• Papua New Guinea is an island country located in the north of Australia and the southwest of Pacific Ocean. It encompasses the eastern half of the island of New Guinea and many outlying islands including New Ireland, New Britain and Bougainville. Situated along the Pacific Ring of Fire, the country has several volcanoes and is prone to earthquakes and tsunamis.
• The country is a former Australian colony for almost 70 years and it gained its full independence in 1975. It has become a constitutional monarchy under the British Commonwealth. With only 8.4 million population, there are almost 850 indigenous languages spoken, making it the world’s most linguistically diverse country. Thanks to its topography with mountains and jungles, it keeps the populations isolated and makes it easier for them to preserve their unique languages. Papua New Guinea adopted four official languages which include English, Hiri Motou, Tok Pisin and Sign Language.
• With over 85% of the population lives in the rural area, agriculture is the major economic activity which provides livelihood for Papuan. High level of seasonal rainfall with a moderate tropical climate provides favourable farming environment. The country mainly produces cash crops such as coffee and cocoa, with half of the labour force involving in production, processing and exports. There is also a small but increasing production of value-added products such as coconut products and spices.
• While agricultural sector accounts for majority of the labour force, minerals and energy sector contributes the most in terms of exports. According to a World Bank report, liquefied natural gas (LNG) accounted for almost 40% of Papua New Guinea’s exports in 2019, with Japan being the largest purchaser, followed by China.
• Being Australia’s closest neighbour, Papua New Guinea concluded a Free Trade Agreement with Australia back in 1977. In 2007, it entered the Pacific Island Countries Trade Agreement with other 11 island countries including Cook Islands, Soloman Islands and Vanuatu. It also signed an Economic Partnership Agreement with the EU and Fiji in 2009, aiming to reduce barriers in goods trade. Papua New Guinea also joined as a member of the China-led Asian Infrastructure Investment Bank (AIIB) in May 2018.
• China and Papua New Guinea have come to agreement to advance talks for establishing a Free Trade Agreement (FTA). A joint feasibility study is currently undertaken to analyse the potential benefits and challenges of a potential China-Papua New Guinea FTA.
• Australia used to be the largest aid provider to Papua New Guinea but in recent years, China has significantly increased its aid spending to the country’s infrastructure, including a new convention centre, Chinatown in Port of Moresby and other transport network projects. China has also signed up Papua New Guinea to its Belt and Road Initiative (BRI) program , which is the only Pacific region country to take part in BRI , paving the way for more Chinese infrastructure development in the island country.

• Cumulative FDI stock in Papua New Guinea has remained at a level above US$4 billion since 2011 and amounted US$4.6 billion in 2018. China’s FDI reached US$2 billion in 2018, a fourfold increase from 2014.

Source: Hong Kong Trade Statistics, Census & Statistics Department