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Saturday, November 27, 2004

China woos South Pacific

China woos South Pacific

Published November 26, 2004

The flow of tourists, aid projects and investment reflects Beijing's penetration of the island nations

By JAMES BROOKE

ASIAN leaders flying home this week from a regional meeting with US President George W Bush in Chile might have looked down over the widely scattered South Pacific islands and believed they were flying over an American playground. But judging by the swelling flood of Chinese tourists to these sunbathed islands, the Pacific is rapidly becoming a destination for Chinese tourism, fishing and investment.

Swelling flood: Chinese tourism worldwide is forecast to hit 100m in 2020. Beyond aid, China's biggest economic attraction for the mini-states of Oceania is tourism

In July, China Southern started flying to Saipan, Northern Mariana Islands, twice a week from Shanghai. In October, China gave the green light to mass tourism in the Northern Marianas, granting approved destination status. On Jan 2, direct flights are to start from Beijing.

'Almost every flight is full - tomorrow night's flight is overbooked, Friday's flight is overbooked,' said Tom Liu, the general manager of Tinian Dynasty Hotel and Casino, a US$150 million Chinese-owned investment on Saipan's next-door island. Speaking by phone from his hotel, which features Chinese dragon decor and a plush discotheque, Club de Macau, Mr Liu said that the start of a lone flight from Guangzhou in April 2002 raised occupancies at his 412-room hotel from 15 per cent to 65 per cent today. With Chinese tourism doubling this year and expected to hit 50,000 next year, he predicted confidently: 'China will definitely be our largest market.'

Washed by warm Pacific breezes, these small volcanic islands have floated with the historical ebb and flow of world maritime powers: 350 years of Spanish rule, 15 years of German rule, 30 years of Japanese rule and now, 60 years of American rule. But now, with Chinese tourism worldwide forecast to hit 100 million in 2020 - a 10-fold increase in two decades - the Tinian hotel is betting on China. Next year, it hopes to open for direct flights from China, a brand new US$23 million, 8,600-foot airstrip. Built by Americans, the runway is already being called 'the Chinese airport' by residents.

Economic power

China is emerging as an economic power in the Pacific, an area that covers one-third of the globe. Although populations are small, the mini-states of Oceania straddle crucial shipping lanes and valuable fishing grounds. The arrival of tourists, aid projects and investment signifies China's penetration of the Pacific.

'The Chinese will dwarf the Japanese in tourism and business,' said Dirk A Ballendorf, an American who teaches Micronesia's history at the University of Guam in Saipan. 'I recommend that all my students study Chinese.'

This spring, China joined the South Pacific Tourism Organisation - a move that came after granting preferential tourism status to the Cook Islands, Fiji, Tonga, Vanuatu and now the Northern Marianas, only a four-hour flight from Shanghai. With a Chinese airline studying direct flights to Fiji, China's ambassador to Fiji, Cai Jinbiao, has said that China will be a major contributor to Fiji's five-year target of turning tourism into a US$1 billion-a-year industry.

In Tahiti, the China Travel Service, which is China's biggest tour operator, recently announced that it would invest nearly US$100 million in two hotels. French Polynesia wants to open tourism offices in Beijing and Shanghai and the local airline, Air Tahiti Nui, is studying starting flights to Shanghai. In Tonga, Chinese investors spent US$4 million to renovate the International Dateline Hotel.

Roughly 3,000 Chinese companies do business in the Pacific, with nearly US$1 billion in hotels, plantations, garment factories, fishing and logging operations. China is building a 50-boat tuna fleet for Fiji - a reflection of China's interest in the massive fisheries of the Pacific.

In a classic case of mixing investment with aid and public relations, China announced a plan to invest US$3 million in a tuna-freezing factory in Papua New Guinea on Sept 9, one week after a news team from The People's Daily interviewed Prime Minister Michael Somare in Port Moresby. Purchasing black pearls from Tahiti, logs from Papua New Guinea and nickel from New Caledonia, China's trade with the Pacific has steadily grown. China now plans to subsidise the establishment in Beijing and Hong Kong of trade offices of the Pacific Islands Forum, a regional government group.

