China’s stranglehold over PNG and South Pacific trade a crisis for Australia

The Judith Neilson Institute, in association with The Guardian, is running a comprehensive series of investigative articles under the theme "Pacific Plunder" which highlights the full extent of China's stranglehold over exports from just about every South Pacific Island nation as well as Papua New Guinea.

The forensic work the Institute is undertaking, and publishing via The Guardian, is in its early stages, but what has already been revealed is truly alarming – and ought to be a massive wake up call to Australia, and our allies such as New Zealand and the United States.

In my articles of the China influence in PNG and the South Pacific my focus has been on debt trap diplomacy – infrastructure and communications loans in particular – that is allowing PRC companies dominate the construction and technology sectors in most countries. Generally the funding comes from Exim Bank and other PRC finance houses that require the work to be undertaken by designated PRC construction companies.

It remains my view that Australia's response has been wholly inadequate. It has so far, via the Pacific Step Up program, made very little difference. The simple truth is that China's domination of these key sectors has not slowed at all.

The Judith Neilson Institute is highlighting what may be an even more consequential aspect of China's expanding "influence in PNG and the South Pacific".

In this contribution I want to focus on just two aspects of this expanding influence and what Australia might do about it.

The Institute's study claims that over half the total exports from PNG and the South/Central Pacific goes to China. Its growth has escalated in recent years as China has sought to entrench and broaden its economic influence in particular. Infrastructure and construction are the driving forces but it is clear that trade is now just as influential.

The main exports from the region to China are timber, fisheries, and gas and minerals. Exports of agriculture are also on the rise.

On face value, Australia's imports from the region look reasonable, but gold and crude oil make up 96 per cent of our imports from the region, principally from Papua New Guinea.

The question which surely arises is what can Australia do and do urgently to increase our imports from the region and lessen the region's growing dependence on China? That dependence will be even more consequential than the unaffordable debt burden most countries have run up.

While timber exports harvested legally and illegally are increasingly dominated by China (it once was Malaysia) it is a very complex area that Australia really cannot do much about in the short term. We could not justify importing high quality and unprocessed timber products from PNG and the Solomon Islands on environmental grounds alone. China and a couple of other Asian countries are under no such constraint

But there are two industries we could take significantly more PNG exports from – and do so relatively quickly.