If all goes to his plan, Commodore Bainimarama will remain in power until at least 2014. Five more years. Only five years ago China’s involvement in Fiji and the South Pacific region barely registered in Australian policymaking and media circles.

In the five years leading up to 2009 China’s bilateral trade and investment with Fiji has significantly increased; it has announced an aid package worth $135m in concessional loans; and it has increased its support to the key regional organisations, tripling its funding to the Pacific Islands Forum. Australia’s aid budget to Fiji was $27m for 2008-09.

Fiji is facing enormous political, economic and social challenges. It is desperate for more assistance, but even the Asian Development Bank cannot issue it any new funding because of political pressure from certain member countries. Thankfully AusAID and NZAID have at least continued to support vital programs in health and education. Meanwhile, China, Malaysia and India are continuing to provide valuable aid and investment in roads, housing, electricity and the sugar industry. Fiji is ‘Looking North’ both as a strategy to diversify its relationships but also because it has no other real option. There is a distinct sense that Australia and New Zealand are pushing Fiji towards its Asian partners.

So whilst the Prime Minister’s Office in Fiji is on first name terms with the Chinese Embassy diplomats, and the Chinese Ambassador reportedly has weekly meetings, Australia and NZ now no longer have top diplomats in the country. Australia’s tit-for-tat approach to disputes with Fiji, along with the reportedly domineering stance it took in the Pacific Islands Forum, especially at the Cairns meeting in August, stands in stark contrast to China’s politically appealing approach of responsiveness, respect, and effective public diplomacy.

Chinese investment and engagement is certainly increasing: China is funding a hydro-dam project in Nadarivatu (this was going to be a European Investment Bank-funded project until the ‘political environment’ changed), and another dam project may possibly be on the cards. China is also funding roads and bridges, fish processing facilities, and hotel projects.

China has also signalled its desire to provide assistance in the area of climate change, something of vital importance to Pacific Island countries. In September this year China presented SPREP (the Secretariat of the Pacific Regional Environmental Program) with US$180,000 funding – notably, US$100,000 more than in previous years.

Australia should not necessarily feel concerned about China’s involvement in Fiji, however the Australian Government should be aware of the unintended consequences of its position. The political vacuum created by Australia and New Zealand isn’t necessarily being actively filled by China. By virtue of Australia and New Zealand’s hardline position, Chinese influence increases.

At the same time, it is fairly obvious that while Bainimarama likes to trumpet China’s involvement and support, this is more rhetoric than reality. The ‘new’ funding the regime keeps announcing is actually part of the US$600m Soft Loan Facility that Chinese Premier Wen Jiabao announced back in 2006. The first project – F$70m for low cost housing – is still in the final stages of negotiation with the China EXIM Bank in Beijing. The proposed biofuel project – turning cassava into ethanol – is on the backburner because of domestic concerns about the appropriateness of using a staple food to produce fuel. Aid projects in the pipeline include the upgrading of rural roads and other infrastructure and fixing water supply problems. All of these will be financed from the 2006 Soft Loan Facility and will not constitute an actual monetary increase in Chinese development assistance.

In fact, the Chinese are careful not to appear too close with the current regime. Their policy of ‘non-interference’, in this case, seems to be just that.

Many leaders perhaps fell under the spell of the Chinese, jumping at the opportunity to diversify reliance on traditional powers, emerging from lavish receptions with their arms full of gifts. But many are aware that no gifts are free and that China, like all the other players, has its own reasons for engaging with them. What makes China appealing is its economic might – the Pacific Islands are aware of China’s growing power and influence in the international arena and understand, like Australia, it is important to engage with China and develop stronger ties.

However, China’s involvement and support is controversial within Fiji itself. There are issues of the use of Chinese labour, companies and materials on Chinese aid projects, and questionable business ethics of the ‘new’ migrants. The Fijian Government itself raised the issue of the special conditions attached to Chinese loans: the contractor must be a Chinese company and at least 50 per cent of the materials must be procured from China. But its support is visible and generally appreciated. As I was told by one of Bainimarama’s senior officials: ‘when there is a positive response to your cry for help then you would go with it’.

The effect wouldn’t be so apparent if it didn’t so starkly contrast with the Australian and New Zealand approach. Canberra and Wellington would be naïve to think their position won’t have potentially lasting implications for regional dynamics.

Philippa Brant is a PhD candidate at Melbourne University who was recently awarded the PM’s Australia Asia Endeavour Award. She recently spent a month on field work in Suva.