Bank of China chairman Ge Haijiao has travelled to Papua New Guinea (PNG) as the world's fourth-largest bank seeks an operating licence in the Pacific Islands nation, which is seeking to boost China trade while expanding US defence ties.

US Secretary of State Antony Blinken last week travelled to PNG to sign a defence cooperation agreement, prompting some domestic political criticism and student protests amid concern the island nation would become embroiled in strategic competition between Washington and Beijing.

China, a major infrastructure lender and creditor in the Pacific Islands, struck a security pact with PNG's neighbour Solomon Islands last year.

In a speech Ge attended on Thursday evening, PNG Prime Minister James Marape, said his country was "a place of friends to all and enemies to none - we have our values which mean we will not compromise".

"Chinese companies, Chinese government and Chinese people have been important partners for our progress in the last 48 years," Marape said, highlighting growing trade with Beijing.

"We hope this bank is able to not just entrench but facilitate ease of transaction between two peoples, two countries," he added.

PNG, a resource-rich but largely undeveloped nation of 10 million, sits a few kilometres north of Australia's Torres Strait.

PNG has four licenced banks, although two of these are Australian-owned and have sought to reduce operations in the country.

State-owned Bank of China has applied for a commercial operating licence that is still being processed. Marape has previously said PNG could become the bank's regional headquarters for the Pacific Islands. (Reuters)