Barry Whiteside: Fiji's economic relationship with the People's Republic
of China
Statement by Mr Barry Whiteside, Governor of the Reserve Bank of Fiji, at the 40th anniversary
celebration of the establishment of diplomatic relationship between the People's Republic of
China and Fiji, Suva, 5 November 2015.
* * *
Salutations
The Honourable Prime Minister, Voreqe Bainimarama;
Your Excellency Zhang Ping, Ambassador of the People's Republic of China;
Honourable Ministers;
Excellencies and Members of the Diplomatic Corps;
Distinguished Guests;
Ladies and Gentlemen.
Introduction
I am delighted to join you in celebrating this auspicious occasion to commemorate the
40th Anniversary of the establishment of diplomatic relations between the People's Republic of
China and the Republic of Fiji. I warmly congratulate both our countries on reaching this historic
day which marks four decades of relationship that has flourished over the years. Today, China
is an important development partner and a close ally and friend of Fiji.
The state visit by His Excellency, President Xi Jinping in November last year, the first of its
kind by a Chinese President, was a great honour for us and reflects the commitment and
genuine friendship that China has with Fiji.
China's economy
At this point I would like to recognise China's spectacular economic progress and its
importance in the global economy. It is said that 'when China sneezes, the whole world catches
a cold'- implying that developments in China have an important impact on the rest of the world.
China's success as the world's second largest super power reflects the country's successful
economic planning, its leadership and the sheer hard work of millions of Chinese, something
we as a friend of China, are proud to associate ourselves with.
China accounts for around 15 percent of global GDP and half of global growth. Fluctuations in
Chinese economic sentiments cause movements in global markets for commodity prices, stock
markets, exchange rates, trade and other key economic indicators.
China is also a key trading partner for our own five major trading partner economies. All these
countries have felt the negative effects of the recent Chinese slowdown. Australia's mining
boom plummeted when demand for its iron ore and other minerals flattened in China. New
Zealand's dairy and coal industries suffered when demand slowed in China. China is also the
US's largest creditor, holding the highest amount of US Treasury securities. For Japan and the
Euro Zone, fluctuations in Chinese consumer demand have an impact on their external trade.
So, developments in China have an important bearing on the Fijian economy both indirectly
through our major trading partners, and directly through our own growing trade and investment
relations.
Trade
In terms of our trade, Fiji holds a deficit with China that has grown exponentially from around
$32 million in the year 2000 to approximately $490 million in 2014. Over this 15 year period,
our imports from China, which include machinery & vehicles, food products, clothing &
footwear, iron & steel, chemicals, and furniture, have risen steadily from $34 million to
$624 million.
Similarly, our exports to China, which include mostly raw materials - wood chips, fish, tuna,
seaweed, mineral water and vegetable products, have also gained traction especially with the
inclusion of Bauxite exports in 2012. Our export earnings have increased from a mere $1.3
million to around $135 million over the last 15 years.
While we recognise the immense trade opportunities Fiji has with China, we are often
constrained by the supply capacity of our industries to meet the large demand from China.
Hence, our focus must be to target China's higher-end niche markets for diverse products that
include mushrooms, quality ginger and ginger products, seafood (including sea weed) and skin
and beauty products. To this end, we are appreciative of the funding and technical assistance
provided by the Chinese government to expand our export potential in supplying these
favoured goods.
Fijian mineral water is one product which could become more popular amongst the growing
class of Chinese who have been abroad and are becoming more and more used to drinking
premium bottled water. Fiji will need to focus on these niche areas and sell the pristine nature
of our products to a perceptive and rapidly growing Chinese market.
Tourism
Ladies and gentlemen, we worry that a slowdown in China will have an indirect and negative
impact on tourist arrivals from our major source markets of Australia and New Zealand. These
two markets make up around 65 percent of our annual visitors.
But China itself is now an important growth market for our tourism. On a global scale, the
number of Chinese travellers has grown to over 100 million annually, a direct reflection of
China's increasing economic wealth and its rapidly growing middle class.
Like the rest of the world, we must remain diligent in our efforts to entice China's large group
of vacationers to our shores. While Fiji may not have extensive museums, large high end
shopping malls and exquisite boutiques that Chinese travellers fancy, we offer the Chinese
tourist a unique experience, a tranquil environment, beautiful sandy beaches, crystal clear
waters and the warmth of the Fijian people, in the only place "where happiness finds you".
Numbers and earnings from Chinese visitors to Fiji have grown tremendously over the last
6 years. From just 4,000 in 2009, Chinese visitor numbers increased to 28,000 in 2014, a
seven-fold increase. They have already surpassed 30,000 this year, and were more than
47 percent higher than the corresponding first nine months of 2014. Similarly, annual tourism
earnings from China have increased from $12 million to $45 million over the last 6 years from
2009.
With the aim of growing the Chinese tourist market in Fiji, the Government has embarked on
specific initiatives including visa-free travel, a travel guidebook in Chinese and the acceptance
by nearly half the ATMs in the country of Union Pay credit cards. Tourism Fiji also conducts
outreach programs to promote Fiji as a travel destination and Rosie Holidays recently ventured
into providing special chartered flights for tourists from Shanghai to Fiji. We understand this
will continue in early 2016.
Furthermore, the opening of a new Fijian Trade Commission in Shanghai in 2014 and the
proposed Free Trade Agreement between Fiji and China, are expected to further boost trade
and investment opportunities between the two countries.
Investment, loans & aid
Ladies and gentlemen, China is also an important investment partner for Fiji, evident in the
many development projects that have already been completed and others that are currently
ongoing in the country. Some of these include the Vodafone arena, the US$158 million
Nadarivatu hydroelectric-power project, the Navua hospital and highway road projects in
Vanua Levu. Chinese companies have also bought stakes in Vatukoula Gold Mines Limited
and invested heavily in our primary industries for bauxite and fishing. China's financial
assistance to Fiji made the country one of the largest recipients of China's loans in the Pacific
region. As of September this year total loans were approximately $521 million or around 38
percent of our external debt.
Conclusion
Your Excellencies, Ladies and gentlemen.
Fiji recently celebrated 160 years of the Chinese community living in Fiji, marking the much
longer relationship and presence that China has had with Fiji. Our local Chinese community
has played a substantial role in Fiji's nation building and contributed significantly to the
economy through agriculture, fishing, construction, health and retail business. More broadly,
Fiji's 'Look North' foreign policy has boosted diplomatic relations between our countries and
Fiji continues to benefit through China's support for the much needed infrastructure
development and foreign investment in the economy.
Fiji's growth momentum has been exceptionally strong by historical standards, at over four
percent for the past three years. Our growth outlook is favourable and continues to be driven
by the strong investment, including by domestic investors, and consumption activity. This has
been supported by the resilience of our tourism and inward remittances which continue to grow
strongly despite the slowing global economy. I am happy to say that our financial sector is
sound and our external position remains stable with adequate reserves and a modest current
account balance. Our forecasts on the Fijian economy are consistent with those of the IMF
Article IV team which was here two weeks ago.
Our macroeconomic stability and favourable economic outlook augurs well in our drive to find
greater opportunities for growth with China, a country of remarkable transformation from which
we can continue to learn.
Ladies and gentlemen, today's occasion reminds us that together we have achieved much and
together we can achieve more for the betterment of our countries.
Let me thank the Ambassador again for inviting me today and congratulate you for the great
success in organizing this auspicious event.
Vinaka Vakalevu.