Failed Palau media deal reveals China's Pacific influence efforts
By Bernadette Carreon, Aubrey Belford, and Martin Young
For years, Moses Uludong has been a lonely voice pushing the small, strategically located Pacific island nation of Palau towards closer relations with China.
Uludong founded Palau's first newspaper, Tia Belau, more than five decades ago, back when the archipelago was under US administration.
Now, as tensions rise between China and the West, Uludong thinks Palau could be devastated if war breaks out between the two powers.
The nation of 18,000 people became independent in 1994, but is still a close US ally and one of only 13 countries worldwide to defy China by recognising Taiwan diplomatically.
So, in 2018, Uludong entered into a deal to set up a new media group that he believed would help restore some balance.
What he did not realise was that the initiative was backed by investors with ties to China's police and military, public records obtained by the Organized Crime and Corruption Reporting Project (OCCRP) show.
The Palau Media Group was the idea of an old friend, Tian "Hunter" Hang, an expatriate Chinese hotelier on the island, Uludong told OCCRP.
The company was supposed to raise Palau's profile in China by making it a "hub of information", he said, bringing news from across the Pacific to a Chinese audience.
"We want to sell Palau, you know, [to get] investment from China," he said.
Though the new media group had a launch event in Hong Kong, it never fully got off the ground.
Nevertheless, the deal appears to have aided in another goal — spreading Chinese influence in the Pacific country.
Emails obtained by reporters show that, shortly after launching the venture, Mr Tian used Uludong's existing newspaper on at least one occasion to publish pro-Chinese content.
Although modest, the efforts fit a broader pattern.
An OCCRP investigation published last year identified Mr Tian as a leading figure in China's influence operations in Palau.
Experts say the case shows how China is seeking to exert its influence in the Pacific region by using political pressure and funding to capture local elites, including in the media.
"In a broad sense, this is similar to what we see in other countries where China has no diplomatic presence, but is looking to shape the political elite to be more friendly," said Graeme Smith, an expert on China's role in the Pacific at the Australian National University (ANU).
China's long-term goal in such efforts is "engineering a switch in diplomatic relations away from Taiwan", he said.
"The Chinese, they have a way of doing business," Uludong said.
"They are really not open."
A flavour of espionage
The largest shareholder in Mr Tian and Uludong's abortive venture was Overseas Chinese Big Data Group (OCBD), a Chinese company that works with universities and research institutes affiliated with China's military and public security organs.
It is owned by businessmen from Mr Tian's home province, Henan, and is headquartered in the southern megacity of Shenzhen.
Hong Kong corporate documents show that OCBD owned a 40 per cent stake in the Palau Media Group when it was founded in November 2018 with $HK1 million (about $188,900) in capital.
Mr Tian and Uludong each controlled 30 per cent.
Uludong said he did not contribute any of the startup cash himself, and all he knew about OCBD was that it was a "media company from Shenzhen".
In fact, OCBD oversees a network of two dozen firms whose names suggest that they work in a wide variety of fields, including blockchain technology and media.
One of its main firms states on its website that it is in a strategic partnership with two national security institutes — including the Chinese People's Public Security University.
OCBD also works with the military-run Information Engineering University in Henan, which focuses on educating "political warfare officers and carrying out offensive cyber operations", according to the Australian Strategic Policy Institute (ASPI) think tank.
Dr Smith said the fact that OCBD works with "a military university that trains people in hacking and signals intelligence" lent a "flavour of espionage" to the group's investment in the Palau Media Group.
The media initiative was not OCBD's first foray into the island, as OCCRP reported in December.
The company founded the Chinese Economic Trade Promotion Association in 2017 in partnership with Mr Tian and former Palauan president Johnson Toribiong.
OCBD has also registered other Pacific-focused companies which — like the Palau Media Group — have so far not resulted in any noticeable business activity.
These include tourism-related and e-commerce companies focused on Palau and Vanuatu, as well as another firm called South Pacific Internet Technology.
OCBD did not respond to written questions.
The Chinese People's Public Security University and the People's Liberation Army Information Engineering University did not respond to questions sent by OCCRP.
If OCBD's Pacific initiatives have achieved little, other Chinese efforts have been more successful.
