China is changing how it engages with Pacific Island countries. The opportunity is real, but so are the strategic, financial and governance risks.
 

The Pacific should not be asked whether it is pro-China or anti-China. We should be pro-Pacific. No matter where aid is coming from, we must remember that it is our responsibility to work with every partner that respects our sovereignty, supports our development priorities and delivers lasting benefits for our people.

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China is already an important development partner for many Pacific countries. The issue is not whether to engage, but how to engage on terms that strengthen Pacific independence rather than create new dependencies.

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China’s growing presence is therefore neither automatically a threat nor automatically a solution. It is a strategic reality that Pacific governments must manage confidently.

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A more ambitious engagement model

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On May 28 and 29, 2025, China hosted the Third China-Pacific Island Countries Foreign Ministers’ Meeting in Xiamen. It was the first time the meeting had been held in person in China. Representatives from 11 Pacific Island countries that have diplomatic relations with Beijing attended, together with the Deputy Secretary General of the Pacific Islands Forum Secretariat, according to the official joint statement.
 

The meeting produced an extensive cooperation package covering climate change, disaster preparedness, trade, agriculture, fisheries, health, tourism, education and policing. Under its Pacific climate cooperation initiative, China announced that it would implement 100 small, community-level climate projects over three years. It also allocated US$2 million for climate cooperation and offered to share early-warning technologies and disaster-monitoring capabilities.

China’s implementation measures following the meeting also included 200 “small and beautiful” livelihood programs during 2025, 274 scholarships for the 2025/2026 academic year, 500 training opportunities and seven groups comprising 56 medical personnel. China also committed to accelerating relevant trade negotiations and improving market access for Pacific products.
 

China is changing its aid strategy

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China’s development engagement is evolving. The most important change is not simply the total amount of financing, but how that support is being delivered.

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The Lowy Institute’s 2025 Pacific Aid Map reports that China provided approximately US$230 million in official development finance to the Pacific in 2023. This was 9 per cent lower than in 2022. Australia remained the region’s largest development partner by a wide margin, accounting for 43 per cent of all official development finance to the Pacific in 2023.

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Current data do not indicate that China is replacing Australia as the Pacific’s largest donor. However, the Lowy Institute’s 2025 Pacific Aid Map identifies China as the second-largest bilateral donor in several Pacific countries, including Kiribati, the Federated States of Micronesia, Papua New Guinea, Solomon Islands and Vanuatu.

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More importantly, the way China delivers development assistance is changing. Here is why.

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During the 2010s, Chinese development assistance in the Pacific was strongly associated with large infrastructure loans. Since the pandemic, China’s financing mix has increasingly shifted toward grants, equipment, community-level projects and more targeted initiatives. Preliminary data from the Lowy Institute’s 2025 Pacific Aid Map indicate that China signed a record US$207 million in Pacific grant projects during 2024.

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Between 2008 and 2019, the median amount spent on a Chinese-funded Pacific project was approximately US$3 million. Since 2020, it has fallen to approximately US$470,000. This pattern is consistent with a shift toward projects that are smaller, more targeted and more visible within communities.

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A solar installation, health clinic, school building, water system or disaster-warning tool may attract less international attention than a new port or highway. However, it can deliver immediate and visible benefits to communities. This approach also responds to demand across the Pacific for development programs that move more quickly from consultation to practical delivery.

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Why climate cooperation matters

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China’s climate initiative is well aligned with the Pacific’s stated priorities.

Pacific leaders have consistently identified climate change as the single greatest threat to the region’s livelihoods, security and wellbeing. Communities need practical investments in water security, renewable energy, coastal protection, resilient agriculture, communications and disaster preparedness.

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Separately, in January 2026, China provided US$200,000 in annual voluntary financial assistance to the Secretariat of the Pacific Regional Environment Program, a regional organization headquartered in Samoa. SPREP described the contribution as ongoing support for its institutional capacity and regional climate and environmental work. It was not identified as part of the 100-project commitment, and publicly available information remains insufficient to assess progress against that commitment.

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China is the leading global supplier of clean-energy technologies, including solar, wind and battery technologies. However, it was also the world’s largest annual greenhouse gas emitter in 2024, according to the European Commission’s 2025 EDGAR emissions report.
 

Pacific governments should welcome Chinese adaptation support while continuing to press China and all major emitters for faster emissions reductions and greater climate finance. Adaptation assistance cannot substitute for global mitigation.

 

Development and diplomacy are connected

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China describes its Pacific relationships as South-South cooperation based on equality and mutual respect. Some Pacific governments have publicly welcomed cooperation framed around mutual respect, trust and sovereignty.

