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According to ABC News, Australia has supplanted China as the dominant lender and infrastructure investor across the Pacific, as the federal government directs billions of dollars to the region through foreign aid and loans. The latest Lowy Institute Pacific Aid Map found Australia also remained the region’s largest aid donor, providing around 37 per cent of all development spending in 2024.
Australia’s share put it ahead of New Zealand, which accounted for 11 per cent of development spending, followed by the United States at 8 per cent, China at 6 per cent and Japan at 3 per cent. The Asian Development Bank and World Bank remained significant lenders, contributing 11 per cent and 10 per cent of overall development spending respectively.
Lowy Institute Pacific Aid Map lead author Riley Duke described the change as a “striking” shift as Chinese lending to Pacific countries continued to decline. He said China had historically built relationships and influence through large infrastructure loan deals, making Australia’s emergence in the lending space significant. Australia has signed new loan agreements worth an estimated $US2.4 billion ($3.44 billion) since 2021, the institute said.
Much of the new funding has gone through the Australian Infrastructure Financing Facility for the Pacific, established in 2019. It has committed more than a billion dollars in loans and more than $850 million in grants. Duke said it was too early to assess the success of Australia’s infrastructure push because many projects remained in the pipeline. He said outcomes would depend on delivering projects on time and on budget, while supporting economic activity without creating unsustainable debt.
China remains visible in Pacific infrastructure despite its reduced lending. Duke said Chinese state-owned firms had won more than half of infrastructure contracts by volume awarded by the Asian Development Bank and World Bank over the past decade. China was also increasing grant funding for smaller projects, including health clinics, roads and schools.
