Taipei [Taiwan], March 3 (ANI): A US think tank has raised concerns that China is using transnational criminal organisations to push its political agenda in Palau, potentially damaging the island nation's diplomatic relations with Taiwan, Taipei Times reported.

According to a report by Pacific Economics, Transnational criminal organisations have been investing in Palau, which is one of the tactics China uses to exert influence on the island nation, alongside initiatives in areas such as academia, business and culture.

Further, the report said, one of the crime syndicates is the Prince Group, a Chinese-Cambodian conglomerate founded by Chinese businessman Chen Zhi, as per Taipei Times.

The group has been implicated in money laundering, online scams and human trafficking, drawing scrutiny from the Chinese government and Radio Free Asia, it said.

According to Taipei Times, the Prince Group has also proposed investing over USD 1 billion in resort developments in Palau.

The report further noted that many recent hotel investments in Palau are linked to China.

Pacific Economics advises Palau to focus on identifying and preventing harmful business activities while promoting positive investments, such as those from Taiwan in the hotel sector, Australia in solar power projects, and the US in infrastructure development.

Although Palau formally recognises Taiwan and does not follow the 'One China' policy, criminal organisations can help Beijing fill the gaps in areas where China's foreign ministry's efforts might fall short, Pacific Economics cofounder Jarod Baker said on Saturday.

The crime syndicates 'are used to covertly bring in money, people and other elements,' he said.

While China employs various methods to influence other countries, business remains its primary tool for advancing its strategic goals, he said.

The Island Times, a Palauan newspaper, cited the report as warning that the infiltration of criminal enterprises into Palau's economy could deter legitimate investors, damaging the country's investment reputation and tourism industry.

China-affiliated projects seeking to secure land and infrastructure could also undermine Palau's sovereignty and disrupt its strategic role in the Pacific, the Island Times quoted the think tank as saying.

In Taipei, the Ministry of Foreign Affairs in a statement said that the PRC has used Chinese business people and criminal organisations with Chinese backgrounds to infiltrate Palau for many years under the guise of land development and investments.

The ministry said those criminal rings are engaging in money laundering, gambling, fraud and other illicit activities to economically infiltrate and coerce Palau, for which it issued a 'stern condemnation.'

In its statement, the ministry contrasted Taiwan's engagement with Palau against China's, saying it has worked closely with Palau by encouraging Taiwanese businesses to invest in the Pacific ally, boosting 'more prosperous development of Palauan businesses.'

Palauan President Surangel Whipps Jr, who began his second term in January, has been supportive of Taiwan since he first took office in 2021 and has repeatedly accused China of pressuring Palau to switch sides by weaponising tourism. (ANI)