Following the Xiamen meeting, the Cook Islands Government stated that its relationship with China had been built on mutual respect, trust and recognition of sovereignty. It acknowledged Chinese support for public infrastructure, agriculture, sports, education, fisheries, maritime development and climate action. The Cook Islands also reaffirmed its intention to advance cooperation under the 2025–2030 Joint Action Plan and related blue economy agreements.

Like assistance from other major partners, Chinese development cooperation also advances foreign-policy objectives. Development partners commonly pursue national interests alongside development objectives. Pacific governments should understand those interests, assess proposed cooperation against national priorities and negotiate accordingly.

The Xiamen joint statement reaffirmed the participating countries’ support for Beijing’s one-China principle. Because the meeting involved only Pacific countries that have diplomatic relations with China, this should not be interpreted as a region-wide Pacific position. In January 2024, Nauru ended diplomatic relations with Taiwan and subsequently resumed diplomatic relations with China. Taiwan currently identifies the Marshall Islands, Palau and Tuvalu as its three Pacific diplomatic allies. Diplomatic recognition therefore remains a sensitive element of regional politics.

Grants, loans and the legacy of debt
 

Not all Chinese assistance is the same. A grant does not require repayment. A concessional loan must be repaid, although usually on favorable terms. Less-concessional and commercial financing can create much greater fiscal exposure.

China’s increased use of grants reduces direct repayment risk for recipient governments. However, grants can still create procurement, maintenance, ownership and long-term dependency risks when their conditions and ongoing obligations are unclear.
 

Loan-financed infrastructure has not disappeared. Recent Chinese lending has supported telecommunications and road projects in Papua New Guinea, Solomon Islands and Vanuatu.
 

The 2025 Pacific Aid Map identified Samoa, Tonga and Vanuatu as facing significant repayment burdens on Chinese loans contracted during the infrastructure boom of the 2010s. It highlighted Tonga in particular, where repeated payment deferrals without extensions to loan maturities compressed repayments into a shorter period.
 

The available Pacific evidence does not support characterizing Chinese lending generally as deliberate “debt-trap diplomacy.” However, Pacific governments must carefully assess debt sustainability, contractual transparency, maintenance costs and long-term fiscal exposure before accepting any loan.
 

A project can be strategically attractive yet financially unsustainable, especially when its full lifecycle costs are underestimated or ignored.
 

Pacific Development Consulting’s recommendations for Pacific governments

 

Pacific countries can benefit from China’s engagement while protecting their independence. This requires stronger national and regional systems.

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1. Establish a Pacific-led project pipeline.
Projects should come from national development plans and the 2050 Strategy for the Blue Pacific Continent, not from a donor’s preferred list of investments.
 

2. Publish the full financing arrangements.
Governments should disclose whether assistance is a grant, concessional loan or commercial facility. They should also publish repayment obligations, procurement arrangements, sovereign guarantees and major contractual conditions.

 

3. Assess lifetime costs, not only construction costs.
Every infrastructure agreement should include funded plans for maintenance, insurance, cybersecurity, spare parts, staffing and eventual replacement.

 

4. Require local participation and capability transfer.
Projects should prioritize local employment, Pacific businesses and skills transfer. Where any externally funded project relies heavily on imported labor or contractors, governments should establish clear local employment, subcontracting, apprenticeship and training requirements.

 

5. Measure outcomes independently.
Major externally funded programs, including the 100 climate projects, should be covered by public reporting that identifies project locations, budgets, financing types, implementing organizations, completion status and measurable community benefits.

 

6. Maintain a diversified partnership portfolio.
Pacific countries should continue working with China, Australia, New Zealand, Japan, the United States, the European Union, multilateral institutions and emerging partners. Pacific governments should retain sovereign control of critical national systems and avoid excessive dependence on any single external partner.

 

A Pacific position

The Pacific is our home, not an empty or insignificant arena for major-power competition. History shows that when external powers treat regions primarily as strategic battlegrounds, the consequences can endure long after the competition itself has passed.

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China’s expanding engagement can bring infrastructure, technology, market access, climate support and new development options. As with engagement from any partner, poorly designed agreements can also create unsustainable debt, institutional strain and excessive strategic dependence.

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Our response should be confident and practical.

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We should welcome projects that advance Pacific priorities, scrutinize unclear proposals and reject arrangements that weaken sovereignty or burden future generations. Legitimate scrutiny should not be applied selectively to China. Every partner should be held to the same standards: transparency, respect for sovereignty, sustainability and measurable benefits for Pacific people.

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Our countries may be small in population, but our ocean does not make us peripheral. It makes us central to the future of the world. That gives us choices and, above all, the responsibility to set the terms.