijing) and CDI (China Development Institute - Shenzhen, Guangdong Province) and other partners from China at this event therefore, is appreciated and demonstrates China’s commitment to support the development aspirations of Pacific islands countries in developing our trade and investment links with China.
It is important to note that other than in mining and fishing, large investments by China in the Pacific islands has largely been in the form of infrastructure/construction under its concessional loan and grant schemes.
There is therefore a need for the Chinese government to help support Chinese private companies investment in large-scale projects in the pacific islands in areas such as tourism, agriculture and airlines. With the Chinese government putting stricter controls and supervision of overseas investment this could have an impact of potential future partnerships between Chinese and Pacific Island companies.
I have continued to follow with interest our tourism industry and development having served recently as Samoa’s Tourism Minister.
It is one of the main pillars of the Samoan economy and indeed for many Pacific islands, it’s their main industry besides fisheries. While tourism numbers for Chinese visitors to the Pacific islands is relatively low compared to other regions, the potential for growth is huge. 120 million outbound tourists from China travelled overseas last year.
There is enormous interest in Chinese tourists from everywhere including our neighbors, New Zealand and Australia because of the sheer number and potential spending and impact on the local economy.
With the exception of Palau and Fiji, tourists arrivals from China are relatively low for many PICs, as the Pacific region is still unknown to many Chinese. This may be to our advantage as it would allow us time to address many tourism related issues with respect to China such as direct air services, sufficient hotels rooms, adequate high quality services and infrastructure, and most importantly, sustainable tourism and how our small island countries should prepare and benefit for mass tourism inflow in a sustainable manner? Is the current tourism revenue sufficient and are the hotels suffocating from the lack of tourist arrivals from our traditional markets like New Zealand and Australia? Can China fill the void and if so what are the challenges?
Another important initiative that is acknowledged and applauded is that of the ‘China Pacific Tourism Year (CPTY) 2019, through ongoing discussions and arrangements between the China National Tourism Administration (CNTA), and the South Pacific Tourism Organization (SPTO). This initiative will benefit and contribute to the sustainable development of our island economies through the Tourism sector. The government of Samoa is fully supportive of the proposal for a China Pacific Tourism Year (CPTY) 2019.
I wish you well in your deliberations and once again convey our government’s appreciation for your contribution to this forum, thank you to all our guests from China and the Pacific. I wish you again an enjoyable stay in Samoa and a safe return home. Soifua.