Our influence in Papua New Guinea continues to decline

What I do know is that Chinese interest - official and unofficial - in the development of the port of Daru and the Kikori-Ihu Special Economic Zone has not gone away. The current PNG Foreign Minister continues to aggressively push Kikori-Ihu while the Western Province Governor pushes the Daru project, and other PRC engagement in the strategically important Western Province.

Both the Foreign Minister and the Governor are critical to China's ambitions. They are up for election in six weeks' time - and as with just about every contest in the PNG national elections their re-election is not guaranteed. So I would not be surprised if there is further action on both projects in the coming weeks.

In the last year or so it has become increasingly evident that China's interest in PNG has shifted in emphasis. I had believed it was more strategic given PNG's location so close to Australia.

The strategic interest must not be ignored by Australia, even if it has slid down the apparent PRC priority list.

I sense the current number one PRC priority in Papua New Guinea is economic and trade engagement. Papua New Guinea is rich in many of the resources China needs - especially oil and gas, copper, nickel, and gold as well as key agricultural commodities coffee, cocoa, and palm oil....and fisheries and forestry!

When we look at our engagement with PNG just one set of trade figures must surely cause alarm. They also confirm my view that our economic and trade engagement in vital community areas, such as agriculture, has diminished - again paving the way for China to gain a real foothold.

Papua New Guinea's main agricultural exports in terms of their benefit to the people are coffee and cocoa. In recent years, palm oil has experienced the most growth, but coffee and coco have significantly more growers. Unlike palm oil, where the major players dominate, for coffee and cocoa it is the rural majority who are the main participants.

That means strong coffee and cocoa production and export are widely beneficial across the 80 per cent plus of the population living in rural/farming environments.

That is why I am truly alarmed at the state of coffee and cocoa exports to Australia. PNG exports overall to Australia are currently lopsided given the predominance of gold and indirectly oil and gas.

Ten years ago, the value of PNG exports of coffee and cocoa to Australia totalled a modest $A45 million. Total they total just $A20 million!

I would have thought DFAT and Austrade would have given priority to coffee and cocoa imports from PNG, given the direct benefit both commodities offer the PNG economy, and especially the people of PNG.

Clearly, China has been watching this alarming trend in Papua New Guinea - Australia trade. Unless we are very careful, and frankly very active, China will capitalise on it.