Around 260 Chinese fishing fleets were recently detected in the seas surrounding the Galápagos islands off the coast of Ecuador. The vast armarda of fishing vessels in the biodiverse Pacific islands has raised alarm bells over the fishing practices that conservationists say could severely damage the region’s protected marine ecosystem. Photo: www.greenqueen.com.hk
China’s distant-water fishing fleet is in the headlines once again. In a story hitting the international media, a flotilla of an estimated 243 China-flagged tuna longliners, squid boats, supply vessels and reefer carriers was fishing on the border of the Galápagos Islands EEZ in the eastern tropical Pacific.
The environmental concern is sharpened in these waters because the Galápagos marine reserve has a concentration of shark species, including endangered whale sharks and hammerheads. Further, the Ecuadorian navy claimed that 149 of these boats had turned off their vessel monitoring systems.
China’s ambassador to Ecuador responded to queries raised by Ecuadorian authorities that “except for some delays or temporary loss of satellite signal, all Chinese ships keep operating and using monitoring systems normally,” adding that “China is a major fishing nation … and it is also a responsible fishing nation.” The spokesperson of China’s Ministry of Foreign Affairs subsequently announced that China would ban fishing near the Galápagos from September to November.
While the Galápagos incident garnered most attention, China’s fisheries expansion is touching all oceans, and most fisheries and markets. In Nigeria, Chinese investment of between US$1.5 billion and $2.5 billion is being poured into the creating of the Andoni Fishing Port and Processing Zone. The complex is anticipated to use Nigeria’s influence with other countries in West Africa in to create a regional hub for the landing and processing of a wide range of species including mackerel, herring, tuna, and crustaceans. Critics argue that fisheries in West Africa are already at capacity.
In Europe, Shanghai Kaichuang Marine International has announced a US$36 million investment in a new tuna processing plant in Spain under its Albo subsidiary. Shanghai Kaichuang Marine International is currently an enormous commercial presence in China’s seafood markets, especially for mackerel, tuna, fish fillets and krill, but only has a very small export presence and is looking to expand internationally. In the Pacific, China is building ever stronger ties with the Solomon Islands since ‘the switch’ in diplomatic relations from Taiwan, including proposed tuna industry investments.
More broadly, and perhaps driving these dynamics, is that China’s distant water fishing fleet is between five to eight times larger than previous estimates. Recent research by the UK’s Overseas Development Institute identified 16,900 vessels, 90% of which are flagged by China. The study uses unique fishing vessel identifiers compiled in the Krakken database, which is reportedly the world’s largest database on fishing vessels.
The seemingly relentless expansion of China’s marine fishing industry continues to give competitors the jitters. Spain’s main tuna industry association – Organization of Associated Producers of Large Freezer Tuna Vessels (OPAGAC) – is arguing that crew conditions on Chinese fishing fleets is not only morally wrong, but gives their product an unfair competitive advantage as safety and working conditions are far laxer than those for EU boat owners.
HONIARA, 17 February 2020 – China says it is prepared to strengthen the tuna industry of Solomon Islands and help the tiny Pacific Island nation benefit more from its fisheries resources as it welcomes the Melanesian state as one of its new diplomatic allies.
For 36 years, the Republic of China (ROC, or Taiwan) benefited from the Solomon Islands tuna industry. Last September, the government of Solomon Islands cut the diplomatic relationship between the two countries (in what locals call “the switch”) to form a new allegiance with the People’s Republic of China.
Although the severing of formal relations with Taiwan was said to be unlikely to affect collaboration in the private sector, four months later there is no mention of dialogue between the two former allies.
This has provided an opportunity for the economic giant, the People’s Republic of China (PRC) as it steps into a formal role.
China is one of the biggest players in the Pacific Islands tuna industry. Just like Taiwan, China is a member to the Western and Central Pacific Fisheries Commission (WCPFC).
However, China’s presence in the Solomon Islands tuna trade was previously unheard of, and only Taiwan was said to be benefiting greatly from the tuna stocks in the Solomon Sea.
Now that mainland China has established a formal relationship with Solomon Islands, there is no doubt that the new friendship will help boost the tuna industry for both countries.
The future: tuna trades between China and Solomons
During a trip by Solomon Islands journalists to Beijing last December, the PRC’s Ministry of Commerce said the Chinese Government was ready to assist Solomon Islands with its tuna trades.
“We (China) know that Solomon Islands has rich fisheries resources, and tuna is one of your major products and you are one of the major producers of tuna as the industry accounts for a huge part of your gross domestic product,” a ministry spokesperson said.
“At the moment, Chinese companies have already gathered some experiences in fisheries cooperation with South Pacific countries, so we support and encourage Chinese companies that are competent and interested to participate in the investment cooperation with Solomon Islands.
