China ceases state-run package tours to Palau in November 2017.
Context
In 2017, the Chinese government reminded China’s travel agencies that Palau does not have Approved Destination Status (ADS) in Beijing – and threatened punishment if group tours to Palau continued. This led to a significant drop in levels of Chinese tourism to Palau, which locals in Palau refer to as the “China ban”.
This incident was reported as relating to Beijing’s concern about Palau’s relationships with Taiwan and with the US. Palau is one of very few states to provide formal diplomatic recognition of Taiwan, in return for which it receives considerable support from Taipei. And Palau maintains a compact with the United States in which Washington provides a security guarantee and economic benefits, in return for military access to Palau’s territory.
The specific trigger for this dispute may have been a 2017 visit to Taiwan by a Palau delegation, which is thought to have angered Beijing.
Responses
i) Palau Industry Response
In 2018, the head of Palau’s Tourism Board, Kevin Mesebeluu, commented publicly on the issue, saying that “we are concerned, because some locals who were reliant on that type of market with the tour packages, they’re suffering greatly”, and suggested that several of Palau’s tourism-related industries were refocussing towards domestic markets. Similarly, one Palau hotel and resort business owner, Jeffrey Barabe, told press that “[t]here is an ongoing discussion about China weaponizing tourism. . . Some believe that the dollars were allowed to flow in and now they are pulling it back to try and get Palau to establish ties diplomatically”.
Leilani Reklai, President of Palau’s Belau Tourism Association told press, “Some people were saying ‘This is the Chinese strategy, this is what they do, they are going to pour a lot of money in here, and get you addicted like it’s Coke and then turn off the faucet.”
Additionally, the (Taiwanese owned) airline Palau Pacific Airways – which operated flights from Hong Kong to Palau – cited China’s action in its decision to suspend operations in August 2018.
(ii) Palau Government Responses
Palau’s government did not change its alignment in response to this instance of Weaponised Trade. Palau’s initial strategic response was to refocus their tourism strategy away from mass tourism (which was blamed for environmental degradation), towards high-end tourism. Then Palau President Tommy Remengesau Jr stated that “[t]he reality is that numbers did not mean big revenues for Palau. It actually made us more determined to seek the policy of quality versus quantity”. Subsequently, in April 2024 the next President Surangel Whipps Jr made clear that Palau’s strategy is based on attempts “to diversify our market, by bringing tourists from Australia, Japan and Singapore and to open up new markets”.
Additionally, Palau doubled down on its alignment with the US. In July 2023 Palau President Surangel Whipps Jr told international reporters that “[i]t’s important that our citizens understand we’re part of the U.S. family” and claimed that “[t]he most important thing is we (Palau and the US) have shared values; we believe in freedom and democracy”. Similarly, in May 2024 President Whipps told press that “[o]ur relationship with Taiwan is strong. . . It’s based on shared values and shared commitment. Our relationship with Taiwan has been unwavering.”
[iii] Chinese Government Responses
On 23 November 2017, a journalist asked the spokesman of the Ministry of Foreign Affairs of the PRC whether China had banned tours to Palau for Taiwan issues. The spokesman formally denied that the China’s government had issued any bans on tours to Palau. However, a leading Chinese newspaper, the Global Times, reprinted a Japanese media article which stated that China had already banned package tours to Palau since late 2017 due to disputes relating to Taiwan.
(iv) Third Party Responses
Western media framed this incident as a ‘David vs. Goliath’ story. For example, one outlet lauded Palau for having “stood up to the Chinese behemoth.” However, the reality is that Palau has strong alignment with the US. In 2023 the US agreed (after a delay) to a renewed deal with Palau in which Washington committed to providing its partner with US889$million in economic assistance.
Status
This case has not yet resolved – with Beijing still allegedly attempting to use offers of a new surge in tourism to call for a change of alignment.
References & Further Information
Beldi, L. 2018. “China’s ‘tourist ban’ leaves Palau struggling to fill hotels and an airline in limbo.” ABC News. August 26. Available at: https://www.abc.net.au/news/ 2018-08-26/china-tourist-ban-leaves-palau-tourism-in-peril/10160020
Cameron, S. 2021. “Palau faces the dragon.” The Lowy Interpreter. November 21. Available at: https://www.lowyinstitute.org/the-interpreter/palau-faces-dragon
Everington, K. 2024. “China offering to ‘fill every hotel room’ in Palau to abandon Taiwan.” Taiwan News. February 15. Available at: https://taiwannews.com.tw/ news/5096273
Global Times. 2018. ‘Japanese Media: Palau concerned China’s ban on tourism’ [日媒: 帕劳担忧中国大陆“撤出”]. August 20. Available at: https://m.huanqiu.com/article/9CaKrnKbzAK.
Jen, V., and Ng, Darrelle. 2024. “Tiny Palau on why it maintains diplomatic ties with Taiwan despite Chinese pressure.” Channel News Asia. May 23. Available at: https://www.channelnewsasia.com/asia/palau-taiwan-diplomatic-ties-chinese-pressure-pacific-islands-4357526
Liu, N. 2023. “Where Does Palau Stand in US-China Rivalry?” Voice of America. July 19. Available at: https://www.voanews.com/a/president-of-the-republic-of-palau-we-re-part-of-the-us-family/7187006.html
Lyons, K. 2018. “’Palau against China!’: the tiny island standing up to a giant.” The Guardian. September 8. Available at: https://www.theguardian.com/global-development/2018/sep/08/palau-against-china-the-tiny-island-defying-the-worlds-biggest-country
Master, F. 2018. “Empty hotels, idle boats: What happens when a Pacific island upsets China.” Reuters. August 19. Available at: https://www.reuters.com/article/world/empty-hotels-idle-boats-what-happens-when-a-pacific-island-upsets-china-idUSKBN1L403K/
Ministry of Foreign Affairs of the People’s Republic of China. 2017. ‘Spokesman for the Ministry of Foreign Affairs, Lu Kang, held a regular press conference on 23 November 2017’ [2017年11月23日外交部发言人陆慷主持例行记者会]. November 23. Available at: http://ies.cssn.cn/wz/yjzl/wjbfyrbt/201712/t20171208_3773847.shtml
Pacific Island Times. 2024. “China steps up efforts to win Palau but President Whipps says he won’t cave in.” Pacific Islands News Agency. April 24. Available at: https://pina.com.fj/2024/04/24/china-steps-up-efforts-to-win-palau-but-president-whipps-says-he-wont-cave-in/
Radio New Zealand. 2018. “Palau tourism industry ‘suffering greatly’ from China ban.” Radio New Zealand. September 3. Available at: https://www.rnz.co.nz/international/ pacific-news/365556/palau-tourism-industry-suffering-greatly-from-china-ban
Seidel, J., and Reuters. 2018. “China ‘weaponises’ tourism: How Palau may be the model of things to come.” News Corp Australia Network. August 21. Available at: https://www.news.com.au/travel/travel-updates/china-weaponiss-tourism-how-palau-may-be-the-model-of-things-to-come/news-story/4617b1a1e4657d1434d992031eb58098
Turton, S. 2024. “Palau says China exerting ‘new level’ of pressure.” Nikkei Asia. July 16. Available at: https://asia.nikkei.com/Editor-s-Picks/Interview/Palau-says-China-exerting-new-level-of-pressure