Australian Prime Minister Scott Morrison said Canberra will set up a multi-billion-dollar infrastructure bank to fund telecommunications, energy, transport and water projects in the South Pacific. There will be new diplomatic posts in Palau, the Marshall Islands, French Polynesia, Niue and the Cook Islands. Australia is also promising to boost defense cooperation in the region.
Morrison says Australia must do more to help its Pacific neighbors.
'We have got their back, they have got our back,' he said. 'They have always had our back, we need to just further strengthen that friendship and relationship. It is our responsibility in this part of the world. I think we have a real duty of care to our Pacific family and friends.'
The prime minister's announcement in a speech to soldiers in Queensland state is seen by analysts as an attempt to counter Chinese influence in the South Pacific.
There are concerns that Beijing is piling up debt on developing nations in the South Pacific that they cannot service, making them politically obligated to Beijing. Australia stresses it will co-operate with other countries trying to boost development in the region, including China.
John Lee, a former senior advisor to the Australian government, says China's political and diplomatic activities in the South Pacific have increased sharply.
'We have been surprised by the extent to which the Chinese are making a play in the Pacific. We have always had a very strong aid and economic development program with the Pacific, but we did not view it as an area of contestation until quite recently.'
It comes as Australian Foreign Minister Marise Payne arrives in Beijing for talks with her Chinese counterpart. It's the first time in three years the nations' foreign ministers have met. Bilateral relations have suffered after allegations were raised in Australia about Chinese interference in domestic politics.
Canberra's pivot towards the South Pacific also come ahead of next week's Asia-Pacific Economic Cooperation summit in Papua New Guinea.
Chinese President Xi Jinping will attend and will convene his own separate meeting with Pacific leaders. Papua New Guinea, Australia's nearest neighbor, has been among the biggest recipients of Chinese-funded infrastructure and is a signatory to the controversial 'Belt and Road Initiative.'