America’s Pacific retreat: China’s advance?

The Oceania region, comprising 14 countries led by its two major members, Australia and New Zealand, along with 12 smaller Pacific Island Countries (PICs) — Fiji, Kiribati, the Marshall Islands, Micronesia, Nauru, Palau, Papua New Guinea, Samoa, the Solomon Islands, Tonga, Tuvalu and Vanuatu — has long been under US influence.

Australia and New Zealand are key US allies in the region. They are members of the Australia, New Zealand and US Security Treaty (ANZUS), established in 1951, and participate in the Five Eyes intelligence-sharing network with the US, UK and Canada, a partnership dating back to the early Cold War.

Additionally, Australia is a founding member of AUKUS (Australia-UK-US), established in 2021, and a member of the Quadrilateral Security Dialogue (Quad) alongside the US, India and Japan.

The US has also maintained strong bilateral ties with most PICs, serving as an active dialogue partner of the Pacific Islands Forum (PIF), the region’s primary political and security-focused multilateral organisation. The US Agency for International Development (USAID) maintained a significant presence through its longstanding programs across the Pacific Islands, focusing on climate change, disaster management, health, sustainable fisheries, infrastructure and the strengthening of democratic institutions. Of its US$40 billion annual budget, USAID allocated US$3.4 billion to the Pacific Islands region, underscoring its strategic importance.

However, this landscape is changing rapidly. Under its “America First” policy, the Trump administration’s global tariffs, withdrawal of USAID activities and review of AUKUS are prompting Oceanian countries to reconsider their policies and look to China as an alternative partner. Visits by New Zealand Prime Minister Christopher Luxon in June and Australian Prime Minister Anthony Albanese in July 2025 to China highlight this shift. Neither Prime Minister had secured a meeting with President Trump since his second term.

In late January 2025, the Trump administration abruptly suspended all USAID funding worldwide, disrupting nearly all ongoing US-funded programmes in the Pacific, including those in critical areas such as climate, health and trade.

The Trump administration’s global tariffs were another blow to the Oceania region. Except for Niue and Palau, all other member countries were affected. Albanese termed tariffs “not the act of a friend”. Leaders of Tonga, Solomon Islands and the Cook Islands sent a joint letter to President Trump expressing their serious concerns. Fiji’s Prime Minister Sitiveni Rabuka labelled the 32% tariff on his country as “a trade blockade” adding that the world is bigger than the US. 

For Australia, Trump’s policies have put the fate of the AUKUS deal, valued at US$368 billion, at risk. Announced in 2021 and formalised in 2024, AUKUS aimed to provide Australia with nuclear-powered submarines and advanced technologies, artificial intelligence and quantum technology, to enhance its ability to counter China. However, in June, the Pentagon began reviewing the AUKUS agreement to determine if it aligns with Trump’s “America First” policy, raising doubts about its future.

Washington also urged Canberra to increase defence spending from 2% to 3.5% of GDP. Albanese’s response that “we’ll determine our own defence policy” reflected growing rifts between the two close strategic allies. Although China has not directly instigated these shifts in US policies, it stands to benefit from them. 

Albanese’s six-day visit to China in July occurred amid several issues in two-way relations, including China’s live-fire naval exercises in the Tasman Sea (a concern shared by New Zealand); ongoing Chinese trade sanctions (Australian media labelled them as Chinese “economic coercion”); Australia’s tighter controls on Chinese investments over national security and espionage concerns; the detention of Australian writer Yang Hengjun in China; calls for China to relinquish its 99-year lease on Darwin Port; and China’s concerns over Australia’s participation in AUKUS. The joint statement reflected that these issues did not affect the relationship.

China and Australia established a new framework for economic and climate cooperation, restored official dialogue channels, removed some trade barriers and adopted a pragmatic approach in managing their bilateral relations. Both sides demonstrated an ability to balance mutually beneficial economic cooperation with ongoing strategic concerns.

A month earlier, New Zealand Prime Minister Christopher Luxon had also visited China. The visit similarly came amid differences, including over human rights, China’s expanding influence in the Pacific (especially the China-Cook Islands agreement), Chinese naval activity in the Tasman Sea, alleged Chinese interference in New Zealand’s media and market access restrictions. 

Nevertheless, Luxon’s visit laid the groundwork for improved bilateral relations. Both sides reaffirmed their comprehensive strategic partnership, with concrete results including increased trade and market access. China’s implementation of a visa-free policy for Australians and New Zealanders would help in promoting people-to-people exchanges. 

The PICs are also developing closer ties with China. In February 2025, the Cook Islands’ prime minister, Mark Brown, visited China and signed a comprehensive strategic partnership agreement. Three months later, in May 2025, China hosted the Third China-Pacific Island Countries Foreign Ministers’ Meeting, the largest of its kind. Except for Palau, the Marshall Islands and Tuvalu, which maintained diplomatic ties with Taiwan, other PICs attended, sending their top leaders.

The joint statement reiterated the “one China” policy, building a community of shared destiny, and nuclear non-proliferation in the region — all of which are core issues of China. The reference to non-proliferation served the interests of both sides. Indigenous people have not lost the memory of the 67 nuclear tests the US conducted at the Marshall Islands in the 1940s and 1950s, while China is wary of Australia’s nuclear submarine plans under AUKUS. A study notes that Chinese diplomats and diplomatic outposts now outnumber those of the US in Oceania. 

All in all, the post-World War II security framework in Oceania, which had centred on US dominance, is now in disarray, with China rapidly filling the vacuum left by Washington. Traditional security arrangements, such as ANZUS and the Five Eyes alliance, as well as newer frameworks like the Quad and AUKUS, are all facing significant strain. China is gradually supplanting these structures through an expanding web of bilateral and multilateral regional partnerships.

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