China in the Pacific Ocean

China has been accused by Japan, Taiwan, Vietnam and others of aggressive moves in the Pacific region, including the militarisation of islands in the South China Sea. Over recent years China has also expanded its economic sphere of influence across the region, becoming the main trading partner of many countries bordering the Pacific Ocean, but politically speaking these nations remain highly wary of China, generally prefering to ally with the US. Fear of Chinese economic or political dominance is an open fear in countries like Australia despite China’s rhetoric of a peaceful rise.  Below I briefly examine China’s relations with a number of these countries. Next week I shall look at nations closer to China such as the the Koreas, Japan and Taiwan.

Papua New Guinea

The impoverished Pacific state has traditionally looked to Australia for economic partnership, but the Port Moresby government has recently turned to the Chinese EXIM Bank for the arrangement of a debt facility worth up to US$2.9 billion, which will be used for infrastructure improvements, including roads and bridges, vital in a poor connected country. Some commentators have linked these funds to the country’s new found oil reserves, arguing that China is trying to gain influence in order to take a future slice of the action.

Mexico

Sino-Mexican relations have taken off in recent years; bilateral trade has soared, but is heavily in China’s favour. Chinese exports to Mexico topped US$50 billion in 2013, while only US$6 billion went in the opposite direction. This could change as the price differential between Chinese and Mexican manufacturing has significantly shrunk, meaning that factories in the Latin American state will be much more competitive and gain a major advantage in selling to its giant northern neighbour.

Mexican companies have also invested in China, the bread making company Bimbo successfully moved into China, sincizing its products, adding ingredients such as red beans and beef to make them more palatable to Chinese tastes.

Australia

Australia has become a major supplier of natural resources to China and witnessed multiple investments by Chinese companies interested in the coal, copper and iron ore which lie under the continents’ vast landmass. This demand has made China the country’s major trade partner and led to a decade long commodity boom, which has come to a  halt as Chinese demand has fallen. It remains to be seen how badly the slowdown will hit China and whether it will slow the flow of Chinese investment into Australia.
Australia has remained politically and militarily allied with the USA and there is wariness in domestic circles towards overdependence on Chinese trade.

New Zealand

New Zealand has successfully exported its well-regarded dairy products to China, a country where food quality has come under a lot of scrutiny lately thanks to a number of high profile scandals in the industry. After successfully exporting milk, cheese and butter, the New Zealand based Fontera cooperative went one step further and actually set up a farm Tangshan, importing Friesians to sell the products closer to the market.

The two countries also successfully penned a free trade agreement in 2008, which liberalised economic ties between them, resulting in 96% of New Zealand’s export products being tariff free, along with a host of other measures which allow for easier bi-lateral investments.

Marshall Islands

The Marshall Island are in a compact with USA, but free to make diplomatic relations with other countries. The Government recognise Taiwan over mainland China, but trade and investment as yet remain insignificant with both countries.

Tonga

China has given aid generously to the Pacific nation, most notably the donation of an aircraft to enable the island to set up its own national airline.

Micronesia

Micronesia remains closely allied with the US, but China has pushed for fishing rights in the country, whose many island cover a vast expanse of Pacific Ocean.

Fuji

The Pacific country was the first to shift towards recognising Beijing over Taipei and since then a modest trade has developed between the two states, with the island buying Chinese textiles and other products, along with receiving Chinese aid in spite of coup which rocked the island in 2006, which led to it receiving the diplomatic cold shoulder from its traditional Commonwealth allies.

Vanuatu

The Pacific archipelago has reportedly tried to attract Chinese tourists to its pristine beaches and beautiful scenery. The financial crisis and lack of other industries on the island has meant the government is looking for new revenue streams and they hope to attract wealthy Chinese citizens wanting a break from busy, overcrowded and polluted cities.

Samoa

Economic relations remain insignificant, but China has given the island aid, including funding for medical and educational initiatives.



Categories: China Goes Global

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  1. Weekend Reading (In Case You Missed It edition): March 12-13, 2016 | Corint Consulting
  2. China’s relations in the Pacific region – Part 2 – Frontier Market Strategy

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