TAIPEI (Taiwan News) — China is using transnational criminal organizations to advance its political objectives in Palau and weaken Taiwan’s diplomatic ties with the Pacific island nation, US think tank Pacific Economics warned in a recent report.

Jarod Baker, co-founder of Pacific Economics, said these organizations invest in development projects in Palau but act as tools of the Chinese Communist Party (CCP) to expand local influence, secretly channel funds and personnel, and pressure the Palauan government, per CNA.

The report highlighted the Cambodia-based conglomerate Prince Group Holdings, founded by Chinese businessman Neak Oknha Chen Zhi (陳志), which has recently invested in multiple resort and real estate projects in Palau. The group has been accused of involvement in money laundering, online gambling, and internet fraud.

Prince Group’s investments in Palau are concentrated near key infrastructure, including Koror Port, Palau International Airport, and radar stations, with land leases extending up to 99 years.

The think tank recommended that the Palauan government strengthen economic resilience and encourage investment from Taiwan and Australia, specifically in hotels and solar power projects.

In August, Palau President Surangel Whipps Jr. accused China of weaponizing tourism to pressure him into severing ties with Taiwan. During a visit to Palau in December, President Lai Ching-te (賴清德) met with Whipps, pledging to enhance bilateral cooperation and strengthen democratic partnerships in response to growing authoritarian influence.