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Contest in the Pacific: China - Pacific islands economic diplomacy

Updated: Jan 12, 2022

Despite the creation of a 10+1 China - Pacific Islands Economic Development and Cooperation forum, there is no regional Pacific islands approach to leveraging economic connectivity with China to support sustainable development. Instead, in recent years a new geopolitical dynamic has dominated the discourse around China - Pacific relations, while other underlying structural factors prevent the development of a strategic regional approach to Asian connectivity. The emerging Pacific regionalism, the new geopolitical narrative as well as other underlying institutional factors are analysed to assess the barriers inhibiting Chinese platforms for engagement in the region, such as the 10+1 grouping and Chinese dialogue with the Pacific Islands Forum. The paper concludes that the 10+1 grouping is not aligned with Pacific regionalism and is better described as multi-bilateralism. The paper innovates by drawing on the grounded (but necessarily subjective) observations of a practitioner.

The article below was published in 2021 in Research on Pacific Island Studies.

1. Introduction

The small, independent nations of the South and Central Pacific Ocean, collectively known as the Pacific island countries, face common challenges. All are isolated from major markets, underdeveloped, sparsely populated, with serious infrastructure connectivity deficits. They are unable alone or together to overcome challenges such as aid dependency and the existential threat from climate change. Since emerging from European colonialism, the region has been strategically dominated by the United States and its regional ally, Australia. The emergence of China as a regional power promised economic development benefits, as indeed had the prior emergence of post-war Japan as an economic partner for the Pacific islands. In recent times however China’s economic promise has been eclipsed by geopolitical threat, at least in the metanarrative speaking to the region that originates primarily in the US and Australia. China’s platforms for economic engagement, such as its over-arching Belt and Road Initiative (BRI) and its creation of the China-Pacific Islands Economic Development and Cooperation (CPEDC), a 10+1 grouping, have become swept up in this geopolitical narrative, but actually face other obstacles preventing them from aligning with the Pacific’s new regionalism.

2. Pacific regionalism

2.1 Asia Pacific

Regionalism is under-developed in the broader Asia Pacific region, with no pan-regional organisation encompassing all of the nation states, other than the regional commission of the United Nations, the Economic and Social Commission for Asia and the Pacific (ESCAP). The historic regional tensions of the East Asian sub-region have prevented the emergence of pan-regional security cooperation. In the post-war order, significant powers such as Japan, Korea and Australia have been allied with the US as regional security guarantor. The successful export-led economic development of many East Asian economies in recent decades has fostered new kinds of regional cooperation. The major economies of the region have pursued economic reform, openness, integration and harmonisation through Asia Pacific Economic Cooperation (APEC) since 1989 and sub-regions such as South East Asia and Australasia have pursued deeper cooperation through the Association of South East Asian Nations (ASEAN) and Closer Economic Relations (CER) respectively.

2.2 Oceania

As a result of the decolonisation process in recent decades a number of new, small (in some cases, micro) island nations emerged in the maritime sub-region Oceania, some fully independent and some retaining constitutional links to metropolitan powers. An emerging oceanic regional identity is evident amongst these diverse nations across a vast area of the Pacific, including island groups Melanesia, Micronesia and Polynesia. Diversity and distance however inhibit a cohesive regionalism. Not only are the islands separated by vast expanses of ocean, with inadequate connectivity infrastructure, but all – even those with significant resources such as Papua New Guinea – are developing nations with weak governance and capacity constraints that inhibit development and internationalisation. The island societies feature a diverse range of traditional cultural hierarchies, elite local decision-making and group identities drawn on kinship, ethnic and racial lines, all of which tend to foster transactional relationships with external actors (Kaiku, 2018).

A peak political grouping for the region was formed in 1971, originally called the South Pacific Forum, comprising Australia, Cook Islands, Fiji, Nauru, New Zealand, Tonga and Western Samoa. Its purpose was to strengthen regional cooperation and political development of the Pacific islands. Later, as former colonies in the region became independent nations, each joined the Forum, bringing the organisation’s membership by the early twenty first century to sixteen nations, as well as French territories French Polynesia and New Caledonia. While Australia and New Zealand have remained members since its foundation, their supportive rather than central role was reflected in the organisation’s re-brand as the Pacific Islands Forum in 1999. The geography over which the Forum deliberates is understood not to include territorial Australasia but to include the oceanic territory administered by the island members. The Australian and New Zealand full membership of the organisation is therefore ambiguous, as is sometimes found in regional organisations with asymmetrical membership (Tavares, 2004). Both countries, rich and integrated into the global economy and US strategic alliance with disproportionate regional influence, have theoretically equal decision-making voices in the Forum, while their position is adjacent to rather than fully within the “Pacific islands” sub-region.

