AUSTRALIA, PAPUA NEW GUINEA AND CHINA: THE STRATEGIC PIVOT IN THE PACIFIC / GEOPOLITICAL FUTURES

Australia, Papua New Guinea and China: The Strategic Pivot in the Pacific

The island nation has become central to Canberra’s Pacific policies.

By: Ronan Wordsworth

On Sept. 17, Australian Prime Minister Anthony Albanese was in Port Moresby, the capital of Papua New Guinea, where he was expected to sign the landmark Pukpuk Treaty. 

The agreement included a clause on mutual defense and would have enabled citizens of either country to serve in the armed forces of the other. 

Yet Albanese left Papua New Guinea empty-handed, having already tried and failed to reach a similar defense agreement with Vanuatu. 

Both treaties were obviously meant to curb Chinese encroachment into the Pacific.

Papua New Guinea is a natural linchpin of this strategy. 

After Australia, it’s the most populous Pacific island and is Canberra’s closest northern neighbor, so ties to it are strategically important. 

And although Papua New Guinean Prime Minister James Marape has said he expects a treaty to be signed in the coming weeks, concerns remain over its viability. 

Internal political dynamics in Papua New Guinea remain highly fluid as unresolved tensions over foreign policy – namely, how to balance relations between China and Australia – divide its Cabinet, parliament and military leadership. 

Some of China’s criticisms over the Pukpuk Treaty have even been shared by major opposition figures on the island. 

Australia and China don’t outright say they are competing for the Pacific, but their actions suggest otherwise. 

Australia is a regional power able to project its influence on smaller neighbors with which it has close historical and cultural ties. 

Australia also has a ton of strategic depth by being an island itself, albeit a large one with a sparse and sometimes difficult-to-defend population. 

Australia's 2023 Strategic Defense Review identified that security threats to the Australian mainland are almost exclusively maritime-based, which explains why it has so loudly promoted the AUKUS security partnership with the United States and the United Kingdom and the associated $368 billion submarine deal.

Its national security strategy, then, depends on having a network of allied countries in the Pacific. 

It has therefore undertaken new initiatives to win friends in its neighborhood. 

In 2024-25, Australia announced record aid and investment in the Pacific island nations (more than $2 billion) and, over the past few years, has made inroads into these nations through economic and security partnerships. 

Initiatives like these promote national security by denying the opportunity to larger foreign powers to create influence close to the Australian mainland.

The U.S., which does outright identify China as a competitor, has helped Australia to nurture these relationships to contain Beijing. 

Washington has allocated $7 billion over the next 20 years for the northern Marshall Islands, the Federated States of Micronesia and Palau, which all lie above PNG, Vanuatu and Fiji and thus fall under America’s perceived purview. 

And as the U.S. continues to encourage regional allies to take on more responsibility for their regional security, Australia will be central to bringing the Pacific islands into the Western fold.

Naturally, China also has interests in the Pacific and opposes all these efforts to contain it. 

Broadly speaking, China’s behavior in the region is characterized as “checkbook diplomacy” – extracting resources and access in exchange for investment in infrastructure and development, the ultimate purpose of which is to expand its influence and challenge Western dominance.

In Papua New Guinea, Beijing has actively tried to stoke anti-Australian sentiment. 

It has also involved itself in various extractive industries, particularly liquefied natural gas and crude oil (68 percent of PNG's total exports to China) nickel (16 percent), and timber (14 percent). 

Though the country sees China as a vital partner for growth, relations remain largely commercial and transactional. 

Among all Pacific island nations, Papua New Guinea is China’s largest trading partner. 

Exports to Beijing exceeded $4.3 billion in 2024, following a 2023 economic cooperation treaty focusing on trade, commerce, minerals, energy and infrastructure. 

Other interests for Beijing include resource access, port infrastructure and the potential for a geographic role in buffering Australian and U.S. operations in the region.

Beijing has tried to parlay its economic influence into security influence. 

In 2024, for example, it engaged in discussions over a secret policing agreement during Chinese Foreign Minister Wang Yi’s visit to Port Moresby. 

Similar Chinese efforts are underway throughout the region. 

In April 2022, Beijing signed a security agreement with the Solomon Islands, affording it the option to station Chinese forces near vital shipping lanes just 1,200 nautical miles (2,200 kilometers) from Australia. 

In Vanuatu, Beijing upgraded its comprehensive strategic partnership in 2024, deepening cooperation politically, economically and within the framework of the Belt and Road Initiative. 

In February, the Cook Islands signed a comprehensive strategic partnership agreement with China covering deep-sea mining, regional economic cooperation and new infrastructure projects. 

