Given their small populations and relative isolation, Pacific island countries may have been spared the worst of the COVID-19 pandemic, but they have not avoided the global economic downturn.

Papua New Guinea, or PNG, has recorded only a handful of novel coronavirus cases, but the country has seen its record high economic growth from last year spin into a downturn this year.

With a population of 8.5 million, PNG, as of Monday, has had just 11 cases and no new ones for 10 consecutive days. Chinese Ambassador Xue Bing presented the latest batch of donations of medical supplies to PNG officials on June 18.

A protocol governing exports of PNG seafood to China was inked on June 15 in its capital city Port Moresby. It allows direct supply to the Chinese mainland market by 77 companies in the first batch, which include 35 seafood producers, 31 cold storage enterprises, nine fishing vessels and two carriers.

The agreement means PNG companies can bypass intermediary locations to tap China's growing market for seafood, said Lino Tom, PNG's minister for fisheries. He called it a significant moment for the country's tuna industry.

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Opportunities ahead

Koh Hui Koon, Asia country risk analyst at Fitch Solutions, said: "China was the second-largest seafood importer in the world in 2019, which suggests that the collaboration in the fishing industry could open up opportunities for PNG, especially if the country could ramp up its seafood production."

PNG's exclusive economic zone of 2.4 million square kilometers for fisheries is the largest in the region. It supplies almost 20 percent of the world's tuna catch. Shrimp, sea cucumber, lobster and reef fish are also important exports.

China's middle class provides enormous opportunities for quality marine products from PNG, Xue told the media at a news briefing in mid-June, and more local companies, including those engaged in agricultural products, could be expected to become suppliers to the Chinese market.

The 77 PNG companies have been invited to participate in the third China International Import Expo in Shanghai in November this year.

China has done its bit to help PNG deal with the pandemic, with batches of donations over the past few months that include $300,000 worth of medical supplies sent to Port Moresby as well as a commitment to work with the government on fighting the virus.

"The COVID-19 situation (in) Papua New Guinea is under control. However, due to the highly transmittable nature of the COVID-19 virus, we do not recommend any countries to stray from the established health and safety as well as social distancing protocols that are in effect," said a Southeast Asia branch spokesman for the World Health Organization.

The pandemic came at a time when the country's economic growth had rebounded after a long period of stagnation. After the economy expanded 5.6 percent in 2019, Fitch Ratings now expects a 1.1 percent contraction this year.

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But PNG needs to ramp up production. "In general, increased access to China's market should support PNG's export growth and wider economic outlook. However, seafood represents a small proportion of total exports, so the short-term economic impact is likely to be limited," Koh said.

Last August, the two countries also started discussing a free-trade agreement that, if it comes to pass, could significantly boost trade.

Koh believes a wider free-trade agreement would support growth in exports of PNG's major resources (especially hydrocarbons) and likely ensure that China is PNG's main export market.

DAVID HO and BRYAN WONG in Hong Kong