The power of the region in the international system has been most effectively harnessed when there has been alignment of goals between the dominant power, Australia, and the other members of the Forum. In its early years, the Forum exerted international influence by campaigning against French nuclear testing in the Pacific, seeking recognition of the impacts of former US nuclear testing and advocating decolonisation. At that time, there was a consensus of views between the governments of Australia and New Zealand, on the one hand, and the Pacific island countries, on the other. The pooling of fisheries expertise and industry governance in the Forum Fisheries Agency was another example of alignment of goals, giving the region weight and capabilities in its promotion and oversight of its most important industry. There was less economic cooperation in other industries, such as mining and tourism, in which members were natural competitors and perceived less benefits from cooperation. The Forum has been weakened at other times when Australia has exerted its disproportionate influence to prevent consensus on key issues for island members, most importantly on the issue of climate change. This has created intense frustration for the island states and some resentment (Fry & Tarte, 2015). More recently, as we will see below, the new Australian geopolitical contest with China has become a dominating factor influencing regional cooperation.

Unlike the classic institutional case of regionalism, the European Union (EU), which has been observed to evolve according to a linear “regionness” (Hettne, 2003), the Pacific Islands Forum has evolved in fits and starts. Its activism and institutional identity have regressed in some respects as its membership has expanded and as member state interests have diverged. Its advocacy of economic integration of the island states with Australia and New Zealand has been inhibited by the lack of competitiveness of the island economies, as well as resistance from the developed member states to opening their labour markets. The Pacific Islands Forum suffered a major setback in institutional development when Fiji was suspended for a number of years after its 2006 coup, which resulted in Fiji sponsoring rival organisations to promote economic development and Pacific island political interests, while excluding Australia and New Zealand. The Pacific Islands Forum remains, nevertheless, the primary inter-governmental platform for the region. While it may have a faltering profile from time to time, it still brings together the heads of government of the region each year and therefore holds a symbolic normative power.

In recent years, a developing Pacific identity has been shaped by leaders responding to the existential threat faced by the region from climate change, which is causing rising ocean levels, more frequent king tides and natural disasters. Indeed, the Pacific Islands Forum has a consciously constructivist agenda, building a shared regional narrative and in particular seeking a shared vision for the future based on guardianship of the “Blue Pacific” (Malielegaoi, 2017). New evocative language of a Blue Pacific Continent has replaced the formerly dry and technocratic frameworks previously issued by the Forum, seeking to transform the region’s identity from small island states to giant ocean states responsible for a vast oceanic environment. This aligns with the most urgent shared concern of the island members, the need to influence global action against climate change. However, because of Australia’s reluctance on this issue, including most recently watering down language at the 2019 Forum Leaders Meeting (Handley, 2019), island states have pursued climate change action through other multilateral forums, in particular at the United Nations. The high profile of Pacific advocacy on climate change has therefore simultaneously strengthened regional identity and weakened the Pacific Islands Forum itself.

3. Pacific – China relations

3.1 Asia Pacific context

Until the last few years the US, Japan and other leading economies in the broader Asia Pacific region pursued a course of constructive engagement with China, as it reformed and opened its economy after 1978 and integrated into the globalisation process after its entry to the World Trade Organisation in 2001. International firms benefited from investing in China, using it as a base for low cost manufacturing and consumers around the world benefited from low cost products. Australia, in particular, benefited from the deepest economic integration with China of all G20 economies, given its economic complementarities, as a major supplier of commodities to China and attracting large numbers of Chinese tourists, students and migrants. By the second decade of the twenty first century China had become the world’s second largest economy and began to claim a role in global economic governance, as a major financier, investor and aid donor, including its ambitious Belt and Road, developing infrastructure connectivity for new trade routes and production chains with China as the global hub. China also pronounced rhetorical support for globalisation, a more balanced development agenda and action against climate change, all of which appealed to the developing world, building upon China’s traditional advocacy of South-South development cooperation.

