China signs deal to 'lease' Pacific island in Solomons

A Chinese company signed an agreement to lease an entire island in the Solomon Islands a day after Beijing recruited the Pacific nation as its latest ally in the strategically important region, according to documents obtained by AFP Thursday.

The leaked papers reveal that the Solomons' Central Province made a "strategic cooperation agreement" on Tulagi island, which has the type of deep-water harbour coveted by the military, with the state-owned China Sam Group on September 22.

A day previously, China and the Solomons officially established diplomatic relations after Beijing persuaded the impoverished Pacific nation to sever ties with arch-rival Taiwan and become its ally.

Tulagi, an island about two square kilometres (0.8 square miles) with a population of 1,200, is the site of a former Japanese naval base and was the scene of fierce fighting in World War II.

The agreement with China Sam mentions developing a refinery on the island, but its potential for dual use as a Chinese military base is certain to raise concerns with the United States and Australia.

"Party A (Central Province) is willing to first lease the whole Tulagi island and the surrounding islands to Party B (China Sam) for the development of the special economic zone," the agreement says.

It goes on to say the deal covers "any other industry that is suitable for development, including oil and gas development".

China Sam said in a statement issued Thursday that it was committed to cooperating with the Solomons in a number of areas, including trade, infrastructure, fisheries and tourism.

Jonathan Pryke, director of Sydney-based foreign policy think tank the Lowy Institute's Pacific programme, said it was not unusual for China to promise such special economic zones to developing nations that were desperate for investment.

"The fear is that these zones can in turn create enclaves of Chinese operations that could then grow over time into some kind of permanent strategic facility," he told AFP.

"The island in question in Solomon Islands has deep water anchorage so could have such strategic uses down the road."