Chinese influence in PNG a ‘wake-up’ call

PNG Prime Minister Peter O'Neill meets China's President Xi Jinping. Picture: EMTV Online

PORT MORESBY,17 SEPTEMBER 2018 (SMH) – Chinese signs on Port Moresby bus stops are one indication of Beijing’s growing influence and investment in the country and should be a wake-up call for Australia, warns the head of a major oil and gas company.

Oil Search chief executive Peter Botten said China had been investing in Australia’s nearest neighbour as part of its global US$1 trillion Belt and Road infrastructure (BRI) building programme. The BRI involves hundreds of infrastructure projects co-funded and mostly built by China in 70 or more countries.

He warned that China’s increasingly heavy investment there risks Australia missing out on PNG’s rapid development.

“China has stepped up their support and this has been welcomed by the Papua New Guinean government. They’ve built new roads and schools, they’ve spent substantially. It’s a new dynamic in the country,” Botten said.

“This is a reasonable wake-up call for Australia, and they should look at how they can help Papua New Guinea to develop.”

This time last year, Chinese investments in PNG reached more than $US$1.9 billion. Beijing recently committed about US$4 billion to build a road network connecting PNG’s capital Port Moresby to its economic hub Lae. This is critical as there is currently no significant road connection between these cities.

Papua New Guinea signed up to China’s Belt and Road Inititative in June this year, and the country owes China nearly US$2 billion arising from concessional loans, according to the ABC – nearly a quarter of its total debt.

While Australia is still the number one provider of foreign aid providing $546 million (US$390 million) in 2017, a recent Deakin University paper noted that Papua New Guineans viewed “Chinese aid as more effective”.

“Australia needs to recognise reality: China is rising,” the paper stated.

This was supported by the Lowy Insitute’s Pacific Islands project director, Jonathon Pryke, who said Australia needed to reassess its relationship with PNG, which was a former colony of Australia.

“Whereas in Australia the perception of our relationship with PNG has been a challenge, China is viewing it as an opportunity,” Pryke said.

“The role China is playing in PNG is creating a sense of urgency in the Australian government.”

A Department of Foreign Affairs and Trade (DFAT) spokeswoman said the government “welcomes the role played by all investors, including from China, to support sustainable development in Papua New Guinea”.

Botten said China had made itself very conspicuous in its investments.

“They’ve made their presence very obvious and are very good at demonstrating their presence,” he said.

“One example is the bus stops around Port Moresby, they have the Asia-Pacific Economic Cooperation logo on them and the Chinese Aid insignia. They’re good at highlighting what they’re doing.

“PNG is a very exciting place to be at the moment, and people are underestimating what’s going on in the country.

“China has definitely woken up to the power of branding, the Chinese aid insignia now rivals the Australian kangaroo in the Pacific,” Pryke said.

“We need to have a close look at how we can do better in the country.”

Oil Search operates one of the largest gas projects in PNG with ExxonMobil and Santos, called PNG LNG.

Earlier this year, it defied market expectations by posting a profit above analyst forecasts after a major earthquake halted its PNG operations for months.

While its profits dropped nearly 40 per cent for the first half of 2018 compared to the same time last year, it was still 20 per cent above RBC Capital Markets’ estimates for the period.

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