3.2 Pacific islands – China economic relations

The ten Pacific island countries that have diplomatic relations with the People’s Republic of China are Cook Islands, Federated States of Micronesia, Fiji, Kiribati, Niue, Papua New Guinea, Samoa, Solomon Islands, Tonga and Vanuatu. All states in the region (even those without diplomatic relationships) have enjoyed growing tourism, trade and investment links with China. It has also become a major source of development assistance (Lowy Institute, 2020) for those Pacific island countries with which it has diplomatic relations. Like Japan before it, China’s integration of aid, trade and investment links to the developing world reflects its conviction that it had become indispensable to globalisation, as well as confidence in the East Asian growth model (Johnston & Rudyak, 2017). As in other regions of the developing world, Pacific island leaders have welcomed Chinese aid and finance, including its less stringent conditions (Regenvanu, 2019).

The scale of the Chinese economy and its capacity for demand, finance and investment provides a theoretically transformational opportunity for these poor nations that have struggled to grow tourism, add value to their vast fisheries resource, to exploit mineral resources (including under the sea) and to export their agricultural produce. Integration into global supply chains would require investment that is beyond the capacity of the region and has not been a priority for traditional development partners. China has the capacity to finance regional connectivity and seeks to increase its supply of products from the region’s fisheries, agriculture and mineral resources, as well as potential Pacific island tourism destinations. Acting alone, though, each Pacific island government faces a dramatic asymmetry in negotiating power with giant China and the small scale of national or sub-national projects remains a barrier to Chinese finance houses, which typically look to fund larger projects than exist in the Pacific islands.

3.3 Chinese regional platforms for economic engagement

China’s pursuit of regional economic engagement with the Pacific island countries is consistent with its practice in other peripheral parts of the global economy, in establishing new institutions and quasi-institutions to engage regionally with clusters of nations. It has built platforms for regional economic diplomacy with groups of countries in Latin America, Africa, Central and Eastern Europe. These regional relationships function as platforms to promote Chinese reputational “soft power” through disbursement of aid, investment and trade deals, as well as to build networks, knowledge, influence and relationships. They are consistent with China’s growing leadership aspirations in global economic governance, with its creation of new institutions and platforms such as the Asian Infrastructure investment Bank and its ambitious BRI (Hodzi & Chen, 2017). There is an emerging debate about whether these actions by China are complementary or threatening to the liberal, rules-based international order of the post-war era.

4. The new geopolitics

4.1 Shifting global balance

This debate has been brought home to the Pacific islands region in recent years. The dynamic has dramatically changed with the deterioration of US - China relations and its impact on the regional power, Australia. The shift in global balance has established China as a competitor to the US in military power in the Western Pacific and a global competitor in key economic sectors such as high technology. China confounded US expectations as it continued to internationalise its economy, by doubling down on its authoritarian model of domestic governance and beginning to act like a major power. At a time of plummeting Western confidence and rising nationalism, the US abruptly changed direction after the election of President Donald Trump to adopt economic coercion instead of multilateral negotiation to address trade complaints and to switch from the decades-long policy of constructive engagement with China to strategic competition (US Government, 2017). The shape of the new multipolar global order remains uncertain, but the unipolar, US-led order appears to have ended. The global discourse has pivoted in recent years from optimism about economic opportunity in an Asian century to a zero-sum China threat narrative. While China’s BRI has been welcomed in the developing world including amongst most Pacific island countries, Western observers characterised it as a bid by China to extend its power (Lee, 2018), including fears of future securitisation (Maçães, 2019).

4.2 Australia-China relations

Australia, the regional power in the South Pacific, and China descended into a war of words (at least), with Australia’s intelligence community regularly feeding Australia’s sensationalist media allegations of cyber-attacks, espionage, political influence operations and military base plans. Much of it was difficult to assess from information on the public record but the ensuing China panic provoked a storm of sentiment directed against China (Lowy Institute, 2020b). Just as its own bilateral relationship with China was rapidly deteriorating, Australian fears grew that the “vulnerable” Pacific island countries were increasingly in China’s orbit.

