Overview

As Beijing steps up its global engagement under General Secretary of the Chinese Communist Party (CCP) and President Xi Jinping, China is also increasing its involvement in the Pacific Islands region. Beijing's heightened engagement in the region in recent years is driven by its broader diplomatic and strategic interests, reducing Taiwan's international space, and gaining access to raw materials and natural resources. Although the Pacific Islands receive less of China's attention and resources compared to other areas of the world, Beijing includes the region in its key diplomatic and economic development policy-the Belt and Road Initiative (BRI)-which suggests China has geostrategic interests in the region. An April 2018 news report on purported discussions over a potential Chinese military base on Vanuatu, though denied by both countries, raises concerns that a Chinese base could be established in the Pacific Islands. Such a development could pose challenges to U.S. defense interests and those of Australia and New Zealand, key U.S. partners in the region. Over the last five years, Beijing has significantly bolstered its economic ties with the Pacific Islands. An examination of trade, investment, development assistance, and tourism data shows China has become one of the major players in the region, well ahead of the United States in most areas. Beijing concentrates much of its economic engagement, especially aid and tourism, among its eight diplomatic partners in the region, but recently it has also made inroads with other Pacific Island countries, including Taiwan's diplomatic partners.This paper is the product of professional research performed by staff of the U.S.-China Economic and Security Review Commission, and was prepared at the request of the Commission to support its deliberations.This compilation includes a reproduction of the 2019 Worldwide Threat Assessment of the U.S. Intelligence Community. Executive Summary * Introduction * China's Interests in the Pacific Islands * Promoting China's Diplomatic and Strategic Priorities * Reducing Taiwan's International Space * Gaining Access to Resources * Chinese Engagement in the Pacific Islands * Economic Engagement * Trade * Investment * Development Assistance * Tourism * Diplomatic Engagement * High-Level Visits * Public Diplomacy * Security Engagement * Implications for the United States * Concerns over U.S. Compact Agreements and Increased Competition with China in the Region * Concerns for U.S. Defense Interests * Increasing China's Influence in Regional and International Organizations * China's Diplomatic Competition with Taiwan * Appendix I: Pacific Islands Data * Appendix II: China's Economic Engagement in the Pacific IslandsBeijing's growing engagement in the Pacific Islands pose a number of implications for U.S. interests in the region. China's inroads in Micronesia, where most of the United States' engagement in the Pacific Islands is concentrated, could threaten U.S. Compact of Free Association agreements with Palau, the Marshall Islands, and the Federated States of Micronesia over the long term. Some analysts are concerned China is trying to erode U.S. influence in the region to weaken the U.S. military presence and create an opening for Chinese military access. In the Commonwealth of the Northern Mariana Islands (CNMI), a U.S. territory near Guam in Micronesia, Chinese investors' casino resort developments could complicate U.S. Department of Defense plans in CNMI for extensive training and exercises resulting from the recent relocation of Marines from Okinawa, Japan.

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