Beijing is piling investment into the Pacific, sending ever more fishing vessels deeper into its waters and reportedly mulling the construction of a military base on Vanuatu.
Faced with this increasing Chinese influence, Prime Minister Scott Morrison vowed to take Australia's engagement "to a new level."
"We want to work with our Pacific Islands partners to build a Pacific region that is secure strategically, stable economically and sovereign politically," Morrison said as he prepares for a major Asian-Pacific summit in Port Moresby next week.
He underscored a series of security, economic and diplomatic initiatives, including the donation of patrol boats and the development of a joint military base in Papua New Guinea.
The centerpiece however is cold hard cash -- much sought after by poverty-hit countries in the region -- with Morrisonannouncing a Aus$2 billion (US$1.5 billion) fund"to significantly boost Australia's support for infrastructure development in Pacific countries and Timor-Leste".
He also announced a further Aus$1 billion for export financing to support investments in the region.
Morrison's government has been preoccupied by domestic infighting and has diverged politically from Pacific Island nations threatened by rising waters, by questioning climate change.
Australia has long been a major political player in much of the south and west Pacific, but has lost ground with China ploughing massive investment into the region as part of its "Belt and Road" initiative.
Charm offensive
His announcement comes as Australian Foreign Minister Marise Payne visited Beijing, the first time someone in her position has visited in three years, and just after Australia blocked a bid of more than US$9 billion from Hong Kong giant CK Group for the country's biggest gas pipeline company.
Although the Pacific islands are small in size, and a less vital waterway for trade than the contested South China Sea, their exclusive economic zones make up a massive proportion of the world's maritime assets.
And the region has become increasingly important as Beijing has signalled its intent to develop a "Blue Water" navy that can project Chinese power far beyond its coastal waters.
The Chinese authorities have also been keen to harness natural resources from hardwood to nickel and have -- with notable success -- tried to entice countries in the region to drop recognition of Taiwan, isolating its cross-strait foe.
The number of Chinese fishing vessels operating in the tuna-rich waters of the Pacific has also increased from 244 in 2010 to over 600, according to data from Western and Central Pacific Fisheries Commission.
Without mentioning China by name, Morrison hailed common values with island nations and said he would expand Australia's diplomatic footprint to "every member country of the Pacific Islands Forum".
Australian media reported that Morrison will continue his charm offensive at the Asia-Pacific summit in Port Moresby, where he will host leaders for a barbecue.
He will have competition from Xi Jinping, who is also expected to meet a host of regional leaders when he attends the summit.
US president Donald Trump will not attend, sending Vice President Mike Pence in his stead.
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