East Timor: Economic and diplomatic relations with China on the rise

30 March 2009

Washington, USA, 31 March – Economic and diplomatic relations between East Timor and China are on the rise, despite recent controversy, and the energy potential and planned infrastructures in the Portuguese-speaking country offer opportunities for Chinese companies, according to the Jamestown Foundation.

In a report published this month, researchers from the North American foundation define access to Timorese oil and gas reserves as “one of [China’s] primary interests” in the Portuguese-speaking country, though until now “without much headway”, namely with the onshore reserve which was prospected by PetroChina in 2005.

“The bigger prize for China would be access to East Timor’s liquefied natural gas (LNG),” namely from the “Greater Sunrise” gas field estimated to contain 8.3 trillion cubic feet of natural gas and 300 million barrels of crude oil, says the report.

On the table is the option to build a pipeline to a processing facility in Timor, a project which is being closely followed by Chinese state energy companies interested in construction and gas purchasing.

“South Korea and Thailand have also expressed a keen interest in buying LNG from East Timor, though their enthusiasm may have waned due to the global financial crisis and falling energy prices. Beijing, hedging a rise in the price of hydrocarbons once the inevitable economic recovery gets underway, is likely to take a more long-term view.” says the report.

Since East Timor’s independence, China has established itself as a key player in the country’s diplomatic and political affairs. Though its role has been widened, particularly when compared with Australia, Portugal, Indonesia and the US,” says the report from the North American think-tank.

China was the first country to establish diplomatic relations with East Timor in 2002.

Official aid has been steadily growing, although it is still far below the level of help given by its traditional partners and the UN.

Aid has been used above all in the construction of government buildings, namely those which house the Ministry of Foreign Affairs (handed over at the start of 2008 at a cost of US$7 million), and also the Presidential Palace and the Headquarters of the East Timor Defence Force (US$6 million each), are being built.

As regards human resources, over the last seven years over 400 East Timorese civil servants and technical personnel have received training in China in the areas of public administration, economic planning, tourism, health, construction, and technology.

“Two areas of Chinese support that have been particularly useful have been public health and agriculture,” through, respectively, the sending of doctors and a hybrid rice plantation project, says the Jamestown Foundation.

The Chinese community in the country is estimated at up to 3000 people.

The North American think tank also highlights the continuity of aid and the “expression of confidence in its economic prospects,” even through the periods of instability the country has suffered, that have contributed towards charming the government.

Trade has risen from US$1.7 million in 2005 to US$9.4 million, making China the country’s fourth largest trade partner.

The launch of important infrastructure projects is expected this year, including the airport, new roads, dams and port facilities, and Chinese construction companies are expected to bid, though facing “stiff competition” from their Korean, Indonesian and Malaysian counterparts. (macauhub)