While the funding is intended to support post-earthquake reconstruction, it may also serve to distance Vanuatu from a delayed defence agreement with Australia.
Vanuatu had been in discussions with Australia over the so-called Nakamal agreement, a proposed $500 million security pact that would have limited Chinese access to critical infrastructure. However, the agreement did not proceed during the Australian Prime Minister’s visit in September, after Vanuatu raised concerns about its economic ties with China. This setback left Australia’s regional diplomacy efforts in a fragile position.
The grant from China is its largest ever donation to Vanuatu. It will fund upgrades to core government buildings including the prime minister’s office, foreign ministry, parliament building, a stadium and a school. This highly visible aid highlights China’s intent to meet Vanuatu’s recovery needs while bolstering its standing as the country’s most dependable development partner. The timing of the aid coincides with continued delays in the Nakamal pact negotiations.
This move also appears to be part of China’s efforts to repair its image after the earthquake in December 2024 damaged several newly built, Chinese-funded projects. These failures raised concerns about construction quality and may have eroded confidence in China's role as a long-term development partner. By committing to improve those same buildings, China seems to be reframing the situation as an opportunity to solidify its influence.
More broadly, the development reflects an ongoing competition between Australia and China for strategic influence in the Pacific. Australia has already secured defence agreements with Papua New Guinea, Fiji, Tuvalu and Nauru. Vanuatu, however, remains crucial due to its location, prompting Canberra and Beijing to intensify their efforts to gain favour with the island nation.
