China Signs Deal To 'lease' Island Near 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.

The leaked documents reveal that the Solomons' Central Province made a "strategic cooperation agreement" on Tulagi island, which has a natural deep water harbour, with the firm 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 with a population of 1,200, is the site of a former Japanese naval base and was the scene of fierce fighting during the second world war.

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. (AFP)