An American think tank has expressed concern that China is using transnational criminal organizations to advance its political agenda in Palau, which could damage the island nation’s diplomatic relations with Taiwan, the Taipei Times reported.
According to a report by Pacific Economics, transnational criminal organizations have invested in Palau, which is one of the tactics China is using to influence the island nation with initiatives in areas such as academia, business and culture.
The Taipei Times reported that the report also identified the Prince Group, a Chinese-Cambodian conglomerate founded by Chinese businessman Chen Shi, as one of the crime syndicates.
The group has been involved in money laundering, online fraud and human trafficking and has come under scrutiny from the Chinese government and Radio Free Asia, it said.
According to the Taipei Times, the Prince Group has also proposed investing more than US$1 billion in resort development in Palau.
The report further noted that most of Palau’s recent hotel investments are related to China.
Pacific Economics advises Palau to focus on identifying and preventing harmful business activities while promoting positive investments, such as Taiwan’s investment in the hotel sector, Australia’s investment in solar energy projects and the United States’ investment in infrastructure development.
Although Palau officially recognizes Taiwan and does not follow the “one China” policy, Beijing can help fill gaps in areas where China’s Foreign Ministry’s efforts may fail, Jarrod Baker, co-founder of Pacific Economics, said Saturday.
Crime syndicates “use money, people and other elements to bring in covertly,” he said.
China uses various methods to influence other countries, and business remains its main tool to advance its strategic goals, he said.
The infiltration of criminal enterprises into Palau’s economy could deter legitimate investors and damage the country’s investment reputation and tourism industry, the report said, citing Palau’s newspaper The Island Times.
China-backed projects seeking to secure land and infrastructure could undermine Palau’s sovereignty and hinder its strategic role in the Pacific, the Island Times reported, citing the think tank.
Chinese businessmen with Chinese backgrounds and criminal organizations have infiltrated Palau under the guise of land development and investment, Taipei’s Foreign Ministry said in a statement.
The criminal groups are engaging in money laundering, gambling, fraud and other illegal activities to economically and forcibly infiltrate Palau, the ministry said, for which it issued a “strong condemnation.”
In its statement, the ministry compared Taiwan’s relationship with Palau to that of China, saying it has worked closely with Palau by encouraging Taiwanese businesses to invest in the Pacific ally and promoting “more prosperous development of Palauan businesses.”
Palau President Surangal Whipps Jr., who began his second term in January, has been supportive of Taiwan since first taking office in 2021 and has repeatedly accused China of pressuring Taiwan to switch sides by weaponizing tourism.
