Fiji

Fiji

The second-largest economy among the Pacific Island countries, Fiji is a focus of China’s engagements in the Pacific, especially since the country’s contentious relations with traditional regional powerholders such as Australia and New Zealand have prompted the Fijian Government to ‘look north’.

Fiji

Written by Denghua Zhang.

Historical Background

A British colony until 1970, the Republic of Fiji established diplomatic relations with the People’s Republic of China (PRC) on 5 November 1975, the first country in the Pacific to do so (followed by Samoa the next day). This primacy is frequently highlighted by leaders of both countries. Since then, thanks to its status as the regional hub and one of the most developed economies among the Pacific Island nations, Fiji has been regarded by China as one of its most important partner countries in the region.

Since its inception, the relationship between China and Fiji has developed smoothly and, in the past two decades, has become particularly close, with frequent bilateral high-level visits. In May 2006, Wen Jiabao became the first Chinese premier in history to visit Fiji, where he launched the China–Pacific Economic Development and Cooperation Forum—an umbrella platform for the promotion of relations between China and the Pacific Island countries. In February 2009, then Vice-President Xi Jinping made a stopover visit to Fiji. At a time when the traditional powers had imposed sanctions on Fiji for the military coup that took place in November 2006, this visit triggered diplomatic protests from Australia and New Zealand. In November 2014, Xi became the first Chinese president to visit Fiji. During the visit, China and its Pacific partner countries, including Fiji, established a strategic partnership for cooperation. The number of visits by Fijian leaders and senior officials to China is also impressive. For example, between 2007 and 2020, the Fijian Prime Minister Frank Bainimarama (in office since 2007) made seven visits to China, while the Minister of Foreign Affairs of Fiji made nine visits.

China’s rise and the disputed relations between Fiji and traditional regional powerholders such as Australia and New Zealand in the wake of the 2006 military coup have prompted the Fijian Government to further implement its ‘Look North’ policy and to deepen cooperation with Asian countries such as China, Japan, India, and Indonesia.

People-to-people links between Fiji and China have also strengthened. One highlight relates to the tourism sector. Chinese tourists to Fiji have increased rapidly in recent years, jumping from 18,147 in 2010[IF1]  to 48,796 in 2017[IF2] . Prior to the outbreak of the COVID-19 pandemic, China had become Fiji’s fourth-largest tourism market (following Australia, New Zealand, and the United States).

BRI Status

As the second-largest economy in the region after Papua New Guinea[IF3] , Fiji is a focus of China’s Belt and Road Initiative (BRI) in the Pacific. In May 2017, Prime Minister Bainimarama was the only Pacific Island leader to attend the first BRI summit in Beijing. In November 2018, Chinese Ambassador to Fiji Qian Bo and Yogesh Karan, Permanent Secretary for the Office of the Prime Minister of Fiji, signed a memorandum of understanding on BRI cooperation in Suva, Fiji’s capital. China has been proactively promoting cooperation with Fiji under the broad concept of the BRI, which encompasses the five pillars of policy coordination, infrastructure, trade, finance, and people-to-people links. Among the most prominent initiatives that are being promoted as part of the BRI, the Power Construction Corporation of China (PowerChina), a Chinese state-owned company, is constructing a 130 million USD water supply project on the Rewa River in the Suva–Nausori region. On the Fijian side, many senior officials see the BRI as an opportunity to generate mutual benefits for both countries.

Current Economic Relations

Trade: China has become an important trading partner of Fiji. As Figure 1 shows, Fiji’s imports from China grew consistently over the 2007–18 period. According to World Bank data, in 2018, Fiji imported 443.8 million USD worth of commodities from China (16.32% of its total imports), making China its second-largest import source. In the same year, Fiji’s imports from its largest import source, Singapore, exceeded 20.8% of the country’s total exports. In 2018, Fiji exported 59.8 million USD worth of its goods to China (5.75% of its total exports), making China its seventh-largest export market, following countries such as the United States (17.95%) and Australia (12.91%). This means that in 2018 Fiji had a trade deficit with China of 384 million USD. Fiji’s main imports from China include electrical machinery, plastic products, and iron/steel products; its exports consist of sugar, timber, and beverages.

Figure 1: Fiji–China trade in 2007–18

Source: Compiled by the author based on the World Bank WITS database.

