RAY BRINDAL
THE AUSTRALIAN

CHINESE INVESTMENT IN Papua New Guinea will continue to grow, but from a relatively low base and not in a systematic fashion, according to Graeme Smith, a China specialist at the University of Sydney.

"We're really just at the beginning of the game in terms of investment" by China in PNG, Smith said.

He was speaking on the sidelines of a seminar on the future of PNG organised by conservative think-tank the Menzies Research Centre.

Over the five years to the end of 2010, Chinese foreign direct investment in PNG had quadrupled to $US323.3 million, which was higher than Chinese capital investment in either New Zealand or Fiji that year but just a fraction of the $US9.87 billion invested in Australia in 2010, he said.

China's largest project in PNG to date is the 85 per cent-owned $US1.5bn Ramu nickel and cobalt mine and treatment plant that is now increasing production in the northern Madang province.

Smith downplayed a notion that growing Chinese investment in PNG was part of a broader strategy by the world's second-largest economy to extend its political and economic influence in the Pacific.

China's total investment in PNG to date was less than Australia's and about on a par with Denmark's, he noted.

"This idea that somehow the Chinese state is supporting all forms of Chinese investment is very much not the case," Smith said.