China’s investment in Pacific Islands growing

China’s cumulative foreign direct investment in Pacific Island countries has grown rapidly since 2014, reaching $2.8 billion in 2016.

This is an increase of 173 per cent from 2014 following President Xi Jinping’s visit to the region, according to a staff research report published by the United States-China Economic and Security Review Commission. 

According to the report, nearly 70 per cent of the F.D.I. was concentrated in Papua New Guinea, but despite its accelerating growth, Chinese F.D.I. in the region was just 0.21 per cent of its global outward F.D.I. in 2016. 

“Since 2005, Chinese firms have invested in two mining projects in Papua New Guinea worth $970 million. Aside from these projects, Chinese F.D.I. throughout the region has been mostly in the transport, real estate, and energy sectors,” the report said. 

The report highlighted that Chinese firms have recently signed major deals with Pacific Island countries on a range of infrastructure and real estate projects, with P.N.G. approving a $4.4 billion worth of projects to be carried out by China Railway Group for road, agricultural industrial parks, and a water supply upgrade in 2017. 

In Fiji, Chinese firm Guangdong Silk Ark Investment is building a $500 million resort on the Fijian coast, one of the biggest projects in Fiji, which was projected to be completed last year, according to the report pointing to China’s real estate investment. 

According to the report, Chinese companies have also been active in information and communications, with Chinese telecom company Huawei given the contract to build national broad band transmission network for P.N.G. with international connectivity via Indonesia, drawing concerns from the Australian Government.  

The Solomon Islands also awarded the contract to Huawei to construct an undersea cable to connect the Solomon Islands’ main islands with onward connectivity to Australia. 

According to the Executive Director of the Australian Strategic Policy Institute, Peter Jennings, “Chinese telecoms companies have connections to the Chinese state. This raises the risk of infiltration, intellectual property theft and could give Beijing the capacity to shut down Australian networks in the event of a crisis,” the report said.

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