“Although our two countries are separated by a wide ocean with thousands of miles apart, we believe that as we work together, as we join hands, we can develop more cooperation opportunities and realise common development for China and Solomon Islands.”
China is Solomon Islands’ largest trading partner and also its largest export destination, she added.
“Among the 10 Pacific Island countries that have diplomatic relations with China, Solomon Islands is our second largest trading partner and second largest source of imports,” she said.
“In 2018, the two-way trade between our two countries amounted to US$750 million, which means Solomon Islands, relatively, enjoys a big surplus against China, and the surplus is enlarging in recent years.
“Now already some Chinese companies are cooperating with their counterparts in Solomon Islands, participating in projects such as infrastructure, fisheries, forestry, telecommunication, and also the mining industry,” the spokesperson said.
The PRC’s Ministry of Commerce also stressed that Chinese companies were also investing in the tuna industry of island states such as Fiji, Vanuatu, Kiribati, and Micronesia. Investment is in numerous aspects of the supply chain, and includes tuna breeding, offshore fishing, refrigerating, and processing and retailing.
In 2018, the total online retail sales reached more than 9 trillion Chinese yuan renminbi (RMB), about US$1.3 trillion. The level of consumption in China is rising rapidly, which means Chinese consumers will have larger demand for high-quality products, China’s Ministry of Commerce said.
“This is a very big opportunity for other countries, including Solomon Islands, because you have many competitive products including seafoods, tuna and many other products that will have wider market access to China,” the spokesperson for the Ministry of Commerce said.
China also said it would like to expand cooperation with Solomon Islands to include infrastructure, investment, and agriculture so that more projects can be carried out to allow local Solomon Islanders to develop better ability to achieve independent and sustainable development.
According to the spokesperson, there is great complementary between the economies of Solomon Islands and China. The Chinese Government was also well aware that Solomon Islands is a country with rich natural resources, and an urgent need to develop its infrastructure and also many industries, and China was ready to assist.
“China has the relative strength in terms of the size of market, and also capital and technology,” the spokesperson said.
“Now that we have established diplomatic relations, we believe that our mutual understandings and also our exchanges in different areas will be deepened and our mechanisms will be improved so that the potential of economic and trade cooperation between the two countries will be further tightened.”
China has also shown interest in enlarging the two-way trade because Solomon Islands is now an important supplier of timber and aluminium ore to China. The Chinese Government is also encouraging its investors to explore the possibility of importing more seafood from Solomon Islands.
The past: Taiwan benefited more than Solomons from Solomons tuna
In the 36 years before the switch, Solomon Islands Prime Minister Manasseh Sogavare said, Taiwan had given Solomon Islands funds to the value of hundreds of millions of US dollars as constituency development funds. But during the same period the country had harvested billions of dollars’ worth of tuna from Solomon Island waters.
Mr Sogavare reflected that, in this regard, Solomon Islands was a net lender to Taiwan.
According to Mr Sogavare, Solomon Islands had permitted its marine resources, especially tuna, to be harvested by Taiwan, besides advocating to the United Nations (UN) for the country’s right to self-determination.
Taiwan was also one of the major markets of canned and processed tuna products for Solomon Islands, as Taiwanese fishing fleets were affiliated members of the Tuna Industry Association of Solomon Islands (TIASI).
At one stage, when Taiwan was issued a “yellow card” by the European Union (EU) in 2015 for not tackling illegal, unreported and unregulated (IUU) fishing, Solomon Islands was instrumental in assisting it work toward fixing the problem. The ruling was lifted after 3 years and 9 months, in part because Solomon Islands Ministry of Fisheries & Marine Resources (MFMR) worked with Taiwan Fisheries inspector Mr Ian Lin to do inspections of and collect harvest data from Taiwanese vessels that fished in the Solomon Islands waters.
He pointed out that dealing with IUU fishing benefits the local economy, and also helps to ensure that from the fishing vessel to the table customers are getting fish the “green way”.
However, there is no doubt that Taiwanese fishing vessels have contributed a lot to the development of the fisheries sector by capturing more revenues for Solomon Islands.
In June 2019, roughly 55 Taiwanese fishing vessels had purchased licenses and were operating in Solomon Islands waters, according to the Embassy of ROC (Taiwan) in Honiara.
“These vessels come into Honiara and Noro every two months,” he said. This is only part of the picture, as other vessels also use these ports.
“Altogether, there are roughly 330 Taiwanese vessels visiting Solomon Islands every year for loading and unloading in our ports,” he said.
“During their visits they pay not only license fees, but also pay for housing, maintenance fees, livelihood supplies, recruiting local people for assistance, and so forth.
“Each visit probably brings more than SBD$20,000 revenue extra to Solomon Islands, and will benefit our economy and improve the employment rate in the country.”
The switch and Taiwan’s investment
Mr Sogavare said that despite the switch, his government would continue to support Taiwanese investments in the country.
