Australia is finding itself ever more isolated in efforts to counter Beijing’s growing sway across the Pacific islands, according to the latest aid-monitoring report by the Lowy Institute. The 2025 Lowy Institute Pacific Aid Map reveals the region’s official development finance (ODF) has fallen by 16 per cent in 2023 to US$3.6 billion, marking a second consecutive year of decline.
Despite the drop in overall development funding, Australia now accounts for an outsized share of the region’s ODF – about 43 per cent – making it the dominant donor in the Pacific, and four times more generous than its neighbour New Zealand. Report authors argue Australia’s “steady” aid spending and an expansion of infrastructure lending will insulate Pacific nations from the effects of cuts from other major partners but that this leaves Canberra bearing an ever-greater burden.
The United States in particular, the report finds, has reduced its presence in the region, notably through deep cuts to its aid agency United States Agency for International Development (USAID) under the Donald Trump administration. Although analysts say the value of the funding cuts may have been overstated, their effect on U.S. credibility and reliability as a development partner has been significant. “In the Pacific, the real cost of US aid cuts won’t be measured in lost dollars, but in lost trust,” says lead map author Alexandre Dayant.
As U.S. engagement declines, China is stepping in; albeit the Lowy Map notes the nature of China’s support has shifted. Beijing has moved away from large, high-visibility infrastructure loans and instead now offers smaller grants and grassroots community-level projects. While China’s overall spending in the Pacific may be lower than a decade ago, its aid is “far deeper into Pacific communities” and therefore carries strategic weight.
According to the report, Australia now finds itself “increasingly alone in countering Chinese influence” in the Pacific. The lead author, Riley Duke, states that by 2028 Australia is projected to deliver “more than double the combined support of Japan, New Zealand, the United States, France, Germany, and the United Kingdom”.
The report further highlights that Australia is collaborating with various Pacific island states — among them Papua New Guinea, Tonga, and Fiji — as well as partners such as New Zealand and France on natural-disaster response and other resilience-building efforts. Yet this cooperation, the authors warn, may not be enough given the wider geopolitical dynamics.
For Canberra, the key challenge is not purely the level of development financing, but maintaining influence and partnership relevance at a time when China is promoting itself as a consistent, non-interventionist alternative in the Pacific. “While Washington steps back, Beijing is winning something far more strategic: narrative dominance,” says Dayant.
