Sino-Pacific Relations: Levels of Localisation, Aid and Investments

By Bernard Yegiora

THE highly publicized pre-eminence of China is captivating for analysts all around the globe, who are watching with anticipation, criticizing and praising every move, China makes daily in its path to become a developed nation.

The central idea behind this writing is to conceptualize what localization means. Furthermore, how the concept is promoting peace, stability and cooperation through aid and investments in adherence to China’s foreign policy.

Localization in this context means the harmonious co-existence of China in a foreign setting, and is categorized into three separate categories to enable an accurate analysis.

Firstly, at the macro-level is an analysis of China’s approach to the South Pacific region. Secondly, at the mezzo-level is an analysis of China’s approach to Papua New Guinea (PNG). Finally, at the micro-level is an analysis of China’s approach to local communities.

Macro-level: The Chinese government’s ability to ‘diplomatically romance’ countries in the South Pacific with gifts of aid in the form of cash with no strings attached, along with strategic investments has definitely helped in trade relations, gaining recognition and creating markets.

Traditionally, the South Pacific region has been the back yard of the West, strictly controlled and monitored by claimed Middle Power and America’s ‘Deputy Sheriff’ Australia. But China is knocking on the door challenging America and its regional allies Japan, Australia, New Zealand and France in matters of trade, investments and development cooperation.

Thus, is China using untied aid and investments as a tactic to localize? In the pacific the ‘boomerang tied Australian aid’ has been a highly debatable issue where intervention and influence have tempered with the sovereignty of the weak states.

The opposite approach of China in devotion to its foreign policy against intervention is changing the view of Pacific states. Although not publicized, they are now more inclined to the respect that China as a rising power has for their domestic affairs.

According to Jian Yang’s (2009) article “It estimated annual aid to the region is somewhere between US 100 million and $150, which represents a rapid increase although it is much smaller than Australia’s over $400 million”.

Moreover, he notes that Chinese official statistics show that China’s trade with the 14 island states that make up the Pacific Island Forum excluding Australia and New Zealand has increased from $121 million in 1995 to $1229 million in 2006.

Likewise, investments like the $625 Million nickel and cobalt mine in PNG, and millions to reinvigorate a Cook Islands Fishing and procession plant epitomizes the type of investments in the Pacific.

China is “providing much needed investments for the aid-reliant South Pacific”. Per se, the investments in the pacific have a similar impact as aid and is playing a pivotal role in the localization process.

In consequence, evolution is working in favour of China with its ever increasing hunger for natural resources, bid for legitimate recognition regarding the ‘One China’ policy and need for markets, the 21st century is inevitably the Sino centric Century in the Pacific.

Mezzo-level: Today China is the second largest aid donor to PNG. China took over Japan and US who were the traditional aid donors. In 2008, China’s Official Development Assistance to PNG was more than US$500 million.

While last year in early November during the official visit by Vice Premier Li Keqiang, PNG has signed two major pacts worth a total of CNY 830 million in a state grant and a China Exim Bank loan.

In addition to its already existing assistance, PNG will also receive extra financial support to build a state-of-the-art international convention centre in Port Moresby, and assistance to develop socio-economic projects in Madang Province.

Apart from other diplomatic reasons China is conscious of the growing anti-Chinese sentiments brought about by the influx of Mainland Chinese especially Southerners from Fuijian Province in a new wave of migration according to James Chin (2008), evident in the ‘May Mayhem 09’ where shops own by Chinese entrepreneurs were ransacked and threatened in the major towns and cities across the country last year.

As such, this visit and the gifts given are a symbol of China’s friendship and interest in developing the economy of PNG.

To China, localization is very vital in the protection of its national interest and Chinese citizens. For this reason, the visit was strategically planned and is a mind game aimed at assuring the PNG people that China is interested in PNG’s economic development.

Psychologically, this will have implications in the way Papua New Guineans view Chinese entrepreneurs post ‘May Mayhem 09’ and will help soothe the tension. In this context localization means embracing China and the Chinese as friends to walk hand in hand in the path towards development, or to harmoniously co-exist.

Micro-level: At the micro-level, it is impossible to find a British, Japanese or an Australian successfully running a fast food or retail outlet in a small town in PNG. According to Chin (2008), in comparison to their predecessors the Old Chinese, the other new ethnic Chinese from Malaysia, Singapore and Indonesia, the new southern migrants from the Mainland are ruthless.

They know the art of localization, acclimatizing and surviving. They can eat anything, sleep anywhere and regardless of the language barrier excel in what they are doing. Simply, they are good at learning and adapting.

In my community when a person dies as a sign of respect we have what is called a ‘haus krai’, a house or place where people go to show their respect and sympathize with the relatives of the deceased.

In that event goods and food stuff are exchanged by the different groups of mourners to cater for other mourners who attend the ‘haus krai’. There was a particular Chinese businessman who operated a retail outlet in town where he traded those typical Chinese made goods.

Upon the death notice of one of the Province’s prominent leaders he mobilized his national workers, bought a substantial amount of goods and proceeded to the‘haus krai’. His unique approach demonstrates the ability of the Chinese in localizing.

In addition, Chinese state owned entity Metallurgical Group Corporation (MCC) has changed the formerly isolated lives of the Rai Coast villagers. Known as ‘the largest non-ferrous resource project that China has taken on anywhere overseas’, the Company has linked Rai Coast with China by building a huge wharf to ship the nickel and new roads connecting it to the main highway.

The company has done what the PNG government has failed to do for the past 4 decades that is bringing services to the people of Rai Coast.

This outlook was expressed when local leaders and Ramu NiCo Management met in May 2009 to negotiate peace after there was a deadly clash between PNG and Chinese workers that resulted in mass damages to properties and injuries to some workers.

Both parties expressed their sympathy and disapproval of what had happened, leading to a presentation by the local community of a slotted pig to the management as a traditional sign of saying sorry and appeasing the tension.

The villagers realized the importance of the company and its investments, making them feel as part of the community was high on their agenda.

Conclusion: At the macro-level China’s bid to localize in the South Pacific region is causing paranoia. Others are watching with eagle eyes the dragons thundering movements across the region.

While at the mezzo-level China is like the concerned friend who is eager to assist wayward PNG with its economic development and change the mind set of suffering common citizens.

Whereas, at the micro-level China and the Chinese have already managed to localize and harmoniously co-exist with the locals but the ‘May mayhem 09’ has a residual potential threat effect.

The nature of Chinese aid and investments regardless of the various reasons for giving has greatly helped in the localization process. The ability of China to respect the domestic affairs of Pacific states will have a long term effect in how localization takes place at the three different levels.

Chinese aid and investments is directly proportional to localization, the more China gives the more it will be accepted as a local and a friend.