THE ECONOMIST: Australia builds a Pacific alliance system to keep China out

The Grand Pacific Hotel is an old British colonial institution at the heart of Fiji’s capital. Tropical breezes blow off the harbour and through its whitewashed verandas to parliament across the street.

On July 6, Fiji’s prime minister was hosting a banquet there for his Australian counterpart to celebrate a new mutual-defence pact between their two countries.

They had just signed the treaty when word reached them that a Chinese submarine would shortly test-launch a ballistic missile into international waters north of Fiji.

The test was only the second Chinese launch since 1980 of a ballistic missile into international waters.

It spooked leaders of Pacific island countries, including Fiji, whose defence minister had unsuccessfully urged China to call it off, and some of whose soldiers are pictured above.

For Fiji and several other Pacific island countries it was the latest in a series of Chinese actions that have convinced them they have been right to align more closely with Australia.

Their concern about the missile launch is born of their history. Bigger countries turned the Pacific into a battleground in the Second World War and into a testing ground for nuclear weapons during the cold war. (Both the July test and an earlier one in September 2024, which also landed in the Pacific, were of nuclear-capable missiles.)

Now, many Pacific island leaders fear that rivalry between America and Asia’s biggest military power will once again destabilise their region.

Rather than choose between America and China, however, Pacific leaders are choosing to deepen ties with Australia by signing the Asia-Pacific’s first new alliances since the early days of the cold war.

The mutual-defence treaty between Australia and Fiji, the Pacific islands’ commercial and diplomatic hub, is the second new military alliance that Australia has signed with a Pacific island state in less than a year.

It did a similar deal with the region’s biggest state, Papua New Guinea, in October 2025.

Negotiations with Tonga, now the only Pacific island country with defence forces that does not have an alliance with Australia, are under way. (Australia and New Zealand have been allies since the early days of the cold war.)

Ministers insist the deals are not about confronting China, but about keeping security arrangements within the “Pacific family”.

That means Australia and New Zealand, which have long been members of the Pacific Islands Forum (PIF), the regional organisation.

It makes room, too, for America, which has sole responsibility for the defence of three states that are members of the PIF (and two heavily fortified territories, Guam and the Northern Mariana Islands, that are not). But it would lock China out of the region’s security arrangements.

That is a big shift from just a few years ago, when Australian officials feared that China had the momentum, and was within reach of realising its ambition of a military base in the islands.

All of this adds up to a new system of military alliances among Pacific island countries.

For the moment that system looks like a smaller version of the hub-and-spoke model of America’s alliances in Asia.

Unlike in Europe, where NATO is a multilateral alliance, America has only bilateral alliances with its five treaty allies in Asia. Likewise, Australia now has three bilateral alliances in the Pacific.

But that could soon change. New Zealand has expressed an interest in also signing the Veitacini Treaty, as the new alliance between Australia and Fiji is known.

If it follows through, probably only after elections in New Zealand in November, the pact could become the basis for a new multilateral alliance in the Pacific, say officials in all three countries.

“A bit like a NATO, kind of,” modestly offers Fiji’s deputy prime minister, Manoa Kamikamica, in an interview in his office in Suva, the capital.

The alliance is open only to those countries that have defence forces, however. For those that don’t, Australia offers other deals.

Agreements with Tuvalu in 2023 and Vanuatu in June would block China from building military bases there and make it harder to do security deals dressed up as police co-operation.

The Solomon Islands, for the past several years China’s closest Pacific ally, is negotiating a similar agreement with Australia after a change in government in May.

Of the region’s other fully independent states, only two — Kiribati and Samoa — have yet to conclude a treaty with Australia or open negotiations.

Both the defence pacts and the other treaties discourage Chinese investment in critical infrastructure that could have military uses, like ports or telecommunication networks.

In return, Australia is investing more than $1 billion each year in its new treaty partners.

In Fiji Australian diplomats hope to get the Millennium Challenge Corporation, an American aid agency that Elon Musk and DOGE forgot to destroy last year, to add several hundred million dollars for redeveloping Suva’s strategically located deepwater port.

Matthew Wale, the new prime minister of the Solomons and a long-time critic of China’s attempts to buy influence in the region, wants all Pacific island countries, whether they have defence forces or not, to agree on a new multilateral treaty limiting security co-operation to the “Pacific family” at their annual summit, which begins on August 30.

But approval would require consensus between all of the forum’s members. For two of the bloc’s weakest states, Kiribati and Nauru, that may go too far towards alienating China.

The two have also blocked a statement condemning the Chinese missile launch, to the dismay of the other members. Nauru opposed the protest despite the treaty it signed with Australia in 2024.

Much of the discussion avoids the fact that by choosing Australia, an American ally, Pacific leaders are choosing sides.

There is little talk in Fiji or the other treaty signatories of what an Australian ally might be asked to do if Australia joined America in a conflict with China.

And military co-operation between Australia and its new allies will proceed slowly; there is, for example, little prospect of Australian troops deploying permanently on its new allies’ territory any time soon.

That does not bother American officials, however, who are happy that Australian diplomacy seems to be blocking a Chinese presence in Pacific island countries that were once crucial territories in the battles of the second world war.