“They are entitled to incentives and the protections guaranteed by our laws. We would encourage more Taiwanese investors to invest in the country, something they have not been actively doing over the 36 years of diplomatic relations,” Mr Sogavare said.
“Their investments have been by political governments and in political interests. The people of Taiwan are welcome to send cultural groups to Solomon Islands for cultural exchanges.
“These exchanges are not affected by the diplomatic switch,” Mr Sogavare once said.
Prime Minister Sogavare said the cost of doing business with China would become cheaper and more efficient.
“According to the recent Central Bank of Solomon Islands report, we have a total trade value of SBD$2 billion, which is by far our largest single trading partner, well above all other trading partners combined.
“Our trade with ROC (Taiwan) is only SBD$142 million, which is a minor fraction compared to China,” he said.
Is tiny Solomon Islands ready for giant China?
Now that China has shown its full interest in helping Solomon Islands bolster its tuna trade and economy, it is up to the Sogavare-led Democratic Coalition Government for Advancement to play its part.
In his statement after the switch to Beijing, Mr Sogavare said Solomon Islands is bound to reap huge benefits never seen before in the history of such a young nation.
However, Mr Sogavare had already been warned over his country’s engagement with China, well before the switch.
Deputy opposition leader Peter Kenilorea Junior has said that the country is not ready for a diplomatic relationship with China.
“The Solomons has many unresolved domestic issues related to land ownership and resource management,” Mr Kenilorea said.
He said the country’s weak laws and regulations leave it vulnerable to exploitation.
“We have already issues in terms of our lax immigration, lax labour laws, lax regulations, land issues, logging issues that have come in and caused a lot of hurt socially as well without much gain.
“And to repeat that again at a much larger scale is something that I just don’t feel we are prepared for.”
Mr Kenilorea told Australian media that the economic advantages of aligning with Beijing were clear, but he feared his country’s institutions were not ready to deal with a “powerful and dominant China”.
“I’m concerned about readiness in terms of our own governance, to really be on terms with China,” Mr Kenilorea said.
“We need to strengthen those governance systems … knowing full well our strategic location in the Pacific, and the strategic resources that we do have.”
During an interview with a top government official at the Office of the Prime Minister & Cabinet, he said, “We must prepare to deal with the Chinese demands and requests. The government must establish mechanisms with some form of regulations and legislative reforms to accommodate its new relationship with China.”
In her personal reflection following the Solomon Islands journalists’ trip to China, senior journalist Dorothy Wickham said she saw China as a country with money to burn and a point to prove.
During the trip, Ms Wickham said she was convinced that political leaders in Solomon Islands were not ready or able to deal effectively with China.
“Solomon Islands’ regulatory and accountability mechanisms are too weak,” Ms Wickham said.
“We have already shown some spirit with our attorney-general rejecting a hasty deal to lease the island of Tulagi, the capital of one of our provinces, to a Chinese company, but I fear how fragile and weak my country is against any large developed nation, let alone China.”
Ms Wickham added that Solomon Islands has always prided itself on setting its own course in international relations, recognising Taiwan for three decades, and in the 1980s, as a newly independent state, standing up to the Americans over an illegal fishing boat fiasco.
“In the end, it will be history that judges our leaders and whether the switch from Taiwan to China was the right move, and if they handle it in the country’s best interest.
“My hope is that in the meantime, the price extracted from our island nation is not too steep or too painful,” she said.
Meanwhile, it is common knowledge that the Chinese government consistently requires Chinese companies to abide by international laws and local laws during their cooperation with their local partners.
It will be interesting to observe what transpires from the new China–Solomon Islands bilateral ties in the three-year transition of 2020–2023. This is especially in terms of the tuna trade and how tuna talks between both countries will be sustainably managed.
The Chinese-founded Asian Infrastructure Investment Bank (AIIB) wants to help Pacific Island nations manage their fisheries.
The multilateral development bank’s president, Jin Liqun, believes the Islands have “limited capacity” to do so on their own, so need the international community’s help.
Speaking at a round table discussion in Auckland attended by interest.co.nz, Jin said, “This is a huge resource that would be sufficient to make these countries very rich, but they have no power to drive away all these illegal fishing boats.
“We can help them…
“Maybe we would work with the New Zealand Government, combining our resources.”
Beijing-based Jin went on say, “I think Pacific Island countries still have to develop their institutional capability. That may take a bit of time, but with the support of New Zealand and other members of the international community, we would be able to help them to be more effective.
“These countries do need concessional funding.”
China’s position in the AIIB vs NZ’s
The AIIB has committed US$4.2 billion to financing 24 projects since it started operating in January 2016.
It offers sovereign and non-sovereign loans for projects in energy and power, transportation and telecommunications, rural infrastructure and agriculture development, water supply and sanitation, environmental protection, and urban development and logistics.
