The topic of Chinese influence in the Pacific looms large, but in general the share of China as an origin of imports in the Pacific has mostly stayed steady over the past decade as goods continue to utilise Australia and New Zealand connections. Fiji on the other hand, has increased its role as a regional distribution hub and improvements in air cargo and shipping connectivity could see further growth. This article looks at developments of imports into Pacific Island Countries, main trading partners, the role of China, and freight connectivity with a particular focus on Fiji.
Main Origins
Australia, China and New Zealand are the primary source of imports into Pacific Islands Countries. Predictably, France takes an oversized role in its overseas territories. A handful of other Asian countries are important origins for imports – primarily due to historical relationships, trading networks and connectivity. These include Japan, South Korea, Malaysia, Singapore and Thailand. The US is an important source of imports for a limited number of countries. On a country level the top five import origins tend to account for between 65% and 80% of total import value (excluding petroleum and energy related products).
The Role of China
Except for the Solomon Islands, the importance of China outside parts of Micronesia as the primary direct origin of manufactured goods is no greater than in Australia or New Zealand. There are large differences across the Pacific, with Papua New Guinea at the low end and Solomon Islands, Tonga and Samoa at the higher end. Of course, many of the goods distributed via Australia or New Zealand are ultimately of Chinese origin.
For most PIC countries the share of Chinese imports as a percentage of total has stayed steady over the past decade. The exceptions are Solomon Islands, Tonga, Kiribati and Nauru, all of which import more than previously.
The interactive dashboard below provides a view of Chinese exports to and imports from Pacific Island Countries from 2016 through to February 2024. We have focused primarily on Polynesia, Melanesia and excluded Federated States of Micronesia (FSM), Marshall Islands and Palau from our analysis. The dashboard has the possibility to drill down into more commodity detail.
China imports about twice as much as it exports to the region in terms of value – primarily due to imports of raw materials. The weight of imports from the region is nine times the weight exported to the region. Exports consist primarily of a mix of consumer goods, machinery and equipment, automotive, high tech and foods.
Overall Chinese exports grew strongly in after 2019, but Chinese export value reached a peak in the second quarter of 2023 and has stalled since then. Trade measured in weight terms continued to grow in 2023, but at a slower pace than in 2022. Export growth to Papua New Guinea, Fiji, New Caledonia, French Polynesia, Westen Samoa, Kiribati, Tuvalu and Nauru was flat to negative. Solomon Islands, Vanuatu, Tonga and Wallis and Futuna was positive.
Over 95% of import value from the region comes from Papua New Guinea, New Caledonia and the Solomon Islands. Chinese imports from the region consist of LNG and oil (from PNG), Nickel and Ores from New Caledonia and PNG, Ferro-alloys from New Caledonia, Copper and Precious Metal Ores from PNG and Solomon Islands, and (tropical) wood from PNG and Solomon Islands.
Weight shipped from New Caledonia has been showing a steady growth trajectory for the last nine years, while imports from the Solomon Islands peaked in 2018. Import weight from Papua New Guinea has been following a moderate downward trend since early 2019.
Fiji as a Regional Distribution Hub
Given geographical location and level of both shipping and air cargo connectivity, Fiji itself is a key source of imports particularly for Pacific Islands Countries in the Southwestern Pacific. Excluding French Polynesia, New Caledonia, Marshall Islands, FSM and Palau, Fiji has grown its share of PIC imports from 3% to around 6% in the past decade.
The importance of Fiji as a source of imports varies across the region – it tends to be less half a percent in Papua New Guinea, New Caledonia, or French Polynesia. For PNG proximity to Australia as well as own direct connectivity drives flows and in the case of New Caledonia and French Polynesia the French connection is key.
The Solomon Islands draw about 2.2% of their imports from Fiji, down from about 3% a decade ago. In other parts of the region, Fiji takes a greater role – around 9% in Vanuatu, 8% in Western Samoa, 10-12% in American Samoa, 6% in the Cook Islands, 17% in Tonga, 19% in Kiribati, 21% in Wallis and Futuna, 24-26% in Tuvalu and 15% in Nauru.
Connectivity is a key driver of the role of Fiji as well as a source of competitive advantage. Both main ports in Suva and Lautoka and in the top 5 ports in the region in terms of container connectivity.
Historical vessel traffic through Fiji shows an increasing number of port calls by container and general cargo vessels and liner shipping networks from Fiji cover most of the region with around two services per month.
A similar picture emerges on the air cargo side, where Nadi has significantly higher levels of international connectivity than any other airports in the region (outside Australia and New Zealand). The figure below shows the number of city pairs with more than 10 international flights per month out of the top six airports in the region.
The charts below show current flight connectivity out of Fiji and a comparison with Papua New Guinea, Vanuatu, New Caledonia and French Polynesia.
The Missing Links
Long haul as well as regional connectivity continue to define how trade flows. The biggest constraint to more direct Chinese trade is probably a lack of direct capacity – particularly on the air cargo side. While information on mode split is lacking for economies across the region, in the case of French Polynesia, air cargo accounts for approximately a quarter of trade value.
Currently the only direct flight between the region and Mainland China is a once weekly China Southern service between Guangzhou and Port Moresby which commenced in December 2023. Currently air freight between China and the Region either is required to transit via other points in Asia (Hong Kong, Japan, Korea, Singapore) or via Australia or New Zealand. There is also no regular freighter capacity to and from any location in the region outside narrowbody services between Australia and Papua New Guinea, Nauru, and Solomon Islands. A regional Fiji based freighter service could increase connectivity to smaller destinations such as Tuvalu, Tonga, Samoa, or Vanuatu, but it is likely that an availability payment would be necessary for such an operation to be economic.
Direct shipping connectivity from Asia is non-existent as Asia services operate via Australia or New Zealand. Given the size of markets in the region this makes sense and is unlikely to change. For example, the total trade weight of goods from China to the entire PIC region is about 5% of what is moved from China to Australia and New Zealand.
Papua New Guinea has the best container shipping service levels, but benefits from geographical proximity to Australia and Asian services that combine PNG with Northern Australian ports. However, PNG is not central enough to take on a wider regional distribution role. Fiji, on the other hand is.