Perhaps no other Pacific nation illustrates China's potential to win friends than Solomon Islands.
The security pact raised alarm in the US and Australia, which are at the forefront of the geostrategic battle with China for dominance in the region.
The agreement was followed by a "propaganda and disinformation" campaign by the Chinese Communist Party (CCP) aimed at "undermining Solomon Islands' existing partnerships with Australia and the US", according to a 2022 report by ASPI, which is considered to be closely aligned with Australian foreign policy goals.
Part of the CCP strategy is to cosy up to local media, including newspapers like the Solomon Star, according to ASPI.
"China's ambassador is offering support, such as more trips to China … and donations including two vehicles to the Solomon Star and maintenance of the newspaper's printing presses," the think tank said in a separate report.
Journalist Ofani Eremae told OCCRP he quit as editor of a different Solomon Islands paper, The Island Sun, after it accepted funds and other support from the Chinese embassy.
"You have to play by their rules, you become obligated to their demands," Eremae said, adding that the quid pro quo seemed obvious to him even if China did not make explicit requests in return for money and equipment.
Eremae said the embassy gave The Island Sun nearly $18,000 worth of equipment, including computers, in 2019 — the same year Solomon Islands ended diplomatic relations with Taiwan.
Then, The Island Sun received $40,450 in cash last year to "help meet the paper's operational costs", Eremae said.
China's increasing influence in the Pacific has sparked fears for some people that the region could once more end up as a battleground between a rising Asian power and Western opponents.
"China is seeking to ensure that, in the event of a war in our Blue Pacific Continent between themselves and Taiwan, that the FSM is, at best, aligned with [China] instead of the United States and, at worst, that the FSM chooses to 'abstain' altogether," he wrote in a letter first reported by the Diplomat.
Mr Panuelo alleged that CCP officials had carried out bribery in Pacific countries, and that he had experienced "threats against my personal safety", including being surveilled by Chinese military intelligence.
The Chinese embassy in FSM did not respond to questions from OCCRP.
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While the threat of conflict has prompted people like Mr Panuelo to make a public stand against China, others such as Uludong have taken a different approach — getting closer.
"I've been to China several times, you know, to promote trade," he said.
Those visits were organised by his old friend Mr Tian and included other prominent Palauans, including Mr Toribiong, the former president.
The Palauans were hosted by the China Zhi Gong Party, one of eight minor political parties in CCP-ruled China that exist, experts say, to give a veneer of multi-party consensus.
Zhi Gong draws its membership largely from Chinese people who have returned to their home country from abroad or, like Mr Tian, continue to live overseas.
Uludong emphasised the fact that he did not deal with the CCP, but with Zhi Gong, saying they are "not communist, they are capitalist".
But that is a distinction without a difference, according to the ANU's Dr Smith.
The Zhi Gong Party is tightly controlled by the CCP's United Front Work Department, which uses China's worldwide diaspora to push Beijing's interests overseas.
The minor party effectively acts as a layer to obscure the hand of the CCP, he said.
It is unknown if Zhi Gong Party officials attended the 2018 launch of the Palau Media Group.
But two Palau state governors did travel to Hong Kong for the event. The Zhi Gong Party did not respond to reporters' questions.
Just two days later, Mr Tian was helping to set coverage in Uludong's newspaper, Tia Belau, according to emails obtained by OCCRP.
Mr Tian sent the paper the full text of a story publicising a recent visit by Chinese diplomats to meet politicians in Palau, which it described as the country's "highest officials openly supporting change of diplomatic ties from Taiwan to China".
The emailed text stated the official Chinese government line that it considers Taiwan to be a "renegade province".
The email came complete with a draft headline, photo, captions, and a suggestion that Tia Belau run the article as a "banner" story on page one.
Four days later, Uludong's newspaper did just that, publishing the article on the front page almost word for word.
Such direct editorial influence proved to be short-lived.
The launch of Palau Media Group was followed a year later by the COVID-19 pandemic, which Uludong said "screwed up" the business.
There is no evidence Mr Tian ever supplied any more articles.
While China failed to win a reliable organ for spreading their views, the venture still appears to have been a successful attempt to influence prominent Palauans, Dr Smith said.
"Obviously, they would've preferred both, but elite capture is a really effective way of getting influence in Palau," he said.