Pacific Islands Turn US-China Rivalry Into Climate Cash as Superpowers Battle for Influence

The Islands Everyone Suddenly Wants

Caught Between Two Superpowers

Pacific island nations are trying to turn one of the world’s fiercest geopolitical rivalries into something far more useful: money for survival. As the United States, China and their allies compete for influence across the Pacific, island leaders are increasingly pressing the major powers to prove their commitment not through speeches or military posturing, but through funding for climate resilience.

That strategy has moved into sharp focus at the Pacific Islands Forum leaders meeting in Palau, where climate finance is competing for attention with arguments over China, Taiwan, missile tests and regional security. For governments facing rising seas, destructive storms, damaged fisheries and expensive infrastructure adaptation, the message is becoming difficult to miss: if powerful countries value influence in the Pacific, the region wants them to invest in the problems Pacific communities consider existential.

Pacific Leaders Want Competition to Deliver Real Money

The calculation is both pragmatic and increasingly sophisticated. Pacific governments have spent years warning that climate change is the single greatest threat to the region, while simultaneously watching the Pacific become more strategically valuable to Washington and Beijing.

That gives some of the world’s smallest states unusual geopolitical leverage. Rather than accepting a simple choice between competing blocs, Pacific governments can push both sides for infrastructure, energy security, development funding and climate investment while insisting that regional priorities remain at the centre of negotiations.

The Pacific Islands Forum itself has described climate change as the region’s greatest security threat and has repeatedly called for substantially greater access to climate finance. Its position is that funding must not merely exist on paper; it must be accessible to the small states and communities that struggle with the bureaucracy, technical requirements and long delays attached to many international climate-finance programmes.

A $500 Million Pacific Fund Is at the Centre of the Push

At the heart of the strategy is the Pacific Resilience Facility, or PRF, a Pacific-led and Pacific-owned financing institution designed to move resilience money more directly towards communities.

Forum leaders established the facility because existing international funding systems can be fragmented, slow and difficult for small island states to navigate. The PRF is intended to provide grants for climate adaptation, disaster preparedness, nature-based projects and wider community resilience without forcing vulnerable countries to take on more debt.

Its initial capitalisation target is $500 million. Around $173 million has now been pledged, leaving approximately $327 million still to be raised, while the longer-term ambition is much larger. Pacific officials are seeking to collect existing pledges while using the intense international attention surrounding the region and COP31 to close the remaining gap.

The timing matters. The facility has moved from an idea into an operational institution, giving Pacific leaders something concrete to put in front of governments, development banks and wealthy donors. Instead of asking broadly for more climate finance, they can now ask foreign powers to capitalise a mechanism designed and governed by the Pacific itself.

China and America Already Have Money on the Table

The geopolitical argument is not theoretical. China and the United States have both previously been identified among countries contributing to the Pacific Resilience Facility, alongside partners including Britain, New Zealand, Saudi Arabia and Nauru.

Washington is also visibly rebuilding its wider financial presence across the Pacific. The United States and Australia announced a combined $580 million package of new support for Pacific island countries this week, part of a broader attempt to deepen economic and security relationships as Chinese influence expands.

Separately, the United States and New Zealand are financing a major port upgrade in the Cook Islands, with Washington committing $50 million and Wellington NZ$17.5 million. The project comes after China and the Cook Islands signed a strategic partnership in 2025, demonstrating how quickly major infrastructure decisions in the region have become entangled with wider strategic competition.

Not all of this money is climate finance, and Pacific governments are unlikely to treat military, policing or strategic infrastructure spending as a substitute for adaptation. But it demonstrates the wider point: geopolitical competition can unlock resources with a speed and scale that conventional climate diplomacy has often struggled to reproduce.

The Pacific Does Not Want to Become a Chessboard

There is an obvious risk in the strategy. Greater attention from competing powers can bring money, but it can also turn small states into arenas for strategic confrontation.

The current Palau summit has already been shaped by disputes involving China, Taiwan and regional military activity. Palau's government has criticised a recent Chinese ballistic missile test in the Pacific, while Beijing has accused Palau of exaggerating the incident. Taiwan's participation in regional events has generated another confrontation with China.

Those disputes underline why Pacific leaders have repeatedly argued that outside powers should listen to Pacific priorities rather than treating the islands as pieces in a contest between Washington and Beijing.

For many governments in the region, climate resilience, economic security, fisheries, energy prices and disaster preparation matter at least as much as the strategic concerns dominating foreign capitals. The challenge is therefore to use outside competition without allowing outside competition to define the Pacific's agenda.

Climate Finance Has Failed to Match the Scale of the Threat

The frustration behind that position is backed by the state of climate financing across the region.

A July 2026 assessment found that although climate-finance flows into the Pacific have increased, funding remains fragmented, short-term and poorly matched to the interconnected resilience needs of island states.

Pacific officials have also warned that obtaining international climate money can itself become an administrative burden. Small governments may lack the specialist staff, institutions or technical capacity required to prepare complex funding applications, satisfy donor requirements and then manage multiple projects simultaneously.

The result is a strange contradiction. Countries facing some of the clearest physical consequences of global warming can find themselves least equipped to navigate the financial architecture supposedly designed to help them.

That is one reason the Pacific Resilience Facility matters politically as well as financially. A successful Pacific-controlled institution would give island governments more control over where money goes, how quickly it arrives and what counts as a legitimate resilience priority.

Rising Seas Make the Argument Harder to Ignore

The climate threat itself is moving faster than the diplomacy.

Pacific communities are already dealing with coastal flooding, saltwater intrusion, storm damage, marine heat and pressure on ecosystems and fisheries. At the same time, international climate assessments continue to warn that the world is approaching or likely to temporarily exceed the Paris Agreement's 1.5C warming threshold.

For Pacific states, 1.5C is not an abstract negotiating slogan. Regional leaders have repeatedly connected the target directly to the physical survival, security and economic future of island communities.

That gives their geopolitical argument its edge. Washington and Beijing may see ports, shipping routes, military access, diplomatic recognition, seabed resources and strategic positioning. Pacific governments can reasonably respond that the territory everyone wants influence over first has to remain habitable and economically viable.

COP31 Could Become the Next Funding Battleground

The pressure is likely to intensify as the region approaches COP31.

Pacific governments want the conference to become a major moment for securing more practical climate commitments, including support for the PRF. The facility's initial $500 million target remains unfinished, meaning the months ahead will test whether the extraordinary strategic attention directed towards the Pacific can actually be converted into durable climate investment.

There is also a deeper opportunity. If Pacific leaders succeed, they could establish a model in which small states stop being passive objects of great-power competition and begin setting a price for access, influence and partnership.

That does not mean simply auctioning allegiance to the highest bidder. It means reminding Washington, Beijing and every other capital competing for Pacific relationships that credibility will increasingly be judged by whether their engagement solves the problems island governments themselves consider most urgent.

The great powers want influence. The Pacific needs resilience. The political test now is whether island nations can force those two interests to meet — and turn one of the world's biggest strategic rivalries into concrete protection for communities living on the climate front line.