Papua New Guinea: Balancing Beijing’s Economy and Washington’s Security

Willem van den Berg

When most Westerners think of Papua New Guinea (PNG) what comes to mind is often a combination of exotic photos from National Geographic, passages from Jared Diamond’s Guns, Germs, and Steel, and something resembling the image Boris Johnson created when he likened the Tory party to “Papua New Guinea-style orgies of cannibalism and chief-killing.” Not many see this Pacific island nation playing a role in the machinations of the great powers. However, that is exactly what PNG has done throughout the 20th century and is increasingly doing again in the twenty-first.

During the twentieth century the island of New Guinea saw wars involving Australia, Britain, the Netherlands, Germany, Indonesia, Japan, and the United States, including significant campaigns by the Allies against the Japanese during the Second World War. Independence in 1975 led to a period of little foreign interest in the now sovereign state of Papua New Guinea; in the twenty-first century, it seems that the great powers are again turning their eyes to this Pacific island. Despite only having a population of seven million and a slightly smaller territory than Spain, PNG is home to some of the world’s most valuable natural resources. This year the Economist predicts PNG to have the world’s fastest growing economy.

PNG, like most Pacific island nations, has traditionally had a much closer relationship with Australia and the US than with China. Australia is the region’s largest bilateral trading partner as well as the largest aid donor. Australia and the US spend vastly more on defense cooperation in the region than any other nation and the US continues to be the leading military power in the Pacific, with military bases stationed throughout the Pacific islands and an unparalleled navy at standby. However, as China’s economic rise continues unabated and the world edges away from unipolarity, PNG’s close relationship with the West will come under increasing strain.

China’s rising interest in PNG is motivated by the island’s vast supplies of raw materials and mineral products, including natural gas, copper, and gold. Chinese trade with PNG increased more than tenfold between 2001 and 2011 to more than US$1.2 billion, and it continues to rise each year. A prominent example of China’s economic involvement in PNG is the Ramu Nickel Project, a US$1.4 billion investment by China’s Metallurgical Group Corporation, which was begun in 2008 and is expected to produce 31,000 tons of nickel and 3,200 tons of cobalt per year for the coming forty years. Thousands of Chinese now work in PNG, primarily in resource extracting industries. In addition, China has ramped up its foreign aid to PNG and since 2008 has begun giving military training and assistance to the PNG Defense Force, traditionally only given by Australia, the US, and New Zeeland. In 2013 China offered the PNG Defense Force a US$2 million grant, and PNG is preparing to open a second diplomatic mission in China—which is significant, since PNG has fewer than twenty diplomatic missions around the entire world.

Western states have not been blind to these developments. In 2011, then Secretary of State Hilary Clinton told the Senate Foreign Relations Committee that “We are in a competition with China. Take Papua New Guinea - huge energy find. Exxon Mobil is producing it. China is in there every day in every way trying to figure out how it's going to come in behind us, come in under us.” Though Clinton later downplayed these comments, they are emblematic of what many in Washington see as a zero-sum game between the US and China in the region. China’s involvement in PNG security matters has particularly raised alarm bells: both Australia and the US quickly promised increased levels of military training and naval support for the country.

Chinese investment in PNG has not been particularly smooth. Chinese companies have been accused of discriminating against Papua New Guineans by illegally bringing in thousands of Chinese workers, engaging in large scale corruption, and destroying the environment. Anti-Chinese sentiment is widespread throughout the country, erupting in numerous anti-Chinese riots over the past decade. In one such riot in 2009, sparked by a fight at a Ramu Nickel refinery, tens of thousands of rioters burned Chinese stores to the ground in several of the major cities and four Chinese were stabbed to death.

PNG’s government has a very amicable relationship with China though. Former Prime Minister Michael Somare encouraged Chinese companies to invest in PNG and welcomed military cooperation between the two countries. As a result, during anti-Chinese riots text messages circulated among the rioters declaring “The Somare regime existed through Asian mafia’s funding.”  Current Prime Minister Peter O’Neill has taken a less overtly pro-China stance, inviting more Australian troops to the island and declaring that PNG’s vital strategic and security relationships remained with Australia and the United States, though the country would continue to develop closer economic ties to Asian countries.

The trends observable in PNG-Chinese relations are present throughout the Pacific island region. Trade and aid have dramatically increased over the past decade and Chinese diplomatic engagement is beginning to reflect that. Chinese officials are now warmly welcomed and China has begun to formalize its relationship to the region, for example by hosting the China-Pacific Island Countries Development Cooperation Forum, where China promised US$1 billion in loans and 2,000 student scholarships to the islands in the coming years. After the 2006 coup in Fiji the West reduced aid and imposed sanctions on the country, while China actually increased its aid in accordance with its policy of non-interference, providing more than half of all foreign aid to Fiji for several years. Samoan Prime Minister Tuilaepa stated “China is a better friend to Pacific Island countries than the United States.” PNG, along with several other Pacific island nations, are awakening to the prospect that their future may include a mismatch between their security ties to the US and their economic ties to China.

Rather than flashpoints like Taiwan and the Senkaku/Diaoyu islands, it is in countries like PNG where China, underreported in the West, is successfully gaining geopolitical ground and starting to challenge American hegemony. China’s economic involvement in the region has ballooned, and it is being followed by diplomatic and military clout. Although PNG will remain in an American and Australian-dominated Pacific island security system for the foreseeable future, the gravitational pull of the Sino-sphere is steadily increasing. PNG is slowly being tugged out of its Western orbit and is increasingly experiencing the tension between Washington’s powerful security ties and Beijing’s lucrative economic ties.