New Zealand is one of the Bank’s founding members, in 2015 committing to investing NZ$125 million in it over five years.
However New Zealand has dedicated a total of US$462 million (NZ$630) to the Bank. The difference between this figure, and the amount already paid can becalled upon by the AIIB as required.
Jin confirmed that while New Zealand is technically eligible to receive funding from the Bank, its priority is developing countries.
“I’m sorry we can’t invest in your country, even though I’d love to,” he said.
The US$462 million pledged by New Zealand makes up only 0.49% of the total committed by the AIIB’s 84 regional and non-regional members. This means it holds a 0.68% voting stake.
China has committed US$30 billion, so has a 27% voting stake.
Japan and the US aren’t part of the AIIB.
Jin is adamant: “It’s not China’s bank. China has China Development Bank, Exim Bank. The combined overseas assets are now beyond US$500 billion – more than the combined assets of all the multilateral development banks.
“So if it’s supposed to be China’s bank, why should we do it? It doesn’t make any sense. It’s a multilateral institution.”
‘Need and temptation often leads to greater risk’
Deputy Prime Minister and Foreign Affairs Minister Winston Peters wants New Zealand to contribute more to multilaterals working in the Pacific.
He made this intension clear when he revealed New Zealand’s “re-energised Pacific strategy” in a speech delivered at a Lowy Institute event in Sydney on March 1.
Peters didn’t mention the AIIB specifically, but said the World Bank and Asian Development Bank were “vital institutions” that could offer “sustainable investment choices for Pacific nations”.
Overall he said he wanted New Zealand to increase aid payments to the Pacific, further to these falling from 0.30% of Gross National Income in 2008, to 0.25% in 2016.
Nonetheless, his speech had a cautious undertone.
“The Pacific overall has also become an increasingly contested strategic space, no longer neglected by Great Power ambition, and so Pacific Island leaders have more options. This is creating a degree of strategic anxiety,” he said.
While Peters said the Pacific was attracting “an increasing number of external actors and interests”, he didn’t mention China.
“So much is changing in the Pacific and sometimes it is not for the best. Need and temptation often leads to greater risk than prudence would suggest,” he said.
Scepticism from Pacific Island fisheries expert
These risks are ever clear to veteran New Zealand journalist and former press secretary for the Samoan Prime Minister, Michael Field.
Having spent a large part of his career in the South Pacific and covering the Pacific, and written a book on fisheries in the area, ‘The Catch’, Field said he was “completely sceptical” about the AIIB’s interest in the Pacific’s marine resources.
“I find it a really cynical move involving a country that is at the very moment engaged in an extensive plunder of the fisheries resources of the South Pacific.”
He said China’s interest in funding regulation could start by it cutting back on the subsidies it offers Chinese fishing boats.
Further, China should be “cutting back on the number and style of their fishing operation, and they should prove to the Pacific first that they are capable of effective internal regulation before they start wondering around telling other people what to do.
“The Chinese operation in the Pacific so far has been a complete disaster. It’s a matter of great shame to China. Everywhere you look; China is over-fishing and ripping off Pacific countries.”
Field said the existing regulatory system of fisheries in the Pacific was “the best option we’ve got”.
Yet he noted one of the bodies that monitors the Pacific – the Western and Central Pacific Fisheries Commission – was “stymied year after year by nations like China who refuse to cut back on their catches, or refuse to limit their catches”.
You can see the extent of China’s fisheries in the Pacific using this Global Fishing Watch resource.
As for the concessional loans made in the past, Field noted the struggle Pacific Island countries were facing, trying to repay these.
The Australian in January reported Vanuatu was forced to lift its GST-style consumption tax from 12.5% to 15%, largely in an attempt to help service huge concessional loans from China.
Meanwhile Tonga was scrambling to start repaying massive Chinese debts with a five-year amnesty brokered by the International Monetary Fund to expire in coming months.
The Australian also reported the building boom that has taken place across the Pacific is on the back of concessional loans with provisos the borrower nations spend the money building infrastructure using Chinese construction groups.
Nonetheless, the AIIB’s Jin said it was important for donors to work with recipient countries to ensure they prioritised funding the right projects.
“So if anything goes wrong, don’t put the blame on the recipient countries, or else you have a problem,” he said.
“As long as donors and recipient countries will learn from lessons [of the past] they certainly will do a better job as we move forward.”
As for the relationship between the AIIB and China’s Belt and Road initiative, Jin acknowledged both were proposed by the Chinese leader Xi Jinping.
Yet he said, “These two are different things. They are not the same, although there is some relationship…
“Belt and Road is a platform, inviting all the interested countries to work together. China does not dominate, China does not dictate, China cannot impose any project in any country. We are all working with sovereign governments.”