The Pacific Power Play: How PNG Balances Relations with China and the West
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Posted On June 12, 2025
Papua New Guinea has become a central battleground in a quiet but intense power struggle between China and a Western alliance led by the United States and Australia.
As global attention shifts to the Indo-Pacific, PNG’s critical location near major sea lanes and its wealth of natural resources have placed it at the heart of this high-stakes rivalry, making it a pivotal player in the region’s future.
This escalating strategic competition has transformed the region, with major powers vying for diplomatic advantage, access to resources, and control over critical infrastructure like deep-water ports and undersea communications cables. For Papua New Guinea, the largest and one of the most influential Pacific Island nations, this new reality presents both immense opportunities and significant challenges. A new issues paper from PNG’s National Research Institute (NRI) titled “Strategic Importance of Papua New Guinea in the Pacific Region” explores this evolving role, detailing the delicate balancing act the country must perform.
The paper’s author, Clara Bal, a Senior Research Officer with the National Security and International Relations Research Program at the NRI, outlines the core challenge facing the nation’s leaders.
“Papua New Guinea is navigating an incredibly complex diplomatic landscape,” Ms. Bal states. “The core challenge is to leverage the opportunities presented by major powers like China for economic development, while simultaneously reinforcing the long-standing security partnerships we have with traditional allies like Australia and the United States. It requires a consistent and carefully managed foreign policy of being ‘friends to all, enemies to none’.”
China’s engagement in PNG has been extensive, focusing on economic and infrastructure initiatives through its Belt and Road Initiative (BRI). Beijing has become a major trading partner, particularly for commodities like timber and fish, and has invested heavily in projects including ports, roads, and government buildings. This has been coupled with a growing security presence across the Pacific, raising concerns among Western nations about regional stability and potential debt dependency for island nations.
In response, the United States and Australia have ramped up their own engagement to counterbalance Beijing’s influence. This includes strengthening alliances like the Quadrilateral Security Dialogue (Quad), signing new bilateral defence and security agreements with Port Moresby in 2023, and investing in unique forms of soft power. In a notable example of “rugby diplomacy,” Australia has committed A$600 million over ten years to support a PNG-based team’s entry into the National Rugby League, a move tied to a broader agreement ensuring Australia remains PNG’s primary security partner.
While this rivalry allows Pacific nations to leverage their strategic importance to secure greater aid and investment, Ms. Bal warns that the competition itself carries inherent dangers for governance.
“While the increased attention from global powers positions PNG as a ‘diplomatic price-setter,’ allowing it to negotiate greater development benefits, this situation is not without significant risks,” explains Ms. Bal. “There is a real danger that this intensifying geopolitical struggle could lead local political actors to prioritise personal or narrow political gains over the broader national interest, potentially undermining good governance and transparency at a time when we need it most.”
These external pressures are compounded by significant internal challenges. PNG remains highly vulnerable to climate change and natural disasters, as highlighted by the catastrophic landslide in Enga Province in 2024, and faces an urgent need to diversify its economy beyond the extractive sector. According to the NRI paper, the path to resilience lies in strengthening the nation from within.
“Ultimately, to secure its future, PNG must look inward,” Ms. Bal concludes. “This means strengthening our own institutions, diversifying our economy away from a reliance on extractive industries, and championing our role as a leader in environmental stewardship. Attracting responsible investment hinges on our ability to address corruption and improve transparency, which in turn ensures the benefits of economic growth are distributed fairly among our people.”
As the great powers continue their contest for influence across the Pacific, PNG’s ability to skilfully manage its diplomacy while addressing domestic priorities will be vital in securing its own interests and shaping the stability of the entire region.
