Over 90% of Papua New Guinea’s exports are linked to energy and mining industries, but imports are more diverse. With a strong link to Australia, the economy is less dependent on Chinese imports than others in the region. Contrary to other islands in the region this has also not changed. However, the status quo should not be taken for granted as we are beginning to identify an emerging shift, with Chinese export value to Papua New Guinea outperforming other major trading partners.
Economic Overview and Context
Papua New Guinea is the largest economy in the Pacific Island region, accounting for 45 % of the region’s economic output and as much as New Caledonia, Guam, French Polynesia and Fiji combined. Papua New Guinea accounts for about 65% of the region’s population. Official estimates put the overall regional population at about 14 million, with about 10 million in Papua New Guinea. Income per capita – a measure of wealth – varies substantially across the Pacific, with New Caledonia and Guam displaying similar levels to Eastern Europe or Portugal, to much lower levels across the region similar to parts of East Africa, South and Central Asia. Figure 1 and Figure 2 provide an overview of gross domestic product (GDP), population and GDP per capita.
Papua New Guinea Trade Overview
Papua New Guinea generates about US$10 billion in exports and about US$4 billion in imports. About half of export value is driven by gas and gold. 10 broad product groups account for over 90% of export value. This includes copper ores, crude oil and some petroleum products, palm oil, nickel ores, fish and fish preparations, cocoa and coffee. Three trading partners account for two thirds of export value – Japan (mainly gas and copper ores), Australia (gold and crude) and China (gas, nickel, and wood). The European Union is the main destination for palm oil, the Philippines and Thailand for fish, and Europe for fish preparations.
Almost 90% of imports are from the Asia Pacific region, with Australia and China accounting for 50% of import value. Singapore, Malaysia, Indonesia, Japan, New Zealand, Vietnam, Thailand, Korea, the US and India are also important import partners. About a third of import relate to energy, bulk agricultural or mining manufactures such as refined petroleum products (primarily from Singapore), steel, Aluminium (from China, Australia, New Zealand and Indonesia), wheat (from Australia), rice (Thailand and Vietnam) and Fertilizers (from Malaysia).
When excluding energy, mining, and bulk agricultural commodities the Papua New Guinea trade picture looks very different. Here exports are much smaller than imports: about US$800 million versus US$2.5 billion. Exports consist primarily of fish (to Thailand, Philippines and China) and fish preparations (to the European Union), coffee (to the European Union, the United States, Australia, New Zealand and Japan), Cocoa beans (to Malaysia, Indonesia, the United States and – predictably – Belgium), Copra (to the Philippines) and Spices (to Indonesia, Australia, The European Union, USA and Canada). Imports consist of a range of industrial and consumer products. This includes industrial equipment and parts primarily from Australia, China, Japan and Malaysia; food, meat and seafood products from Australia, Singapore, New Zealand, Indonesia and other parts of Asia; household goods, apparel or high-tech products directly from China or often via Australia.
Trade with Australia
In fact, Australia acts as an intermediary for a number of products that in other trades may be sourced directly from China. That includes products like computers, office equipment or mobile phones which are dominated by China. The main items exported from Australia to Papua New Guinea include industrial equipment and parts (often linked to mining or energy industries) and meat. The figure below shows an overview of trade between Australia and Papua New Guinea between 2018 and 2022, excluding mining, energy and bulk agricultural commodities.
Exports from Australia to Papua New Guinea are significantly higher than imports. Overall trade value and weight grew by about 15% and 21%, respectively in 2022. Exports from Australia were about 10% higher in weight and 5% higher in value terms than 2019, while imports from Papua New Guinea were 50% lower in weight but 70% higher in value terms.
Trade with China
Chinese trade value with the Pacific region has grown strongly over the past two years. As the largest economy, Papua New Guinea is the most important export destination within the region, followed by Fiji and the Solomon Islands. Overall exports from China to the region grew by 27% in 2022 and 23% in 2021.
Chinese exports to Papua New Guinea grew by 36% in 2022, much faster than with the overall region. After three years of growth, they are now 80% larger than in 2019.
China vs Australia
Throughout the region the importance as China varies. Papua New Guinea has one of the lowest China shares of imports within the region. The chart below shows an overview of the share of Chinese as a percentage of total imports of manufactured goods and machinery by country. China includes Mainland China as well as Hong Kong and Macao. We have also recently published some other research on the topic of China and dependence on China.
The Solomon Islands have by far the highest China share and has seen a significant increase over the past decade from about 10% in 2011 to 49% in 2021. Fiji has also seen a gradual albeit less drastic increase from 17% to about 22% today. Papua New Guinea on the other hand has not seen an increase with the China share at around 10% over the last decade. During this time Australia’s share also stayed constant at around 36% of imports. However, this should not be taken for granted given increased Chinese focus on the region.
Be First to Comment