Investment: Chinese investment inflows to Fiji fluctuated significantly between 2007 and 2019, peaking at 68.32 million USD in 2012 before plummeting to –37.16 million USD in 2014. China is not a major source of foreign investment in Fiji in terms of investment inflows or stock. In 2019, Chinese investment inflow to Fiji was 17.46 million USD[IF4] , which represents 5.4% of total foreign investment inflows (321 million USD). In 2019, Chinese investment stock in Fiji was 195.47 million USD[IF5] , accounting for 3.75% of total foreign direct investment (FDI) stock (5.207 billion USD[IF6] ). The main sectors of Chinese investment include fisheries, tourism, mining, and real estate.

Source: Chinese Ministry of Commerce.

Aid: China has become a major donor to Fiji. Based on data from the Lowy Institute in Sydney, China’s aid to Fiji was 16.35 million USD in 2018 (including grants, interest-free loans, and concessional loans), making it the fourth-largest donor to the Pacific Island country. The top-three donors in 2018 were Australia (58.3 million USD), India (28.93 million USD), and the United Nations (19.78 million USD). China was the largest donor to Fiji during the 2006–13 period, when Fiji was sanctioned by traditional donors following the 2006 military coup (the sanctions included measures such as travel restrictions and the suspension of aid administered through the Fijian Government). Chinese aid to Fiji mainly consists of concessional loans and grants. While focusing on infrastructure, China has also provided aid to Fiji in the areas of agricultural technical support, Chinese Government scholarships, and disaster relief. Fiji has also received grants and medical supplies from China to combat COVID-19, as well as a supply of Sinovac vaccines.

Other financing: In August 2020, the China-initiated Asian Infrastructure Investment Bank (AIIB) approved a 50 million USD loan to Fiji to stimulate the country’s economy after it was hit hard by the COVID-19 pandemic. This was the first loan provided by the AIIB to the Pacific region.

Key Controversies

In Fiji, there is a mix of voices on the issue of China’s fast-growing loans to Pacific Island countries. While some are concerned that China may seize Fiji’s assets if the latter fails to make repayments, this claim has been dismissed by senior Fijian Government officials. Based on the author’s interviews with Fijian nongovernmental organisations in 2021, China’s focus on the government-to-government approach and very limited engagement with civil society groups is a concern for some. The impact of Chinese companies’ activities on the environment is another issue that receives growing attention from local communities and affected stakeholders. One recent example involves a holiday resort that, since construction began in 2018, has caused massive environmental damage on Malolo Island, a 5-kilometre-long island about 20 kilometres west of the main island of Fiji. The developer is believed to be linked to a Shanghai-based company, but China’s Ambassador to Fiji denied that the company is ‘Chinese’, as it is registered in Fiji and the owner holds a Fijian passport, even if he is of Chinese origin. The controversy surrounding the identity of this company reflects a wider emerging phenomenon involving people of Chinese origin who have obtained foreign passports, which creates legal ambiguity and poses challenges to governance. In April 2021, a Fijian court found the developer of the resort on Malolo Island guilty of unauthorised development.

Key Sources

Local English-Language Media:

Websites:

Lowy Institute. ‘Pacific Aid Map.’ Link.

Other Sources:

Chinese Ministry of Commerce. 2019. 对外投资合作国别(地区)指南: 斐济 [Guide for Countries and Regions on Overseas Investment and Cooperation: Fiji]. Beijing: Ministry of Commerce.

Lowy Institute. 2021. ‘Pacific Aid Map’, https://pacificaidmap.lowyinstitute.org.

Pacific Trade Investment China. 2019. Trade Statistical Handbook between China and Forum Island Countries. Beijing: Pacific Trade Investment China.

World Bank. 2016. Pacific Possible: Tourism.Washington, DC: The World Bank.

Zhang, Denghua. 2020. A Cautious New Approach: China’s Growing Trilateral Aid Cooperation. Canberra: ANU Press.Updated on 29 June 2021.

Cover Photo: Small Fijij island. Credit: (CC) Rupert Taylor-Price.

Updated on 29 June 2021.


Denghua Zhang is a Research Fellow at the Coral Bell School of Asia Pacific Affairs, The Australian National University. His research focuses on Chinese foreign policy, foreign aid, and China’s relations with the Asia-Pacific region, especially the Pacific. His book A Cautious New Approach: China’s Growing Trilateral Aid Cooperation was one of ANU Press’ top ten new releases in 2020.