BILATERAL TRADE RELATIONS

Trade relations between China and PNG started in the 1960s, and have developed smoothly since the establishment of diplomatic relations between the two countries in 1976. China and PNG have enjoyed closer and stronger relations since Sir Mekere Morauta came into office in July 1999, and the economic and commercial cooperation between the two countries has gained momentum. PNG now is the biggest and the most important trading partner of China among the South Pacific island nations. During his visit to PNG in July 1996, H. E. Mr. Qian Qichen, Chinese Vice Primer and concurrently Foreign Minister signed a trade agreement between the two Governments with his PNG counterpart, thus paving the way for further development of economic and trade cooperation between the two countries. Other agreements signed between the two countries include Memorandum of Understanding on Promotion for Economic and Trade Cooperation, Agreement for the Promotion and Protection of Investment, Agreement for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income, and Agreement on Fisheries Cooperation.

In recent years, trade between China and PNG has grown rapidly. It constitutes two-thirds of China's trade with the South Pacific island nations.

The trade volume between China and PNG amounted to USD 110 million in 1999, 118.8% higher than that of the previous year, of which Chinese import from PNG stood at USD 85.5 million, 53.6% higher than that of the previous year; Chinese export to PNG stood at USD 29 million, 156% higher than that of the previous year.

The trade volume in the year of 2000 soared to USD 225 million, 96.6% higher than the previous year, hitting an all-time high. In 2000, China's export reached USD 24.86 million, 14.9% lower than the previous year, and the import was USD 200 million, 134.8% higher than that of the previous year. The increase resulted from a sharp rise of import of timber and crude oil from PNG.

The trade volume in 2001 amounted to USD 140 million, a drop of 37.3% from the previous year, of which China's import from PNG stood at USD 122 million, a drop of 39% from the previous year, while its export to PNG stood at USD 19 million, a drop of 23.1% from the previous year.

PNG's commodities exported to China mainly comprise timber and crude oil, while its main imports from China range from textiles, garments, light industrial products (such as footwear, suitcases, bags and toys), to machinery and electronic products. China has a big trade deficit with PNG for many years, and PNG is the only country in the South Pacific with a big trade surplus with China.

CHINA'S ECONIMIC ASSISTANCE TO PNG

Since 1976, China has provided economic and technical assistance to PNG, through a number of projects including 4 complete projects, namely Sir John Guise Sports Stadium, Henganofi Rural Housing Project, Kandep Agricultural Research Center Project, Markham National High School Project, and 4 technical cooperation projects such as rattan weaving. So far, PNG has received 11 batches of goods and materials donated by the Chinese side. PNG is the largest recipient country of Chinese aid among the South Pacific island nations.

CHINESE INVESTMENT IN PNG

There are 20 Chinese enterprises registered in PNG. Currently, the total Chinese investment amounts to USD 44.74 million, covering manufacturing, logging, timber processing, restaurant and real estate, etc.. The most important investment projects are Veneer Project in Wewak by Heybridge Pty. Ltd., Logging Project by Fusen Industries (PNG) Pty. Ltd., and Salt Project by PNG Salt Industries Ltd., all run under Chinese Government subsidized loan.

CHINESE ENTERPRISES IN PNG

China National Overseas Engineering (PNG) Corporation (COVEC PNG) was established in 1996, with contracting for projects as its main business activities. They have involved in the construction of 80-km-long Beireina-Malalaua Road in Central and Gulf Provinces, 37-km-long Mumeng-Bulolo Road in Morobe Province, and the China-funded Markham National High School. The on-going projects are the housing project of Department of Finance of PNG and Karkar Road upgrading project in Madang Province.

Contact Person:Mr. Fucha Lisheng Tel:(675)3253993 Fax:(675)3253335

PNG Salt Industries Ltd. was established in 1997, with salt prodution, processing, wholesale and retail as its main business activities. The Refinery Salt Factory in Hohola, Port Moresby has been completed and will go into production in 2002.

Contact Person:Mr. Zhou Zhide Tel:(675)3202588 Fax:(675)3202568

BNBM PNG Pty. Ltd. was established in 1992, with wholesale and retail of building materials as its main business activities. It has set up building materials supermarkets in Port Moresby, Lae and Kokopo.

