So Palau is being economically squeezed by China

I guess it was expected to happen sooner or later. China (mainland) has been looking for different ways to turn countries in the world--in Africa, South America, South Pacific, etc., to turn away from Taiwan. In some cases, it involves infusion of millions of dollars into the target countries in order to convince them that China can match the financial assistance that Taiwan is giving to them.

In Micronesia, its RMI and Palau that have diplomatic relations with Taiwan, not mainland China. These two Compact nations continue to vote in support of the US when it comes to UN voting for international matters.

It's reported that China has declared Palau as an "illegal" tourist destination. Any violator of this new degree will be fined whether a citizen, tour operators, airlines. As a result, the tourist from China to Palau has ground to a halt. In addition, it seems that the many investments by Chinese in Palau have also come to a half.

Of course, there are many implications to Palau's economic development, environment, future diplomatic moves, etc.. Palau leadership are divided--some continue to want Taiwan while others have been approaching China in the recent year. They are pleased with this new China position.

It looks like this is a political squeeze by China--to force Palau to come to its knees. It is also a message to Palau when it votes in the UN with the US against China's interest.

More will come from this recent development, I am sure. I also think that RMI is also monitoring the situation closely.

It might be a blessing for Palau as they shift the focus of their tourism from mass tourist to the more quality tourists--which it turn reduce the stress on the Palau's fragile environment. Just some thoughts.


  • This is what happens when you put all your eggs in one basket and that basket has hole one day in the bottom. Bubble economies are always vulnerable when the source for revenues dry up or in this particular case when the sources of those eggs decide to go elsewhere. Palau has but one basket, this is why it is important to diversify ones investments. Sad part Palau entire economy depends on their tourism. No other basket.
  • Good point, R; and a good lesson to all small countries trying to tie their future fortunes to unpredictable and dictatorial countries like China. China can, by a government decree, declare tourism, in this case, to Palau as illegal; and all the Chinese people and assets most importantly the government-backed investments in hotels, etc., will fall in line.

    This is the difference between a dictatorial country and a democratic country.
    It's also a good lesson for small countries--don't try to play the game of pitting one giant against another giant because in the end, you will be stepped on when the big countries, like elephants, decide to "fight"--not necessarily militarily but economically and for political dominance and regional influence.

    The positive side of this development is that Palau can shift the focus of its tourism to the fewer numbers but quality tourists but high paying tourists, say, from Japan, Europe, US and other countries. South Korea is a good market but their tourists spend quite a small amount during their stay--like looking for cheap hotels, etc. Palau should focus on Japanese market now that Chinese are not coming to Palau anymore.

    Palau might also consider reopening is vast ocean for commercial fishing fleet the way it was a couple of years ago--in order to increase its revenue.

  • Well see if this high class tourism works.
  • Yes, it's expected that the tourism revenue will drop; so Palau has to look for ways to make it up or reduce its government budget. One of the ways to attract and show appreciation to tourists is for Palau to decrease its departure fee from $100 to between $30 and $50.

    Right now, at $100, it's like saying to tourists "good bye but don't come back"--now that we've taken your last change from your pocket. I get that feeling whenever I depart from Palau airport.

    Again, I think the Japanese market is a good one to focus on: big spenders; clean; appreciate the link with Palau's pre-war history; appreciate the fact that Palau is able to maintain its pristine environment; a short plane distance from Japan; others.

    Another way to encourage Japanese investment is to make it easy for them to purchase the big hotels as built by Chinese. Once they own more facilities, they will promote Palau and will enable Palau to attract more Japanese tourists. Just some thoughts.
  • So its all in for tourism from the looks of it. No plan to diversify?
  • Kudos to the Palau President for not bowing to the commies , it's a sign of a true commitment toward the compact of free association that had eventually make a mark on Palau's commitment with USA into the future.
  • The second industry that has the potential is the fishing. Palau recently banned commercial fishing although they are part of the PNA. I think Palau's ocean being near Papua New Guinea and Yap and other fishing areas do have the potential of reaping several millions of dollars from fishing licenses, etc.

    I heard that Palau's leadership is also split on this issue. Now that the tourism revenue is expected to be reduced due to China tourism downturn, I am sure the other leaders who have continued to support the commercial fishing will be able to convince the Legislature and the President to look into the commercial fishing licenses as another way to make up the shortfall.

    I think these 2 industries will be able to make up the shortfall. The third one is the gambling but if the Chinese cannot come to Palau, that industry will not work in Palau plus the fact that Palauans have disapproved of it in previous plebiscite.
  • even though Palau had banned fishing in their water,Palau still reap a good portion of the fishing industry in the region by the means of the VDS being a member of the PNA.
  • vf, so if Palau were to open its waters to the PNA oversight and fishing fleets, would it receive additional or more revenues that what it is getting now or not? I am not familiar with the PNA's fishing schemes but I do hope more revenues are possible as Palau tries to wean itself from dependency of the Chinese tourists.
  • The Chuuk secession movement would be wise to take note of China's actions toward Palau, if China is being considered as a potential new benefactor. (remember the recent meeting/photo) Beware - Piss it off and it will slam the door in your face.
  • Palau can still ban fishing in their water but their share of the days will always be there for them to sell it to other PNA members or any fishing companies, good thing about this set up is, Palau water is now a breeding ground hence the conservation of the tuna resource in the region.. my little understanding of this scheme.
  • The green movement is strong in Palau so its hard to see them taking advantage of the fishing.
  • R, you're right about Palau's being strong in its green movement, particularly, as the current President Remengesau has been in the forefront on environmental protection--not only on land but also on seas and oceans, in general. I hope they'll continue to be able to set examples of good conservation and preservation actions as they try to deal with the China's decision.

