A Chinese syndicate will spend more than $400 million building a Chinatown in Port Moresby, but Papua New Guinean politicians have dismissed concerns that Beijing is trying to expand its influence in the Pacific.

Key points: Baosen International Holding and other Chinese companies will spend $414 million on Port Moresby's Chinatown

Baosen International Holding and other Chinese companies will spend $414 million on Port Moresby's Chinatown Approximately 20,000 Chinese nationals live and work in Papua New Guinea

Approximately 20,000 Chinese nationals live and work in Papua New Guinea Australia and the US have voiced concern about China's rising influence in PNG and other Pacific nations

A prominent Papua New Guinean politician told the ABC that China's increased involvement in the region is a concern for Australia and the United States, not PNG.

The first sod has been turned on what will be the biggest private Chinese investment in the country — a Chinatown which will include apartments, shops, restaurants a cinema and a hotel.

Some of the country's top politicians joined the Chinese ambassador and the developer for a ceremony to mark the occasion and were treated to performances of a traditional PNG "sing-sing" and a Chinese lion dance.

PNG Prime Minister Peter O'Neill told the gathering that the development was worth almost a billion kina, or $414 million.

"I know the [Chinese] state-owned enterprises have started investing in some of our resources projects and other major projects in the country, but for private investment, this is by far the largest," he said.

Peter O'Neill (second from left) says the development is worth more than $400 million. ( ABC News )

This latest big project comes at a time when Chinese interest and investment in the Pacific is under a spotlight.

But PNG's Lands Minister, Justin Tkatchenko, who also attended the sod-turning ceremony, said he welcomed Chinese investment in the country.

"I don't have any concerns at all about the increasing influence of China into Papua New Guinea, as long as it benefits our people and our country and it's of mutual benefit," he said.

However, he conceded he did not know much about Baosen International Holding, the company behind the Chinatown development.

"I think they've gone through the proper due diligence through the city hall and through the appropriate agencies that have cleared everything," he said.

Lin Sen Junior from Baosen International Holding insisted that the Chinese Government was not involved in the project.

"We are just businessmen," he said.

"We come here; we're not related to the Chinese Government. We think it's better to create a better community and better infrastructure here — that's the main purpose [of what] we're doing here."

After initial delays caused by difficulties in trying to transfer large sums of money from China, the project is now going ahead with the support of PNG-based Chinese businesses.

"I think everyone knows about the policies — that money is really hard to get from China to anywhere in the world," Mr Lin said.

"But because of a lot of local Chinese here, we all got together and raised money altogether — so everyone contributed.

"So we all got together to make a group, so we don't need to transfer the money."

'America and Europe are talking nonsense'

Powes Parkop says China is a natural ally for Papua New Guinea. ( ABC News: Natalie Whiting )

Port Moresby Governor Powes Parkop has also dismissed concerns about Chinese influence.

"That's mainly a concern of Australia and the US, it's not [overly] a PNG concern," he said.

"When I look at the world, I look at America and Europe — they are talking about nonsense. They are talking about a wall, they're talking about Brexit; in the meantime, China is going to the moon."

He said China was a logical place for PNG to align to.

"At the moment the Chinese are investing, it's not that we are bending over and saying just come and do whatever you want; we're going through the process," he said.

Mr Parkop said all countries tried to exert political influence, including the US and Australia, who announced plans for a naval base on Manus Island last year.

"For me, I'm particularly concerned about the US and Australian influence on us because, for example, the naval facility in Manus, I don't think that's in PNG's interest," he said.

"I think that's in their interest. If it was in PNG's interest and win-win, they should have done it a long time ago."

He claimed he raised the idea of redeveloping the base with Australia back in 2014.

"Why now? The only reason now is because of China. So, is it really in our interest?" Mr Parkop said.

PM heads to China as countries grow closer

Baosen International Holding is investing $400 million to build the Chinatown in PNG's capital. ( ABC News )

The launch of the Chinatown development was also used to tout the close bilateral relationship between the two countries.

Mr O'Neill will travel to China next week to represent the Pacific at a forum on the controversial Belt and Road Initiative infrastructure program.

The Chinese ambassador to PNG, Xue Bing, wished him well on his trip to Beijing and commended the strengthening relationship.

"In 2018, through the joint efforts of both sides, the bilateral trade volume between China and PNG reached [$5.06 billion], a 27 per cent increase over the same period of last year," Mr Xue said in his speech.

"China's direct investment in PNG reached [$5.06 billion], also a big increase."

Mr Xue said there were now 20,000 Chinese nationals living and working in PNG and the availability of Chinese restaurants and products meant "you feel that you are still inside China".

PNG is broadening its horizons beyond Australia, according to Michael Shoebridge, the Director of Defence and Strategy at the Australian Strategic Policy Institute.

"I think PNG is sensibly thinking about their own interest, but some of the implications of Chinese investment need to be considered," Mr Shoebridge said.

He said Chinese activities were driven by the goals of the Communist Party, such as pushing the diplomatic isolation of Taiwan and gathering support for international forums like the United Nations.