Contact Person:Mr. Bo Kegang Tel:(675)3251135 Fax:(675)3257393

China Long Kong (PNG) Industry Pty. Ltd. was established in 1996, with logging, timber processing and wooden products export as its main business activities.

Contact Person:Mr. Chen Changzheng Tel:(675)3253399 Fax:(675)3252238

Heybridge Pty. Ltd. was established in 1994, with logging, timber processing and sales as its main business activities.

Contact Person:Mr. Kong Qingxiang, Tel:(675)3232828 Fax:(675)3257888

Fusen Industries (PNG) Pty. Ltd. was established in 1996, with logging and timber processing as its main activities.

Contact Person:Mr. Sun Guangfu, Mr. Yi Xiangrui Tel:(675)3112358 Fax:(675)3112368

China Jiangsu International (PNG) Ltd. was established in 1999, with contracting for projects as its main business activities. It completed the Kokopo water project in 2001.

Contact Person:Mr. Han Xuwu Tel:(675)9829333 Fax:(675)9829332

POM Packaging (PNG) Pty. Ltd. was established in 1992, with production and sales of cartons, cardboard and decoractive paper as its main business activities. It has a carton factory in Port Moresby.

Contact Person:Mr. Chen Hongli Tel:(675)3261600 Fax:(675)3261300

Green Chemical Ltd. was established in 2000, with prodution of active carbon with coconut shell as its main business activities.

Contact Person:Mr. Li Linchang Tel:(675)3232828 Fax:(675)3257888

China-PNG Cooperation Ltd. was established in 1987, with import, wholesale and retail of textiles and garments as its main activities.

Contact Person:Mr. Han Honyan Tel:(675)3252868 Fax:(675)3232058

Hua Yang Ltd. was established in 1998, with wholesale of suitcases, bags and shoes and some other products as its main business activities.

Contact Person:Mr. Liu Jingan, Mr. Xiao Shengli Tel:(675)3252868 Fax:(675)3232058

Modern Construction Company was established in 1991, with contracting for medium and small-sized projects and indoor decoration as its main business activities.

Contact Person:Mr. Zhang bolin Tel:(675)3230703 Fax:(675)3232058

Longxin Trading Company (PNG) Pty. Ltd. Its main business activities are import and wholesale of food products and light industrial products.

Contact Person:Mr. Hu Xueqin Tel:(675)3259013 Fax:(675)3258091

Double Cross Contractors Ltd. Its main business activities are contracting for projects.

Contact Person:Mr. Yang Long Tel:(675)3297286 Fax:(675)3297581

SIETCO was established in 1985, with real estates as its main business activities.

Contact Person:Huang Haiyue Tel:(675)3231423 Fax:(675)3256316

China Dalian Ltd. operates a restaurant in Port Moresby.

Contact Person:Mr. Guo Yan, Mr. Jiang Wentao Tel:(675)3212765

ECONOMIC AND TECHNICAL COOPERATION

Chinese enterprises started economic and technical cooperation activities in PNG since 1984. By the end of 2001, 175 contracts of labor service, valued at USD 395 million were signed, with a turnover up to USD 252 million. The majority of them are contracts of projects (51 contracts, valued at USD 344 million, with a turnover of USD 226 million). About 400 Chinese technicians are working with the projects in PNG.

China National Overseas Engineering Corporation (COVEC), one of China's largest state-owned enterprises, has completed Beireina-Malalaua Road Project, Mumeng-Bulolo Road Project, and Markham National High School Project. It is now constructing the 78-km-long Karkar Road in Madang Province. The total value of its contracted projects in PNG reached USD 120 million.

The state-owned Jiangsu International Economic and Technical Corporation completed Kokopo Water Project in November 2001, and is carrying out the construction of another water project with the contract value up to USD 1.7 million.

In February 2002, Qingdao Branch of China Shandong Zhonglu Oceanic Fishery Co. Ltd. signed an access agreement for M.V. Taifu, the first Chinese purse seine fishing vessel with PNG National Fisheries Authority.