China's Xi in Brunei as oil-dependent sultanate seeks investment

Xi, who arrived from a tense summit in Papua New Guinea dominated by a war of words between China and the US, was treated to an official welcome at Sultan Hassanal Bolkiah's enormous, golden-domed palace.

Like in many other parts of Asia, Chinese companies are investing huge sums in the absolute monarchy on Borneo island, part of an infrastructure drive aimed at extending Beijing's economic and geopolitical clout.

Initiatives include a multi-billion-dollar oil refinery -- Brunei's biggest ever foreign investment project -- a dam and a highway.

The wealthy former British protectorate, which is surrounded by Malaysia, long depended on abundant oil deposits but was plunged into recession when prices fell several years ago, and crude reserves are also in a long decline.

"Brunei, whose income from hydrocarbons will decrease in the coming years, is looking for help from China in developing economic alternatives," Murray Hiebert, a Southeast Asia expert from think-tank the Centre for Strategic and International Studies, told AFP.

After talks between the sultan and the first Chinese president to visit the country in 13 years, a joint statement said that Brunei "will continue to support and jointly promote cooperation in the Belt and Road Initiative", China's infrastructure drive, official news agency Xinhua reported.

Brunei, a conservative Muslim-majority country of about 400,000 people, is a rival claimant to China in part of the South China Sea -- which Beijing claims in almost its entirety -- but its criticism has been muted.

There have as yet been few outward signs of unease at growing Chinese influence in tightly-controlled Brunei, where per capita GDP remains among the highest in the world.

But concerns have been mounting in the wider region at the aggressive Chinese investment drive, particularly that poorer countries could struggle to pay back debts.

Ahead of the weekend's APEC meeting in Papua New Guinea, US Vice President Mike Pence warned countries not to be seduced by China's infrastructure programme, saying that Beijing offered "opaque" loans that led to "staggering debt".

In an earlier speech, Xi insisted the initiative was not a "trap".