PNG signs on to China’s Belt and Road Initiative (News)

“That is a great potential for Papua New Guinea, which means that this will help integrate our own economy to the global economy … The rest of the world is making business with China and we cannot simply sit back and allow these opportunities to go by.”

The exact terms of agreements signed between China and partner countries on the Belt and Road Initiative (BRI) vary and tend to be broad. But they commit each country to working with China on infrastructure projects badged under the $US1 trillion ($1.3 trillion) program.

Crucially, O’Neill said he would not sign PNG up to any more Chinese loans during his visit.

Australian Foreign Minister Julie Bishop told Fairfax Media recently that Australia was concerned Pacific nations may be entering some financial arrangements with China that would “be detrimental to their long-term sovereignty” and wanted to make sure they were “not trapped into unsustainable debt outcomes”.

The Lowy Institute has calculated that Chinese-built infrastructure and construction projects totalled $858.4 million in the decade to 2016.

Loading

Jonathan Pryke, director of the institute’s Pacific Islands program, said the pace of building by China had “if anything increased since 2016”.

PNG owes China nearly $2 billion arising from concessional loans, according to the ABC – nearly a quarter of its total debt.

Pryke said the Australian government would likely be looking at this latest demonstration of deepening PNG-China ties “with a fair degree of anxiety”.

“[China] is really rolling out the red carpet,” he said. “They’re just investing more into an already pretty deep relationship.”

For O’Neill, this was part of a “look north policy” which is diversifying PNG’s strategic relationships, he said.

Loading

O’Neill has visited Australia six times since the Coalition took office in 2013 but not once as an official “guest of government”.

“It should be motivating us to up our game,” Pryke said.

But he added that Australia was clearly doing more to engage with Pacific leaders overall.

Solomon Islands Prime Minister Rick Houenipwela paid an official visit last week. And next week, Vanuatu Prime Minister Charlot Salwai will be a guest of the Australian government for a six-day visit.

Charles Abel, PNG’s Deputy Prime Minister, spoke at the Lowy Institute on Monday night and signalled there were some concerns in the country about China’s involvement. While Chinese aid and investment was providing opportunities to his country, it was also presenting challenges that Australia needed to help “balance”, he said.

“Some of the things that the Chinese interaction brings are not necessarily conducive to good governance, particularly if some of our country’s institutional frameworks are weak,” he said.

“We very much need our traditional partners to continue that engagement in the region and in Papua New Guinea to make sure there’s some balance brought there and support us in this development process.

“Whilst we appreciate the interaction with China, there remains some concerns in terms of the way they do conduct business.”

Some Chinese firms involved in PNG have raised concerns internationally because of their practices.

Several projects have been built by the China Harbour Engineering Company, a state-owned construction firm that was blacklisted by the World Bank for most of the past seven years for “fraudulent practices” on a previous Philippines road project.