In January, Beijing re-established formal diplomatic relations with Nauru, following the Pacific island nation’s shift in diplomatic recognition from Taiwan. Chinese President Xi Jinping (習近平) hosted Nauru’s president in Beijing, welcoming the nation into the Belt and Road Initiative and promising to expand bilateral trade and investment.
Such moves are part of China’s broader strategy to diplomatically isolate Taiwan while expanding its presence and influence across the Indo-Pacific region.
The US and China are locked in a strategic contest of diplomacy, economics and military buildup in this vital area.
The Indo-Pacific region includes South Asia, Southeast Asia, East Asia — which includes China, Japan, South Korea and Taiwan — Oceania and Pacific island nations, as well as the Pacific Rim, which includes the western coastlines of North and South America.
It is home to more than half of the world’s population, including 58 percent of the world’s young people, and accounts for 60 percent of global GDP and two-thirds of global economic growth.
Geographically, it encompasses 65 percent of the world’s oceans and 25 percent of its land.
It is also home to several of the world’s largest and most powerful militaries.
China’s Blue Dragon Strategy seeks to expand its influence across key bodies of water and land in the region, threatening regional security and freedom of navigation.
China has built and militarized artificial islands in the South China Sea, reinforcing territorial claims covering 90 percent of the area.
Taiwan and Sri Lanka are strategic anchors. Controlling Taiwan would give China dominion over the Taiwan Strait, a crucial route for 80 percent of the world’s largest container ships. Sri Lanka, which is in the Bay of Bengal, is ideal for naval bases, enhancing China’s influence in the Indian Ocean.
The Chinese People’s Liberation Army Navy conducts drills off Taiwan and near Sri Lanka, maintaining a dedicated fleet that can include two aircraft carriers.
The Blue Dragon Strategy targets Japan’s Senkaku Islands — known in Taiwan as the Diaoyutais (釣魚台) — and control of inland areas of rivers such as the Brahmaputra and the Mekong, giving China geopolitical leverage over downstream countries. This strategy heightens territorial disputes with India, particularly in Aksai Chin and Arunachal Pradesh.
Projects such as the Belt and Road Initiative and the China-Pakistan Economic Corridor dovetail with the Blue Dragon Strategy, leveraging China’s strengths to expand its influence.
More US military personnel are stationed in the Indo-Pacific region than anywhere else outside the US. China’s aggression, including economic pressure on Australia, border conflicts with India, threats toward Taiwan and intimidation in the East and South China seas, has put the US and China on a collision course.
In 2022, the US launched its Indo-Pacific Strategy to counter China. The same year, the Solomon Islands signed a security agreement with China, allowing Chinese naval vessels to dock and replenish at its ports, potentially leading to a Chinese military base in the region. This could extend China’s military reach in the South Pacific.
In response, the US increased its engagement with the Solomons and reopened its embassy in Honiara, which had been closed since 1993.
China also tried to convince the Federated States of Micronesia, Palau and the Marshall Islands to break their compacts of free association with the US. However, the US successfully negotiated to keep them aligned. The compacts provide the US with strategic military positioning in the Pacific, while offering financial assistance and other benefits to the other nations.
Two years into its Indo-Pacific policy, the US released an assessment. During this time, the US Department of State increased regional investment, and humanitarian and military aid. The US Navy upholds international maritime law as outlined in the 1982 UN Convention on the Law of the Sea and the US government publishes detailed studies on maritime claims in the “Limits in the Seas” series. The US and its allies condemned China’s repeated harassment of vessels exercising high-seas freedom of navigation and its refusal to comply with a 2016 arbitral award, which rejected China’s expansive claims to the South China Sea under the UN Convention on the Law of the Sea. The US supports the ruling, recognizing it as final and binding.
Last year, the US cohosted the Indo-Pacific Business Forum with Japan, launched the US-Taiwan Initiative on 21st-Century Trade to boost economic ties and reaffirmed its commitment to helping Taiwan defend itself against a Chinese invasion.
Additionally, the US signed defense cooperation agreements with Indonesia and Papua New Guinea, held US-Pacific Islands Summits in 2022 and last year, upgraded its relationship with ASEAN to a comprehensive strategic partnership and recognized the Cook Islands and Niue as sovereign nations, establishing diplomatic relations.
Last month, the US opened an embassy in Port Vila, Vanuatu, and plans to open one in Kiribati this year, where China recently signed an expanded fishing agreement.
The US also opened a new embassy in Nuku’alofa, Tonga, to strengthen diplomatic ties. Other achievements of the Indo-Pacific strategy include successfully hosting last year’s APEC Ministerial Meeting in San Francisco and advancing the Indo-Pacific Economic Framework.
The US has also strengthened ties and defense agreements with regional allies. In June 2022, Australia, Japan, New Zealand, the UK and the US established the Partners in the Blue Pacific to support Pacific priorities. Through this initiative, the US has facilitated cooperation between Europe and the Pacific, including NATO and the G7. Canada, Germany, and South Korea have joined as partners, and the EU has joined as an observer.
The US and the Philippines established bilateral defense guidelines, reaffirming and strengthening the 1951 Mutual Defense Treaty. The US also established trilateral cooperation with Japan and the Philippines in defense and security to maintain a free and open maritime order.
Trilateral military talks were held between the US, Japan and South Korea. Already bound by a mutual defense agreement, the US and Japan are now establishing a military command in Japan to oversee stationed forces and coordinate more closely with regional allies to better counter China.
Cooperation with Quad partners Australia, India and Japan continues, focusing on investment and maritime security. Bilateral relationships with Vietnam and Indonesia have been upgraded to comprehensive strategic partnerships. Additionally, there have been high-level visits and increased cooperation with India, along with greater participation in the Indian Ocean Rim Association.
Overall, the competing Indo-Pacific strategies of China and the US are reshaping the region’s geopolitical landscape. China aims to increase its control, while the US focuses on maintaining a free and open region, striving to avoid triggering a conflict with China.
Antonio Graceffo, a China economic analyst who holds a China MBA from Shanghai Jiaotong University, studies national defense at the American Military University in West Virginia.
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