Bank of China Chairman Visits Papua New Guinea Amid Sino-US Strategic Rivalry

By Kirsty Needham

17:33 JST, June 2, 2023

SYDNEY, June 2 (Reuters) – Bank of China 601988.SS chairman Ge Haijiao has travelled to Papua New Guinea (PNG) as the world’s fourth-largest bank seeks an operating licence in the Pacific Islands nation, which is seeking to boost China trade while expanding U.S. defence ties.

U.S. Secretary of State Antony Blinken last week travelled to PNG to sign a defence cooperation agreement, prompting some domestic political criticism and student protests amid concern the island nation would become embroiled in strategic competition between Washington and Beijing.

China, a major infrastructure lender and creditor in the Pacific Islands, struck a security pact with PNG’s neighbour Solomon Islands last year.

PNG Prime Minister James Marape, in a speech Ge attended on Thursday evening, said his country was “a place of friends to all and enemies to none – we have our values which mean we will not compromise”.

“Chinese companies, Chinese government and Chinese people have been important partners for our progress in the last 48 years,” Marape said, highlighting growing trade with Beijing.

“We hope this bank is able to not just entrench but facilitate ease of transaction between two peoples, two countries,” he added.

PNG, a resource-rich but largely undeveloped nation of 10 million, sits a few kilometres north of Australia’s Torres Strait.

PNG has four licenced banks, although two of these are Australian-owned and have sought to reduce operations in the country.

Marape said 60% to 70% of the population did not use banking, and most small to medium enterprises were yet to migrate to the formal economy.

State-owned Bank of China has applied for a commercial operating licence that is still being processed. Marape has previously said PNG could become the bank’s regional headquarters for the Pacific Islands.

China had grown from a rural economy to the second-largest on earth, he said, urging Bank of China to fill gaps in the PNG banking market.

Bank of China said in a statement it was the first branch of a Chinese bank to open in the Pacific Island country and it would play a role in local economic revitalisation.

Establishing a PNG representative office is “a vivid interpretation of the Bank of China’s joint construction of the ‘Belt and Road Initiative’, with financial strength and high-quality service”, it said, referring to a policy launched by Chinese President Xi Jinping in 2013.

The bank’s presence in PNG would “deepen bilateral cooperation in RMB (Renmimbi) settlement” and “add new impetus to the promotion of cross-border trade and investment between the two countries,” it added.

China has been promoting the use of yuan, or Renminbi, to settle cross-border trades as part of efforts to internationalise the use of its currency.