David Morris is the Pacific’s new Trade Commissioner to Beijing. He talks to Business Advantage PNG about the changing nature of China’s economy and the trade and investment opportunities for the Pacific Islands that can arise from being part of China’s new ‘Maritime Silk Road’.

Chinese tourists in Palau (AFP Photo/Sebastien Blanc)

Australian-born David Morris is no stranger to promoting trade and investment. The 50-year-old was a senior adviser to the Tasmanian state government and managed trade and investment promotion for the New South Wales government. He’s represented Australia on diplomatic postings, and led trade, investment and education missions to China, Hungary, India, Ireland, Japan, Malaysia and the United States.

Now, he’s in Beijing, as the new Trade Commissioner to China for Pacific Islands Trade and Invest (PT&I), the trade and investment promotion arm of the Pacific Islands Forum Secretariat.

China’s next phase

‘What interests me about this role is the great opportunity the rise of China provides to support sustainable economic development to benefit communities across the Pacific,’ Morris told Business Advantage PNG.

‘China’s growth phase over the last couple of decades has been that of capital growth. There’s been a massive investment in the cities and in industrial capability, and so China has been sucking commodities in from all around the world,’ he says.

Pacific Islands Trade and Invest’s David Morris

Pacific Island countries (PICs) have been a beneficiary of this, he notes, but China is now moving into a new phase, which Chinese President Xi Jinping calls ‘the new normal’.

‘China’s growth is starting to slow and this not necessarily a bad thing,’ he observes. ‘Because the burst of growth would have been unsustainable if it had continued at the pace we’ve seen in recent years.

‘I’m sitting here in Beijing surrounded by millions of middle-class consumers who are out consuming all the sorts of goods and services that we see around the world.’

‘It’s becoming a more balanced economy, not just focussed on capital formation. It’s becoming a consumption economy and this is a transformation which is in its early days.

‘I’m sitting here in Beijing surrounded by millions of middle-class consumers who are out consuming all the sorts of goods and services that we see around the world.’

Pacific opportunities

Two-way trade between China and the Pacific Islands Forum countries, excluding Australia and New Zealand, is currently worth US4.5 billion (K12.24 billion).

China’s exports to the region are mainly electronic products such as phones and TV sets, instant food, machinery, clothing and footwear, furniture and construction materials. Chinese imports from the Pacific consist of mostly raw materials (timber and seaweed), seafood and mineral products.

But that’s about to change, says Morris.

‘There’ll still be demand for those commodities but prices are going to continue dropping. But, because of this shift, there’ll be a demand for niche products, like tourism, and a whole range of things from coffee to health products.

‘Any sort of lifestyle product that is a niche market within China hopefully can provide important opportunities for Pacific economies.’

‘We need to develop direct air links, resorts and tourism experiences and infrastructure which will allow Pacific Island nations to benefit from what is a massive growth in Chinese outbound tourism that is really just beginning.’

The PT&I office in Beijing has business managers specialising in trade, investment and tourism, who work with local Chinese companies and try to match them with Pacific Island companies.

Chinese tourists diving Palau. Credit: (AFP Photo/Sebastien Blanc)

Tourism potential

In 2012, nearly 70,000 Chinese tourists visited the seven ‘approved destinations’  on the Chinese government’s list of Pacific island countries and Morris believes there is ‘a very strong potential to strengthen tourism’:

‘We need to develop direct air links, resorts and tourism experiences and infrastructure which will allow Pacific Island nations to benefit from what is a massive growth in Chinese outbound tourism that is really just beginning,’ he notes.

‘Chinese tourists are much more adventurous and looking for much more diverse experiences, so those who’ve been down to Australia a few times are looking for a more exotic location in the Pacific for their next holiday.’

Long-term relationships

China’s President Xi Jinping with Fiji’s Prime Minister, Frank Bainimarama. Credit; RNZ

Chinese President Xi Jinping visited Fiji in November 2014, and Morris says the significance of that visit cannot be underestimated.

‘Within China, there’s a very strong cultural dimension in forming relationships at the highest level and this is often the way business begins in China: when people feel they can trust one another and particularly when leaders have made a commitment to one another.

‘But also, very importantly, Xi Jinping outlined in his speech in Suva that the Pacific Islands are part of the ‘Maritime Silk Road’, and it is important for us to understand where we sit in terms of developing trade, investment and tourism.

‘Chinese tourists are much more adventurous and looking for much more diverse experiences so those who’ve been down to Australia a few times are looking for a more exotic location in the Pacific for their next holiday.’

‘It means, in the Chinese way of thinking, that they see a long-term commitment to the region and they want to build links and infrastructure so there will be mutual advantage through trade, investment and tourism over the long term.

‘We now need to do the hard work and work out how to translate the symbolic importance of those words into action.’