In 2023, Fiji signed agreements focused on infrastructure, agriculture, education, police training and trade, allowing for Chinese police officers to be stationed in the country.

Australia has responded to these moves with outreach of its own. 

In the Solomon Islands, Canberra signed an array of medical, public health and maritime security initiatives while agreeing to a $118 million-$190 million deal to enhance policing to ensure that they can be responsible for their own security without an external partner. 

Similar security partnerships were signed with Nauru and Tuvalu. 

These agreements attempt to grant Australia the power to veto security and critical infrastructure transfers by Pacific countries to third parties (that is, China), giving Australia leverage to block Chinese military or policing deployments.

Australia has made parallel security arrangements to manage China too. 

It has undertaken more joint maritime patrols, delivered Guardian-class patrol boats to Pacific island nations and expanded defense training for their armed forces. 

The security agreement with Vanuatu that failed to be signed was also meant to lock Australia into being the country’s primary security partner, primarily by supporting climate change resilience, strengthening the economy and deepening security ties.

Notably, the deal was delayed for domestic political reasons; the ruling coalition party raised concerns over the potential for the deal to limit Vanuatu’s access to infrastructure funding from other countries. 

Beijing remains the nation’s largest creditor, providing loans for infrastructure projects completed by Chinese contractors. 

A similar security agreement, signed in 2022 by Australia and Vanuatu, was blocked by the Vanuatuan parliament, suggesting there are plenty of influential decision-makers who still believe in keeping their options open.

Despite the setback in signing the agreement with Papua New Guinea, Australian efforts to enhance relations have already proved successful. 

In December 2023, Canberra committed $200 million to training new police officers and providing judicial assistance. 

The funds will cover the improvement of bilateral military relations, programs for officers to deploy and train in Australia, and the construction of a new naval facility.

The final piece of the partnership was announced last December over an important but overlooked arena of diplomacy: sports. 

According to an agreement, Australia will provide $600 million over 10 years to set up a Papua New Guinea-based rugby league team (which will compete in the Australian National Rugby League from 2028) and support local development. 

However, the license includes a provision to revoke the funding should Port Moresby enter into security or military arrangements with China. 

Rugby league is the national sport of Papua New Guinea, and so any government that would jeopardize an opportunity to have a team in a premier league would almost invariably lose public support. 

Besides sports, the Pacific Australia Labor Mobility scheme channels thousands of Pacific workers to Australia each year, further deepening public affection toward Australia.

Given the strong foundation of this relationship, when the latest treaty came up, China felt outmaneuvered. 

Like in Vanuatu, the last-minute stumbling block is that some politicians in Papua New Guinea want to keep the door open for partnership with Beijing. 

The Chinese Embassy in Port Moresby was highly critical of the communique and potential treaty, saying that “such a treaty should not be exclusive in nature, nor should it restrict or [prevent] a sovereign country from cooperating with a third party for any reason.” 

Port Moresby cannot simply ignore China’s objections, given that China is its largest export market (Australia is third, behind Japan) and second-largest source of imports (after Australia). 

Overall, though, Australia’s increased engagement has granted its neighbor more strategic flexibility to play the two competitors against one another.

The two (potentially temporary) rejections mark the first setbacks in the Albanese government’s attempts to court its Pacific partners following the shock of the Solomon Islands-China defense agreement that leaked in 2022. 

Until now, Canberra’s efforts to draw the Pacific islands back into its orbit have been effective – aided no doubt by their long enduring economic, political and cultural relations. 

The fact remains, however, that some policymakers in both Vanuatu and Papua New Guinea are wary of tying their security exclusively to Canberra and Washington.

Despite the delays, Albanese believes it is a matter of when, not if, the two agreements will be signed. 

Canberra’s perspective, Papua New Guinea is a vital component of Australian national security. 

But the hiccups underscore the extent of China’s soft power, whether through economic infrastructure development or diplomatic pressure. 

Following a series of diplomatic wins for Australia, China is stepping up its own engagement in Pacific nations with which it has strong economic ties.

Papua New Guinea and Vanuatu’s hesitancy does not signal a collapse of Australia’s Pacific strategy, but it does reveal its limits. 

The region will keep hedging: security cooperation led by Australia (i.e., policing, maritime training, basing access) will deepen, but China will push leaders to resist clauses that enable Canberra to veto third-party partnerships and box out Beijing. 

Deep cultural and historical ties favor Australia, but Albanese’s government will have to stay heavily engaged to ensure that Beijing’s offerings don’t become more attractive.