China has been active in the South Pacific for four decades, largely driven by its competition with Taiwan for diplomatic recognition. Although a truce (of sorts) has held for the last few years, this competition has seen China and Taiwan engage in ‘chequebook diplomacy’ to win the favour of South Pacific states, and resulted in China becoming the second-largest aid donor in the region, behind Australia.

China’s Assistant Minister of Foreign Affairs, Cui Tiankai, declared at the recent Pacific Islands Forum meeting that China is ‘here in this region not to seek any particular influence, still less dominance’. Despite this, China has invested heavily in diplomacy, and now has the highest number of diplomats in the region. High-level Chinese officials have also undertaken a number of visits to the region, which have been reciprocated by South Pacific politicians and officials. China has also used tools like language training, student exchanges and tourism to build links. It also seized the opportunity created by Australia’s and New Zealand’s attempts to isolate the military regime in Fiji (including its suspension from the Pacific Islands Forum) by building links with the Melanesian Spearhead Group, in which Fiji is an active member.

Although Clinton declared that ‘the Pacific is big enough for all of us’, the fact that she attended the Pacific Islands Forum meeting highlights Washington’s increased sensitivity to growing Chinese influence in the South Pacific. In recent times the United States has resumed a more active role in the region, with senior officials conducting tours, its diplomatic presence being bolstered, and foreign aid and trade missions being reopened.

How might the South Pacific constitute a microcosm of broader emerging strategic rivalry between the United States and China? Given that the region is Australia’s immediate neighbourhood, Australia faces the prospect of attempting to balance the interests of, and its relationship with, the two powers. Whether that balance is ultimately struck will have important strategic consequences for Australia, and potentially for the broader Asia Pacific region.

Pessimistic analyses predict that China on the one hand, and the United States (and its ally Australia) on the other, will engage in a zero-sum competition for regional influence, as happened between the United States and the Soviet Union during the Cold War. This competition could come to a head if there is a clash between China’s increasing military presence in the region and United States extensive military presence in Micronesia, particularly in Guam. If such a conflict broke out, Australia would have little option but to respond and, in so doing, inevitably make a choice between the two powers.

But there may be room for optimism. Australia could try to draw China into a more cooperative approach to development and security, particularly by working through regional multilateral institutions. Australia could also encourage China to carry out joint projects with it, the United States and other Western states, to ensure the effectiveness and coordination of aid. Until recently China had been reluctant to engage cooperatively, but it has shown a greater willingness to coordinate, or at least communicate better, with other donors. China’s new cooperative approach is illustrated by the announcement that it will partner with New Zealand to improve water provision in the Cook Islands. Clinton welcomed this announcement, declaring that ‘New Zealand sets a good example for working with China’.

Evidence of emerging communication and cooperation between China, Australia and other Western states in the South Pacific may suggest that proposals for the United States to engage and cooperate with China — perhaps along the ‘concert of powers’ model envisaged by Hugh White in his new book The China Choice: Why America Should Share Power — could succeed in the future. These proposals could be developed on a relatively small and low-risk scale in the South Pacific, so that the lessons learnt and the confidence gained may benefit broader Asia Pacific stability and security.

Joanne Wallis is Lecturer in Strategic and Defence Studies at the Australian National University, where she also convenes the Bachelor of Asia-Pacific Security program.