Bank of China Opens Office in Papua New Guinea Amid US Tensions

People pass the Beijing headquarters for Bank of China on Aug. 26, 2004. STR/AFP via Getty Images

The Bank of China (BOC) has opened a representative office in Papua New Guinea (PNG), its first branch in the South Pacific island nation, amid intensifying regional competition between the United States and China.

The ceremony, at the new office in the capital of Port Moresby, was attended by BOC Chairman Ge Haijiao and PNG Prime Minister James Marape on June 1.

Ge said the new office signifies “a concrete practice” in implementing Chinese leader Xi Jinping’s plan to build “a higher-level and more mutually beneficial comprehensive strategic partnership” with PNG.

He affirmed the bank’s commitment to strengthen the construction of a collaborative service network in the South Pacific region, deepen China–PNG economic cooperation, and co-construct the Belt and Road Initiative.

Marape emphasized in his speech that his country welcomes friendships with all and harbors no enmity towards any. He made it clear that PNG won’t compromise such values under any circumstances.

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

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

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

Marape said that more than half of PNG’s 10 million population don’t use banking, and most small enterprises have yet to migrate to the formal economy.

US–PNG Defense Cooperation Deal

PNG signed a defense cooperation agreement with the United States last week to solidify their bilateral ties, as the United States attempts to push back China’s influence in the Pacific.

The United States is seeking to increase security ties with PNG amid the fallout of an agreement between Beijing and the Solomon Islands that could result in Chinese troops and weapons stationed in the region.

Papua New Guinea Prime Minister James Marape speaks as U.S. Secretary of State Antony Blinken looks on in Port Moresby, Papua New Guinea, on May 22, 2023. Andrew Kutan/AFP via Getty Images

U.S. Secretary of State Antony Blinken, who signed the deal on behalf of President Joe Biden, said it would enable the United States to support PNG in building its defense capacity and tackling illegal fishing.

Marape said that some details of an operational agreement still need to be made, “such as how the defense force will operate, what they will do, and so forth.”

“This will happen after we have tabled the signed agreement and parliament decides on the needed details,” he said on May 30 in response to student protests against the accord.

Biden has invited Marape to Washington for a second summit later this year, during which they will discuss various issues, including trade and economic ties and maritime security.

The Pacific nation, however, has delayed signing a proposed security treaty with Australia due to “certain wordings and provisions” that require consultation with domestic processes.

During his meeting with Australian Deputy Prime Minister Richard Marles in Seoul on May 30, Marape affirmed that PNG “in no way would compromise its excellent existing bilateral relations with Australia“ and that his government was ”capable of managing its sovereign affairs on its terms, systems, and processes.”

Australia and PNG already had strong security ties and have engaged in conflicts alongside each other. However, the two countries have never signed a formal security treaty.

The proposed treaty will enhance their partnership “by providing a legally binding framework for security cooperation across our many areas of mutual interest and contribute to bilateral and regional security, trust, and stability.”

Victoria Kelly-Clark and Reuters contributed to this report.