4.3 Contest over infrastructure

Communications technology became one of the early tests of the new battle for influence. When China’s Huawei (a firm long suspected by the US of conducting espionage) was awarded a contract to supply a communications cable between Papua New Guinea, the Solomon Islands and Australia, the director of the influential Australian Strategic Policy Institute, which is part-funded by the US Government, warned “if the government doesn’t do something, we could see large parts of Melanesia fall into China’s sphere of influence” (Murray, 2018). Australia subsequently stepped in to fund the project with a different provider (Doran & Dziedzic, 2018). Another battle for influence became the BRI and China’s infrastructure program across the Pacific. A figure from the right wing of the Australian government, minister responsible for Pacific affairs Concetta Ferravanti-Wells, was widely reported using inflammatory rhetoric pushing back against Chinese economic and development programs in the Pacific, which she evocatively described as building “roads to nowhere” (Graue & Dziedzic, 2018). Not only did the comments contribute to a souring of the Australia-China relationship, but they seriously offended the sovereign nations of the Pacific, which local leaders interpreted as an attack on their priority infrastructure projects.

The new primacy of geopolitics was evident at the APEC leaders meeting in Port Moresby, Papua New Guinea, in November 2018. US Vice President Pence confronted China with rejection of its “constricting belt” and “one-way road”,claiming the terms of Chinese assistance to the region were “opaque”, “unsustainable and poor quality”, threatening the sovereignty of small nations (White House, 2018). At the same time, Pence announced the US would partner with Australia in upgrading a military base on the Papua New Guinea island of Manus, at Lombrum, a port that China had reportedly offered to help upgrade (Murphy, 2018; Medcalf, 2018). Australia also announced a US$1.5 billion infrastructure financing facility for the region, in cooperation with Japan and other countries, as a clear counter-balance to China’s BRI, although no projects have yet materialised. A suite of other initiatives labelled a “Step-Up” in Australia’s relations with the Pacific islands have been unveiled, most with a security dimension and each one framed in the media narrative as resisting China. Driven by security objectives, Australia’s “Step-Up” was criticised by the development aid sector as inadequately prioritising local needs and perspectives, and counter-productive given that Chinese aid is popular precisely because of historic perceptions in the region of, on the one hand, Australian “new-colonialism” and, on the other hand, neglect (Yeophantong, 2019). The Pacific islands is of course of critical security importance to Australia as the region protecting its immediate approaches and Australia understandably seeks military predominance in the region, while traditionally suspecting its island neighbours are vulnerable to outside influence because of their weak governance.

Australian intelligence agencies appeared to be the source of media stories in 2018 that claimed China was seeking to establish a military base in Vanuatu, a small Pacific island nation close to Australia. The claim was swiftly denied by the Vanuatu Government (Wroe, 2018). Funded by China Exim Bank concessional finance, Shanghai Construction Company had rehabilitated and extended the main wharf at Luganville. The project was welcomed by government and local business as critical infrastructure for the development of both container shipping and cruise tourism, improving warehouses, roads and other supporting facilities for the resource-rich island of Espiritu Santo. The project had been delivered on time and on budget, but criticism of the work began as soon as the Australian media began describing the project as a geopolitical threat, a story that continues to rebound around the world. Despite reported claims by unnamed Australian officials that China could “seize strategic property” as a result of the project, subsequent investigation discovered that there was no debt equity clause in the debt agreement (Bohane, 2018). Further, Vanuatu was not widely considered to be at risk of debt distress, with a debt to GDP ratio of 30 per cent, typical for the region (Fox & Dornan, 2018; Kliman, et al, 2019), although the nation had suffered significant political instability. In the absence of access to confidential intelligence assessments – which may not become available for decades, if ever – the claim that China was planning a military base in non-aligned Vanuatu appears difficult to take seriously. The claim might better be understood as related to the China panic stoked in domestic Australian politics, consistent with intelligence-leaked media “revelations” in earlier decades of planned Libyan and Russian military bases in the South Pacific (Gyngell, 2017).

