The West can expect to be challenged not only on the world stage but also in many individual developing countries such as PNG.

James Chin’s chapter in The Chinese in Papua New Guinea further develops his interest in this topic. He updates his now classic 2008 article on the Chinese in Port Moresby.

Both works are part of a broader body of research on Chinese living in urban PNG.

In his chapter, Chin argues that the mainland Chinese have now become a dominant economic and political force in PNG.

They dominate the local Chinese community and rival Australia for influence in national politics.

He also makes suggestions about what might happen in the future. He thinks the PNG elite will play Australia and China against each other and that China is seen is as ‘more flexible’ and less concerned with issues of corruption than Australia.

Chin argues that China will replace Australia as the most influential external actor in PNG politics. While PNG will move closer to China on political issues, it will remain more aligned with Australia culturally. He argues that these power shifts within PNG reflect the rise of China on the global stage.

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Extract from Chapter 4: PNG-born Chinese (PNGBC)

In my 2008 article, I wrote that the PNGBC were almost a dying breed, with the younger generation refusing to take over the family businesses, preferring to live in Australia and pursuing other careers. This has largely been vindicated. My interviews with PNGBC over the past decade reveal that many of the younger generation are still refusing to come back to PNG. In many cases, the family holdings amount to millions in real estate, but they still refuse to return to PNG. Their first option is always to sell, followed by being an absentee landlord. For the older generation still running their business, the process of consolidating their holdings is still happening while others are quietly selling out after accepting the reality that their children will never come back to live in PNG.

Most of the PNG Chinese businesses are holding on, while others have experienced some expansion, building on foundations that were formed prior to the large influx of mainland Chinese. Many of these family-run businesses were started even before Independence in 1975. One clear example of a PNG Chinese family-run business that managed to expand is the Chow family, originating in Rabaul and led by the late Sir Henry Chow.²⁰ Their name is synonymous with the Lae Biscuit Company. What is not widely known is that, in the past decade, their biscuit factory has become the largest in the South Pacific and they control a sizeable share of the biscuit market in both PNG and the Solomon Islands. Another long-term family business is Coastal Shipping. In the past decade they have also tried to move into plantations and expand their shipping business. The family has survived because they are constantly trying new businesses and restructuring their existing businesses.

Another successful PNG Chinese business that managed to expand is JJS Holdings, owned by the Seeto family. The company underwent a restructuring, led by Irene Seeto, a daughter-in-law from mainland China. The Seetos maintain their dominance of the wholesale trade in Kokopo.

An example of a PNG Chinese trying to sell off their business is Martin Tsang, owner of MST Wholesale, who operates the oldest supermarket in Madang. Martin has been trying to sell his business for the past few years, but the only willing buyers are mainland Chinese.

In my 2008 essay, I wrote the following:

The group that the PNG Chinese detest most is the mainland Chinese, whom they characterise as ‘con men’ and ‘uncivilised’, which is the greatest insult in PNG. The main reasons people give for this is that mainland Chinese have spoiled the previously good relationship between the Chinese community and PNG nationals. People say that before the coming of mainland Chinese PNG nationals never killed ethnic Chinese over business affairs, but now they are stirring up trouble by competing with nationals in small businesses like kai bars and small retail stores. People also complain that the mainland Chinese are corrupting the system because they are involved in too much smuggling and have set up a market in stolen goods. (Chin 2008, p. 125)

This remains the case. The only difference is that the PNGBC think that the mainland Chinese cannot be stopped on their way to the top, and that eventually, even the ‘big boys’ (Australian-owned businesses) will be overtaken by the mainland Chinese. For them, it’s just a matter of time.

PNGBC contacts also complained that it is virtually impossible for PNGBC or other Chinese to compete with the mainland Chinese because they do not rely on conventional finance. They claim the mainland Chinese have their own financial network, closed to outsiders, and prefer group buys. What they are probably referring to are Chinese SOEs who operate based on decisions made by Beijing and the Chinese Embassy. These Chinese SOEs are big enough to bypass all the financial and customs barriers enacted by the PNG authorities.

On the other hand, the PNGBC will go into joint venture with the mainland Chinese because they know the mainland Chinese have access to better pricing and services in China. But the level of trust is much lower compared to joint ventures with, say, Malaysian or Indonesian Chinese.

Overall, the PNGBC are even more pessimistic about their presence in PNG compared to the 2008 survey. This was made clear to me when one of them expressed the following: ‘In the future, the PNGBC, if lucky, will be the landlord but the business will be run by the mainland Chinese’ (personal communication, October 2020).

Observation and discussion

While most of the observations I made in the 2008 essay remain valid today, there are some significant changes to the contemporary Chinese community in PNG. The biggest change, and the focus of this essay, is the massive increase in influence (politically, economically and socially) of China and mainland Chinese in PNG. Mainland Chinese have taken a leadership position among the PNG Chinese community and have also become the second most influential external player in PNG politics. Australia and its allies, New Zealand and the US, remain the most influential but the consensus among the PNG Chinese community is that the clock is ticking. They think, sooner or later, China will replace Australia as the most influential external actor in PNG politics.

While the economic boom in PNG in the later part of 2010s, generated by the gas pipeline, was beneficial to the entire PNG economy, the mainland Chinese companies, especially the Chinese SOEs, were the major beneficiaries. In general, the entire Chinese business community benefited but the mainland Chinese SOEs were probably the biggest legatee among Chinese businesses.

In my opinion, it is almost impossible to stop the rise of China in PNG because the official and non-official groups, as described above, operate as a single entity with a common aim. Their work is either directly or indirectly co-ordinated by the Chinese Embassy in Port Moresby. The Chinese Ambassador and his staff are unusually aggressive when it comes to pushing China’s interest in PNG. As mentioned earlier, China sees PNG and Fiji as the two most important countries in the South Pacific, which must therefore be brought under China’s influence. It is also interesting that China’s main competitor for influence in both countries is Australia.

I was partly wrong in my 2008 paper about the mainland Chinese taking over from Malaysian Chinese. In fact, RH and selected Malaysian Chinese businesspeople, such as Martin Poh and Huan Tiong Sii, have continued to thrive in PNG. However, all three are not new arrivals; they have been operating in PNG for many years. There have been few new arrivals since 2010. The business environment has become competitive with the arrival of mainland Chinese.

It is my view that the ‘old’ PNGBC do not know how to handle the mainland Chinese. Their relationship is complex and ambiguous. They see the mainland Chinese as both an opportunity and a threat. They know that in the long run they might be eclipsed by the mainland Chinese but at the same time they know that only the mainland Chinese have the capital to buy them out. There are some who think a genuine joint venture with mainland Chinese is possible, although there are no prominent examples yet. Some even hold the view that the rise of the mainland Chinese is a good thing overall as the PNGBC suffered under racism in the past and it is time for Australians and other ‘whites’ to experience ‘reverse’ racism. It is very likely that the PNGBC numbers will dwindle even further in the coming years and that eventually they may have to sell out. However, one part of their holdings that they will not sell is real estate. The rental return in PNG is probably the highest in the region and is at least seven or eight times what they can get in Australia. Hence, the default thinking is that if they eventually move south to Australia, they can depend on rental income from PNG.