Vanuatu PM Urges Bank of China for Local Operations

Vanuatu's Prime Minister Charlot Salwai has requested the Bank of China to establish operations in the Pacific Island nation to help reduce costs and improve financial access. The move comes amid increasing U.S. and Australian efforts to bolster financial infrastructure in the region as China competes for influence.

Vanuatu Prime Minister Charlot Salwai has asked the Bank of China to set up operations in the Pacific Island nation, his office confirmed in a statement on Friday. The statement, posted on Facebook, indicated Salwai made the request during a visit to bank officials in China. A decision on the Port Villa branch, which could serve as a yuan clearing bank, is yet to be finalized.

The Bank of China did not immediately respond to a request for comment. The announcement comes as the United States and Australia scramble to formulate plans to improve financial access in the strategically important Pacific Island region. Due to small populations and vast distances, global banks have been progressively exiting the area, seeing little profit potential.

Additionally, numerous countries within the region lack sufficient resources to tackle financial crime, heightening the risk of banks becoming involved in costly and humiliating scandals. Earlier this week, the U.S. and Australia co-hosted a meeting in Brisbane aimed at enhancing financial opportunities in the area, where China is also seeking to expand its influence.

The Vanuatu government's statement noted that a yuan clearing facility would help lower the cost of Chinese-made goods, which currently must be purchased with a stronger U.S. dollar. Bank of China already operates in New Zealand, Australia, and Papua New Guinea, and earlier this year signed a memorandum of understanding with Nauru to explore banking solutions.

Salwai, who traveled to Shanghai on Tuesday, is visiting China before attending a Pacific Island leaders meeting in Japan next week. Earlier in his trip, Salwai visited the technology company Huawei in Shenzhen.

(With inputs from agencies.)