4.4 Areas of Australia – Pacific islands divergence

At the time of writing, the Australia-China relationship has soured to the extent that leaders of both countries had effectively given up on talking and were broadcasting aggressively worded messages to each other through the media. The Pacific islands meanwhile were positioned within this new geopolitical contest as pawns, without agency, imagined to be subject either to Australian dominance or a China threat. The Secretary General of the Pacific Islands Forum, Meg Taylor, echoed island leaders in rejecting the narrative that a choice must be made between China and Australia, or through it the US (Taylor, 2019). Pacific island countries have continued to pursue their relationships with China bilaterally as before and, as non-aligned countries, are less focused than Australia might wish on their large neighbour’s security concerns. Island leaders, who have no hard power in the face of Australian demands, retain some discursive power at least within the region, and have made it clear in repeated Pacific Islands Forum and other meetings that they consider the greatest security challenge to the region is climate change. On that issue, Australia, as a major coal exporter and emitter of greenhouse gases, remains disconnected from its neighbours. Pacific island support for Australia’s geopolitical objectives therefore remains somewhat unstable, although the power differential remains significant. Australia has at times, through neglect and hubris, dangerously offended Pacific leaders (Keany, 2015; Morris, 2019). Despite deep cultural affinity on one level between some Australians and island populations, Pacific elites have often found China to be a more respectful partner, particularly more aligned on islander priorities, climate change and sustainable development (Lyons, 2019). Ten Pacific island countries have proceeded to sign bilateral Memoranda of Understanding to cooperate with China’s BRI. The current situation indeed provides an opportunity for transactional advantage by playing Australia and China against one another for aid and investment.

5. Platforms for regional engagement

The Pacific islands region has regional organisations that would have the institutional capacity to develop a collaborative strategy for engagement with China to build economic connectivity. In particular, the Pacific Islands Forum dialogue with China and China’s own 10+1 platform, the CPEDC, should both provide vehicles for regional level planning and coordination. Neither has had that result, exhibiting more form than substance.

5.1 Pacific Islands Forum

Given the pre-eminence of the Pacific Islands Forum as the political grouping for the region, China has traditionally sought to engage with the Forum as a means to regional engagement. China accords diplomatic status to the Forum’s Trade and Investment Commissioner in China (a role filled until recently by the author) and sends a high-level representative to the Post-Forum Dialogue meeting that is held after each year’s Forum Leaders Meeting. The Forum Secretariat, however, has no strategy for international engagement and interactions are therefore ad hoc, not only with China but also with other external partners such as the US, EU and Japan.

The Pacific Islands Forum’s relationship with China is particularly vexed because of the deep political divide between its members on diplomatic recognition of Taiwan. Four (until recently six) small Pacific island countries maintain diplomatic relations with Taiwan. Their leaders vigorously promote Taiwan’s agenda in the Pacific Islands Forum and other multilateral forums such as the UN, while simultaneously enjoying growing private sector economic ties with China. These are Marshall Islands, Nauru, Palau and Tuvalu (Kiribati and Solomon Islands recently switched to establish diplomatic relations with China). A recent loss of face for China in an interaction with one of the world’s smallest countries demonstrated the potency of this underlying issue. At the 2018 Forum Leaders Meeting held in Nauru, a tense diplomatic incident drove a wedge between Forum leaders and culminated in the Chinese envoy to the Post-Forum Dialogue storming out of the meeting, claiming he had been prevented from speaking for the first time since China began attending the dialogue meetings in 1990. The incident followed a dramatic week of behind the scenes attempts by other Forum leaders to convince Nauru authorities to allow diplomatic courtesies to the Chinese delegation, who only received clearance by Nauru to attend at the last moment (Agence France-Presse, 2018).

The Taiwan divide presents a fundamental obstacle in the way of the Pacific Islands Forum developing a coherent approach to regional engagement with China. In the absence of consensus in the Forum, member states rationally pursue absolute gains from bilateral engagement with China and exhibit a competitive approach with fellow member states and with the Forum itself. While there have been attempts by the Forum Secretariat to develop a regional approach to realising opportunities from Asian engagement more broadly, these have been prevented from proceeding, often in behind-the-scenes consensus blocking. A series of initiatives endorsed by Forum Economic Ministers including to develop a framework to articulate the needs and aspirations of the Pacific islands and to guide regional, sustainable economic interaction with Asian economies (Pacific Islands Forum Secretariat, 2017) were subsequently not pursued, despite broad consultation, without any explanation.

