The US territory in the western Pacific grapples with geopolitical realities amid a push to revive its biggest source of income – International Tourism.
In July, a sleek 45-second video in Japanese debuted on YouTube. The ad campaign called “Shh! Between You & I,” featuring two young Japanese tourists, showcased the pristine beauty of the Northern Mariana Islands. The video, aimed at attracting Japanese Gen Z, captures the islands' stunning beaches, swaying palm trees, and breathtaking views.
This latest effort by the government of the Commonwealth of the Northern Mariana Islands (CNMI) symbolizes the broader geopolitical shift underway in the backdrop of the island’s serene waters. Through these videos and other efforts, the CNMI is attempting to diversify and de-risk its biggest source of income – international tourism.
A US territory, the Mariana Islands sit at the gates of the Second Island Chain in the Western Pacific – and a stone-throw away from the strategic US military base of Guam. Given the stakes, China, once a lucrative source of tourists and investment in the islands, is out of favor and the focus is on attracting countries such as Japan, South Korea, Taiwan, and Australia.
However, the transition is being driven at a time when the economy is struggling to stay afloat, prompting backlash over solutions beyond Chinese participation and the increasing role of the US military on the islands.
Sun, Sand and Security
The Northern Marianas, a group of 14 islands, is located east of the Philippines and shares a maritime border with Japan, allowing the United States to extend its defense perimeter to Taiwan, which lies around 1600 miles away.
During the Second World War, the capital Saipan witnessed one of the biggest battles between American and Japanese forces, which killed over 45,000 soldiers and civilians. 79 years on, the island once again is in the midst of a tense security environment with the rise of China as a regional maritime power and the likelihood of aggression against Taiwan.
The United States strategy to de-risk its reliance on China in multiple spheres is also being implemented in the Marianas. Dubbed as the “Caribbean of the Western Pacific,” with a shrinking population of around 47,000, the economy primarily runs on tourism, contributing over 75% of the islands’ GDP and employing more than half of the workforce.
While South Korea and Japan had been its traditional tourist markets, Chinese tourists and investments skyrocketed in the late 2000s. At the time, Chinese tourists were allowed to enter the territory without a visa, the only place under US jurisdiction to do so. As a result, China surpassed others to become the second biggest overseas market in the 2010s, with over a 40% share, just a notch below South Korea. As China’s share increased, Japanese tourists steadily declined, from over 185,000 in 2010 to just above 17,000 in 2019. Chinese investors also had a considerable presence in gaming and hotel businesses.
Then, the COVID-19 pandemic gutted the tourism industry and brought the economy to its knees. The revival since has been patchy. In July 2024, tourist arrivals were 50% less than those the same month in 2019. South Korea still remains the top source with over 75%, but China’s share has plummeted. In July, just over 2,000 Chinese tourists visited the Marianas, a little over 9% of the total. The visa-free rules for Chinese tourists were amended in early 2024 to pre-screen tourists for security concerns but allowed for 14-day visa-free travel. Yet, the lack of direct flights and tensions between the United States and China have taken their toll.
While intense efforts are on to attract the once traditional markets like Japan and South Korea, the Governor of CNMI, Arnold Palacios sees “little sense” in reaching out to Chinese tourists. He often terms the islands “America’s Asian border” and cites national security threats due to the islands’ proximity to Guam and US-China competition in the Indo-Pacific - as reasons for the attempted pivot. The government has also cracked down on a big Chinese-run casino and other hotels alleging labor violations and visa-waiver abuse.
While speaking to Asia Matters for America, Dr. Isa Arriola, Assistant Professor at the University of Concordia and a CNMI native, believed that the government is “piggybacking” on China’s threat, while maintaining that Beijing’s actions haven’t helped either. “I'm not saying China is not doing things wrong. What I am saying, is that fear is not a sound security policy.”
But the government is trotting ahead. Apart from advertising campaigns, Governor Palacios himself has reached out to neighboring countries to fill the tourist gap. In May, he visited Japan, met the Tokyo governor and pitched CNMI as an ideal investment and tourist destination. Before that, in October last year, he flew to Taiwan for the “Taipei International Travel Fair” and also to South Korea in June.
Despite these efforts, at least in the short term, the government’s diversification efforts have not produced the desired outcomes - primarily due to lack of frequent direct flights and a weaker Japanese currency. Only 647 Japanese tourists visited the islands in July.
Currently, there are three daily flights from South Korea but only three weekly flights from Japan. From Taiwan, there are just two flights per week. Also, from China, there are no direct flights and Hong Kong Airlines flies twice a week to the islands.
As a result, the administration is facing backlash from other politicians and the business community over its anti-China stance, as they argue that a hard pivot is not in the island’s interests. For example, Gloria Cavanagh, the interim chair of the Marianas Visitor Authority Board, the official tourism body, has defended the Chinese market and advocated for deeper connections.
In Dr. Arriola’s view, the size of the Chinese market makes it difficult to be replaced by other countries in the short run. “They (the government) are not able to fill that gap, is the reality. Even with the boosted Korean or Japanese market, it's not going to be what was there with the China market.” She argued that the government understood that reality and hence the “stronger push for programs and opportunities in terms of increased militarization.”
She pointed to the Governor’s recent show of support for the military-led investments. The US Department of Defense (DoD) is carrying out multiple projects, worth millions of dollars to bolster its defenses in the islands.
The diversification efforts are not just restricted to tourism. To improve broadband connectivity, tech giant Google is laying undersea cables to connect the islands to Japan. Under the project, the CNMI will also be linked to the Taiwan-Philippines-US cable system.
Apart from providing business incentives, it would offer a reliable system of communication and remove CNMI’s current dependence on Guam, a security risk especially during times of emergencies and conflict. The Biden administration too has approved grants for improving internet access.
The Mariana Islands are attempting to balance its objective of economic diversification in a challenging security environment. The rising tensions with China, leading to the securitization of the economy could make the task even tougher. It may have been blessed with natural beauty, but ultimately its geography might end up dictating the future.
Nayan Seth is a Fall 2024 Young Professional at the East-West Center in Washington. He is a second-year mid-career master’s student at the Fletcher School of Law and Diplomacy at Tufts University, with a focus on maritime and energy security in the Indo-Pacific region. Before joining the Fletcher School, he worked as a multimedia journalist in India and China.