China is trying to build a $39 billion major seaport city on Papua New Guinea (PNG), and has already reached out to PNG Prime Minister James Marape to approve the project, The Australian reported. If approved, China would establish a major presence on the country’s southern coast, within about 200 km (about 124 miles) of the Australian mainland and even closer to Australian islands in the Torres Strait.
The project would be built in the town of Daru and would be known as the “New Daru City,” encompassing a 100 square km area. The project is aimed at PNG’s impoverished Western Province. Another Chinese company is looking to build a $200 million fisheries industrial park in the area and New Daru City would include fisheries, agricultural processing facilities, and provision for “intensive manufacturing.” New Daru City’s proposed project value would exceed PNG’s GDP by about $5 billion.
Hong Kong-based developer, WYW Holding, offered to transfer ownership of the seaport assets to PNG, after an unspecified period of Chinese ownership and management. The proposed seaport has heightened security concerns in Australia.
“We hope that you and your government will agree to engage with us on this ambitious plan which is, as you are aware, predicated on an agreed Sovereign Guarantee based on a long-term BOT contract between and for the mutual benefit of both parties,” WYW Holding chief executive Terrance Mo wrote in a letter to Marape in April.
In a separate WYW Holding letter to Marape, the company said PNG could “advance significantly through appropriate infrastructure development, modern communications, efficient transport systems and natural resource exploitation” through the project.
The Australian Strategic Policy Institute’s defence and national security program director Michael Shoebridge told the Australian that the Chinese government and Chinese corporate proxies are working to secure strategic and economic advantages in nearby PNG.
“The big message is really that Australian policymakers and leadership cannot be complacent in any way about Chinese presence and intent in PNG,” Shoebridge said. “Chinese entities and actors are demonstrating that they are opportunistic and entrepreneurial, and the environment is a reasonably permissive one for that kind of behavior.”
With the New Daru City proposal, Shoebridge said China is “testing the waters for an opportunity.”
China has sought numerous development projects around the world through its Belt and Road Initiative. WYW Holding’s is also a developer of another Belt and Road project, in Myanmar’s New Yangon City.
Belt and Road Initiative have often targeted impoverished cities and countries with expensive projects that host countries cannot always repay. The Chinese infrastructure development strategy has been described by U.S. officials as a means of Chinese “debt diplomacy.” In 2018, Sri Lanka, another country that has accepted loans from China, found itself unable to pay down its loans and as a result, signed away a major seaport to Chinese control.
Responding to an Australian request for comment a spokesman for Prime Minister Marape said he was unaware of the proposed seaport, but said “if a foreign investor wants to come to PNG with multimillion kina investments, PNG will not stop them, on condition that all our laws are complied with and local Papua New Guineans benefit from these types of projects.”
The Lowy Institute’s Pacific program director, Jonathan Pryke, told the Australian, “It seems the strategy is to try and get a politician of some level to sign off, generate enough attention around it that Beijing notices, and hopefully something will come out of it that gets the money flowing. Western Province has immense development challenges including some of the worst [tuberculosis] in the world, so you can see why these opportunities sound appealing. But frankly they are too good to be true.”