In Tonga, a Chinese company, Huawei Technologies, is investing US$17 million in a cell phone expansion project of the Shoreline Group, a telephone and power conglomerate controlled by Tonga's royal family. Shortly after the investment was announced in July, Tonga announced the appointment of its first ambassador to Beijing.

Forging economic links with local rulers is common as China courts Pacific leaders with trips to Beijing. In recent years, China has hosted the leaders of Fiji, Kiribati, the Federated States of Micronesia, Papua New Guinea, Samoa, Tonga and Vanuatu. Beijing also flies diplomats, journalists and tourism officials to China for training or familiarisation tours.

Although Japan is still the region's largest aid donor, China has concentrated on high-profile projects: a China Friendship Sports Centre in Pohnpei for the Micronesia Games; a stadium in Fiji for the South Pacific Games; a Parliament for Vanuatu; a courthouse and a police station for the Cook Islands; a 52-classroom high school for Tonga's capital; a Foreign Ministry for Papua New Guinea; a multistorey government office for Samoa; a larger-than-life-size bronze statue of King Tupou IV of Tonga; and a ferry service for Kiribati, a republic spread over one million square miles.

With the flag following trade, China's South Sea Fleet has started to venture from its home port in Zhanjiang, dropping anchor since 2000 in Hawaii, Palau and Tahiti, and last October, in Guam, the forward bastion of US military power in the Western Pacific. Just the way 50 Guam residents of Chinese heritage waved Chinese and American flags to welcome the ships of China's navy, a Chinese minority across the Pacific is easing the way for spreading Chinese influence.

In the Pacific, the Chinese diaspora ranges from newly arrived illegal immigrants to middle-class Chinese who have acquired Pacific Island nation passports to local elites who are descendants of 19th century Chinese imported to work in plantations and mines.

New commercial class

On Fiji, a nation long torn by ethnic rivalries, Chinese immigrants are becoming the new commercial class, displacing departing ethnic Indians. In French Polynesia, Robert Wan, a local businessman of Chinese origin, has won Beijing's approval to open a Chinese cultural centre in Tahiti. The parliaments of Papua New Guinea, Samoa and the Solomon Islands have prominent members of Chinese origin.

Taiwan also plays on the ethnic ties. Anote Tong, president of the Republic of Kiribati, is the son of a Chinese immigrant, who helped China open its embassy in Tarawa, the capital, in 1980. This ethnic affinity did not help Beijing last fall when Mr Tong extended diplomatic relations to Taiwan, apparently in return for US$8 million in annual aid through 2007.

Playing China off Taiwan, small islands often offer recognition to the highest bidder. A few months after Nauru broke with Taiwan and opened ties with Beijing, in 2002, China extended a US$2.4 million loan to the virtually bankrupt nation of 12,000. At latest count, five Pacific nations - Kiribati, the Marshall Islands, Palau, the Solomon Islands and Tuvalu - maintain diplomatic ties with Taiwan.

During two weeks of flip-flops this month, Vanuatu, a nation of 200,000 people north-east of Australia, broke with Beijing, recognised Taiwan and finally returned to Beijing. Prime Minister Serge Vohor cited a lack of aid as his primary reason for breaking with Beijing, despite numerous agreements. China is financing an agricultural college, a rice farm and a biogas project and has promised two ferries for this nation of 82 islands.

Beyond aid, China's biggest economic attraction for island nations is tourism. By January, Boeings and Airbuses will disgorge tourists on almost daily basis to Saipan, one of China's closest Pacific island destinations. 'The Chinese go with their gut, that's why we like them,' said Ken Barberis, general manager of the Tinian Dynasty casino, among the rings and whirs of slot machines and the cheers - and groans - from card tables. - NYT

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