5.2 China - Pacific Islands Economic Development and Cooperation

China has meanwhile developed its own platforms for engagement with the region that exclude the island countries that conduct diplomatic relations with Taiwan and also relegate the Pacific Islands Forum, Australia and New Zealand to observer status. The Chinese Government has used rare visits to the region by its leaders to bring together Pacific island leaders (of those island countries with which China has diplomatic relations) to meet as a group. The meetings have been used to underline China’s interest in engaging with the region and to convey high level messages of support for South-South development cooperation.

The first regional (8+1) CPEDC ministerial meeting with Pacific island countries was held during the visit of Premier Wen Jiabao to Fiji in 2006, accompanied by 600 Chinese companies, using the opportunity to make announcements about Chinese finance and aid for the region, including scholarships for 2,000 students. Other regional leaders meetings have been held on President Xi Jinping’s two visits to the region, first in 2014 in Fiji and second in 2018 in Papua New Guinea. These were not badged as CPEDC but were also used as opportunities for announcements about economic cooperation, including infrastructure finance and aid commitments. In 2014, Xi promised US$1 billion in commercial finance for the region (to be disbursed by China Development Bank) and also announced a series of measures such as preferential trade, medical assistance and 5,000 training places (Pacific Trade Invest China, 2017).

At the second (8+1) CPEDC meeting in 2013, China hosted Pacific island delegations in Guangzhou, its key southern trade hub. At that meeting China pledged US$1 billion in concessional finance for infrastructure (to be disbursed by China Export Import Bank). Despite being grouped together for these major announcements, finance for individual projects has been negotiated bilaterally with Pacific island governments, with most funds channelled to Papua New Guinea for infrastructure projects but also smaller projects including government buildings in Samoa and Tonga, a water project in Cook Islands, transport infrastructure in Vanuatu and a road and downtown re-build (following anti-Chinese riots) for Tonga (Pacific Trade Invest China, 2017).

The third (now 10+1) CPEDC meeting was held by China in Samoa in 2019, with a delegation led by Vice Premier Hu Chunhua. Given the slow drawdown of previous funding, and the changed geopolitical discourse, discussed above, no dramatic announcements of new infrastructure finance were made. In conventional Chinese discourse, the leaders and ministers who attended agreed to a statement that “the countries will work together to strengthen a comprehensive strategic partnership based on mutual respect and common development and build a community with a shared future for humanity” (China-Pacific Island Countries, 2019). At all of these regional meetings, Pacific leaders hear messages that are well attuned to island priorities. Chinese leaders stress their support for the equality of all nations, pay due respect to national leaders, acknowledge that each country has its own development path, focus on practical infrastructure and industry development cooperation and do not make judgments about governance, human rights or corruption (Xi, 2018).

At these summits, the usual practice is for China to announce new initiatives for finance, aid, trade and investment, as well as other areas of international cooperation, which has symbolic importance for China in its new narrative as a major contributor to global governance. It is a feature of China’s fusion of Confucian and Marxist-Leninist practices that Government plays a lead role in such forums by outlining the vision and strategy for engagement with a region, announcing (previously negotiated) projects to be financed by State-owned banks, to be implemented by State-owned construction companies and their private sector partners, all closely coordinated by Government. These platforms, bringing all the key Chinese parties together with regional leaders in a setting according to traditional diplomatic discourse and practices, therefore represent for China meaningful engagement with regions. This is the case in the Pacific islands, just as elsewhere. The CPEDC is consistent with other Chinese sub-regional groupings around the world which have been described as having “minilateralist” characteristics such as bringing together a number of regional actors with China in a relatively informal structure, but utilising diplomatic practices, featuring non-threatening, face-saving, consensus-based dialogue (Kobayashi & Sanchez, 2017).

These platforms created by China to engage with Pacific islands leaders at a regional level are best described however as multi-bilateralism, rather than minilateralism, as the former better describes the substance of cooperation than the latter. Minilateralism would suggest these forums exist for negotiation or collective decision making, which they do not. The key vectors of communication, planning for economic cooperation projects and implementation of cooperative projects remain bilateral government-to-government processes.

