China's Shrinking Pacific Aid Increasingly Targets Political Allies Amid US Competition, Reports Australian Think Tank

Pacific governments' interest in Chinese loans declines amid better offers from US allies; China's dwindling aid primarily targets diplomatic allies including the Cook Islands, Fiji, and Papua New Guinea.

China's aid to the South Pacific is increasingly targeted towards political allies like the Cook Islands, Fiji, and Papua New Guinea, reflecting a strategic shift to cement political ties amid declining influence in the region.
The decline in Chinese aid, from its $384 million peak in 2016 to $241 million in 2021, is largely due to improved loan conditions being offered by US allies, particularly Australia, causing a loss of interest in Chinese funds.
China has increased aid to the Solomon Islands and Kiribati after they switched diplomatic allegiances from Taiwan to Beijing in 2019, indicative of China's strategy to strengthen alliances through targeted aid.
The US has been actively working to counter Chinese influence in the South Pacific, resulting in greater diplomatic and economic engagement including initiatives like hosting Pacific Island leaders at the White House.
The decline in Chinese aid is also due to Pacific governments' waning interest in Chinese infrastructure loans, which have left certain Pacific nations heavily indebted. This is in the backdrop of warnings from the US about China's finance being a debt trap that threatens the sovereignty of poorer countries.