    Here is wishing Palau and the current President Tommy the best of luck as he continues to navigate in the international political arena in its quest to maintain its good relationship with the US. Hopefully, the diplomatic front will be worked out to the best of al the parties and especially for the conservation and preservation of Palau's unique ecosystems.
  • I think the reason why Palau chose Taiwan over China was the fact that the Taiwanese natives also chew beetlenut.

    It was a decision based on beetlenut politics which clouded their vision and impaired their sight over their horizon.

    RIP - Palau tourism industry.

  • So Palau's relationship with Taiwan has resulted in the millions of dollars--probably between 10 and 50 million dollars (corrected figures will be provided after research later). Palauans have access to Taiwan's medical facilities which are some of the best in Asia--much, much better than some in other countries. Funding for renovation of the airport facility, donations in the form of boats, assistance for programs in agriculture and aquaculture, etc., are some of the benefits.
  • Taiwan and Palau are both constitutional democracies.

    China is not. It is a one-party state governed by the Communist Party.
  • Palau and Marshalls have relationship with Taiwan while FSM has one with China. And i don't think betel nut was the factor that lead to this relationship.

    Its also nice to remind FactsMatters that china is a communist state. Communism is a form of socialism. Socialism which you advocate for in this forum.
  • wads the difference between a duck and liar?
  • edited September 2018
    Wads maybe.
  • If you believe in democracy and freewill, support Taiwan. Do not whore yourself by wanting People's Republic of China's money.
  • China will not implement its type of government in Chuuk. China is just throwing money around to win over allies and counter the US influence in the Pacific.
  • Remember never trust chinese governmentimage
  • So I read from a recent copy of the Micronesia Business Journal (?) that Palau President Remengesau is satisfied with the current trend of tourism activities in Palau. In spite of sizable drop of tourism revenue due to China's prohibition of Chinese tourists to Palau, there is an increase revenue from other type of tourists. The President feels that these new type and level of revenue reflects that tourists who are coming in to Palau are spending more--that they are more of quality tourists who spend more.

    Other benefits of fewer but quality tourists is the lessening of pressure on Palau's infrastructure such as water, sewer, roads, etc. The President is saying that he was against the huge number of tourists being organized by operators from Macau and other locations. He did reduce the number of charter flights from Macau and another location about 2 years ago--before this new action by the China government was put forth.

    It's noted that individual or small group of Chinese tourists are not prohibited by Palauans or the China government's new decree; and so many Chinese are still arriving in Palau but not in droves. And these small size of groups are what President Remengesau thinks is more desirable focus of tourist promotion to Palau and is good to Palau's fragile environment.

    It's reported by other people, not MBJ, that some Chinese tourists last year scratched their names or characters in some of the sacred ancient structures in Palau. This was viewed by Palauans as the "don't care" attitude that comes up with mass tourism--no time to educate the tourists to appreciate or be sensitive to local and traditional ways.

    Lastly, it was noted that Palau actually did not get much from the mass tourists from China who were brought in by the charter flights. They came and stayed in Chinese hotels; took boat rides owned and managed by Chinese entrepreneurs; ate at the Chinese restaurants; took bus tours owned by Chinese; and departed again on airlines owned by Chinese. The only benefits for Palau are the "crumbs" that were left in the form of departure tax; and may be some small purchases, here and there.

    In short, it seems the Palauans are not regretting the loss of the mass tourists from Macau and other locations. It is hoped, according to the Palauan friends I talked with, that by lessening the number of mass Chinese cheap tourists, that Palau will have more space and services to attract high paying tourists from Japan, Europe, Russia, US and other locations. Interesting!

  • May I request any of the Forum posters from Palau to chime in; so that we would know whether the information about Palau that I have posted under this thread are correct or reasonably correct--or not. We're impressed with the way Palau is handling its political and diplomatic "dance" with the mainland China and its fragile but important relationship with Taiwan within the one-China policy. Any input, one way or another, would be appreciated.
  • Alii from Belau, you all.
  • President Remengesau is a smart man with the right vision. He respects the environment that provides for healthy living fiendish man and other life forms and takes care to prolong the healthy environment which is sustaining the small country. The Bible says God will destroy those who destroy the earth (Revelation 11:18).

    A clean and healthy environment is attractive to people, tourists included and is also valuable for survival.

    Kudos to Mr. Remengesau and wise leaders of Palau who understand the value of a clean environment and shy away from the pressure of China and it's evil ways.
  • imageBelau is the best!
  • China is threatening over Taiwan's rejection for reunification this week. A Chinese admiral said he would destroy two US carriers in the region. I think he is bluffing.
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