While China enjoys an asymmetric advantage in these bilateral negotiations, the agency of individual Pacific nations should not be underestimated (Zhang, 2019). Island leaders can be skilled at negotiating transactionally, including playing external powers against each other. China’s increasing economic presence in the region does not therefore necessarily bring zero sum advantages for China and losses for its partners. Indeed, Chinese finance extended to Pacific island governments poses risks to China as well as to recipient countries of falling into “debt traps”. While it might be assumed small debtor nations seeking to renegotiate debt terms with Chinese financial institutions would be negotiating from a position of weakness, a number of debtor countries have been able to reschedule debt or even convince China to convert debt to grant aid. Tonga, which became heavily indebted to China after taking out two concessional infrastructure loans, has convinced China to continually defer repayments (Dornan & Brant, 2014).

Nevertheless, despite the agency of Pacific islands leaders and the capacity for these regional platforms for engagement to theoretically bring together the region’s negotiating talent, CPEDC meetings provide no capacity to deploy regional agency. The island countries have been unable to develop and implement a regional plan for strategically valuable, high quality, well governed projects to build key industry connectivity to China or other major Asian markets. China manages and resources organisation of the meetings, which observe protocol over content. The Pacific Islands Forum is an observer – like Australia and New Zealand - and plays no role in setting the agenda to assist members to pursue a regional strategy at such meetings. Some of the larger Pacific island nations, such as Papua New Guinea, have competitive advantages that allow them to pursue economic connectivity bilaterally for mutual benefit, but smaller and more isolated members would require a regional strategy to benefit from new trade routes, production chains and tourism development. In the new contested geopolitics, there is little chance that Australia will support such a regional approach, even though it has itself prospered from deep economic integration with China.

6. Conclusion

Well before the emergence of the new geopolitical tensions in the region, the governments of the Pacific islands had failed to develop a regional strategy to benefit from Chinese finance. Bilateral deals to fund infrastructure such as roads and government buildings have no doubt brought benefits to these developing nations, particularly in the face of the region’s stark infrastructure deficit. No plans have been developed, however, or approaches made to invest in Asian connectivity for the major industries of the Pacific, tourism, fisheries or agriculture, or indeed infrastructure to tackle climate change, all of which would require a regional approach. Despite an evolving Pacific regionalism, there is no alignment between that and the platforms for engagement between Pacific island countries and China.

The Pacific Islands Forum cannot lead the region in engagement with China while four of its members do not recognise China and while its dominant member is escalating a geopolitical contest with China. The lack of regional collaboration leaves the 10+1 China – Pacific Islands Economic Development and Cooperation Forum without a practical (as opposed to rhetorical) agenda, which simply underlines China’s primarily bilateral (and symbolically multi-bilateral) approach to building relationships in the region.

Meanwhile, none of the island nations wish to be treated like pawns in a bigger game, although they are familiar with the pattern from their experience of two centuries of colonialism. Pacific leaders will therefore seek transactional benefits by playing Australia and China, and other actors, against each other, while remaining focused on the existential challenge of climate change rather than fretting about the latest emerging great power.

Australia nevertheless has enduring interests in the region. Its bid to return to leadership in its northern approaches is driven by its continental and maritime security rather than any regional agenda. In the heightened geopolitical contest currently underway, there are few voices within Australia advocating regional collaboration to develop a constructive engagement with China to address the region’s infrastructure connectivity needs. Whether Australia succeeds in its attempts to wrangle other partners to offer an alternative to the BRI for the region is yet to be seen.

China also has enduring interests in the region, especially with its major economic partner Australia but also, as a global actor, in the Pacific islands region as a whole. Papua New Guinea, particularly, has rich reserves of resources to which China will seek access, as will other powers such as the US and Australia. The geopolitical contest therefore may continue, or it may be resolved with a Chinese acceptance of Australian leadership in the region and Australian acceptance of a significant Chinese economic role, but in the absence of leadership dialogue the confrontational atmosphere is likely to continue for some time.

Even if or when the current geopolitical tension is resolved or stabilised, serious structural internal barriers to regional strategy-making remain in the Pacific islands. The Pacific way is for leaders to talk, so ultimately the only way forward is for further discussions between all parties and it is to be hoped such discussion can be informed and motivated by the needs of the region for sustainable development.


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