‘Soft power surrender’: US retreat from Pacific is a gift to China
China is now outspending the US in the Pacific, with Trump’s brutal aid cuts gifting Beijing a golden opportunity – and leaving Australia with a dangerous new ‘strategic reality’.
China is now outstripping the US in providing assistance to Pacific nations, as Anthony Albanese warns that the Trump administration’s decision to abandon aid programs in the Pacific and withdraw from the Paris climate agreement presents Australia with a new “strategic reality” in the region.
President Donald Trump’s more-than 80 per cent cut to the US Agency for International Development programs has been a sledgehammer blow to aid-dependent Pacific nations, leaving a vacuum the Australian government fears will increasingly be filled by China as Beijing ramps up its “soft power” push into the region.
“The US decision to withdraw from aid and withdraw from Paris will have a real impact on the standing of the US in the region”, the Prime Minister told British podcast The Rest is Politics on Saturday.
“Australia, we want to be the security partner of choice in the region, and we’ll continue to step up but there’s no doubt that any time the US steps back, China will seek to step forward, and that is a strategic reality that we have to deal with,” Mr Albanese said.
The axing of vital USAID programs comes as Mr Trump hit several longtime Pacific allies with brutal tariffs – 32 per cent for Fiji, 30 per cent for Nauru and 23 per cent for Vanuatu – on the back of his executive order to withdraw from the Paris Agreement on climate change, a move met with alarm and anger by Pacific nations highly vulnerable to rising sea levels.
The US disengagement in the Pacific has coincided with provocative and unannounced live-fire drills by Chinese warships in the Tasman Sea in February, forcing air traffic controllers to reroute more than 50 commercial flights, and the sudden appearance in March of Chinese “research” vessel Tan Suo Yi Hao off the southern coast of Australia.
The increased volatility in the region comes as both sides of Australian politics prepare to make major defence announcements in the federal election campaign, with pressure to increase defence spending to 3 per cent of GDP as the US demands its allies shoulder a greater share of the burden.
“At some point in the campaign both sides of politics will have to grapple with the national security consequences of Trump’s disaggregated international strategy,” says US Studies Centre director of foreign policy and defence Peter Dean, who was co-lead of the 2023 Defence Strategic Review Secretariat.
In The Australian on Monday, Professor Dean says key priorities for spending should be medium-range, land-based Surface to Air Missile capability; sustainment and maintenance of existing programs; and a decision to buy Japanese Mogami-class frigates.
The wholesale dismantling of USAID will strengthen Beijing’s ambitions in the Pacific as it seeks out new economic and security partnerships, according to the Lowy Institute, which describes the US retreat as “a soft power surrender to China”.
“Between the tariffs and the aid cuts, the US is in a soft power freefall in the Pacific,” Lowy Institute research fellow Riley Duke told The Australian.
Even if China’s aid remains static, its influence will fill the vacuum left by US withdrawal around the world, Mr Duke said, with the aid cuts restoring China as the world’s largest bilateral development partner and the US ceding larger partner status to China in more than 40 countries.
Australia remains the region’s largest donor but by late last year China – already the largest trading partner for most Pacific Island countries – had regained its place as the region’s second-largest bilateral donor after Australia, according to Lowy Institute data, despite only a modest uptick in spending by Beijing.
The total US aid spend in the Pacific reached $US1.12bn in the Pacific between 2018 and 2022, according to the institute, with most money directed toward the so-called Compact States: the Marshall Islands, the Federated States of Micronesia and Palau, which all give the US exclusive military access.
That contribution narrowly beat China’s $1.08bn but Beijing’s commitment is increasing while the US spend has nose-dived.
Defence expert Peter Jennings told The Australian China would capitalise on the decline of US global leadership in aid programs.
“I think there’s a big risk for the US globally in trying to make savings – that they’re actually going to damage a lot of American interests, particularly in the developing world,” said Mr Jennings, a former deputy secretary for strategy in the Australian Department of Defence.
“That mightn’t have been the intent but China is out to capitalise on it as fast as it can, which is why we’ve got Xi Jinping in Southeast Asia, and they will be very loudly making the point that ‘We’re the more dependable partner at the moment’.”
“The Americans have lifted their profile significantly with the Pacific Islands but that global leadership does cost money. I don’t think it’s Trump’s intent to walk away from the idea of global leadership but sometimes ‘America first’ means actually working with friends and allies to achieve shared outcomes, and that’s where I think they’re failing at the moment.
“One of the things that’s been exposed by the first few months of Trump is how thin our own capabilities and efforts are, in everything from the military to aid to diplomacy, because we’ve been skimping on that, largely because the Americans have done heavy lifting for us in this part of the world.
“We’ve just got to accept that this is going to cost more money for Australia to sustain or regain a leading position of influence in Southeast Asia and the South Pacific. It’s going to take more defence spending, more diplomacy, and probably more aid.”
Earlier this year, the tiny nation of Cook Islands blindsided governments in the region with the announcement of a murky “strategic partnership” with Beijing that included trade, fisheries, investment and deep sea mining.
Beijing has changed tactics on aid in recent years, ditching unpopular loan agreements and re-emerging with “a more competitive, politically targeted model of aid engagement, notably in the use of direct government budget transfers,” the Lowy Institute said.
Post-2020, China has recalibrated its strategy towards “small and beautiful” projects, focusing on community initiatives like school grants and agricultural equipment, alongside large budget transfers like the so-called Solomon Islands’ Constituency Development Funds – effectively, slush funds channelled to pro-Beijing MPs.
Last year, The Australian revealed how the Chinese ambassador to Solomon Islands visited the large Malaita province, which has rebelled against Beijing’s influence, handing out water tanks, solar lamps and fishing nets to local people, as Chinese police gave martial arts instruction to local children.
US aid, which surged under the Biden administration, has now been all but abandoned under Mr Trump. The cuts will end work on everything from protecting coconut tree farms against rhinoceros beetles in Samoa to clearing unexploded World War II bombs in Palau.
Climate change projects and natural disaster programs are top of the hit list, along with health programs targeting tuberculosis, malaria and HIV, just as Fiji scrambles to contain an HIV outbreak of more than 1000 cases, a nine-fold increase in five years.
The new administration appears to have entirely junked the US-Pacific Partnership Strategy which had included a $US800m aid package, with the USAID regional mission in Fiji shuttered and new US embassies in Solomon Islands, Tonga and Kiribati reportedly in the firing line.
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