Ministers' meeting signals thaw in China-Australia ties

French President Emmanuel Macron former Australian Prime Minister Malcolm Turnbull and Foreign Minister Julie Bishop on the deck of HMAS Waller

Australian Prime Minister Scott Morrison is expected to announce a $US1.5 billion fund to provide loans to Pacific nations today, in a speech putting forward the Government's new foreign policy strategy in the Pacific.

Addressing Australia's $1.5 billion infrastructure fund to support Pacific islands - seen by some as a counter to Beijing's rising regional influence - Wang said the two countries were "not competitors" but partners, and said they could combine forces to develop trilateral relations with Pacific islands.

A further $1 billion will go to Efic, Australia's export financing agency, to support Australian businesses active in the Pacific.

Australian will also put diplomats in all 18 countries in the Pacific Islands Forum, with new embassies planned in Palau, Marshall Islands, French Polynesia, Nui and Cook Islands.

The U.S. charge d'affaires to Australia, James Carouso, said the three Pacific defense allies were negotiating with the impoverished South Pacific island nation of 8 million people, mostly subsistence farmers, on its internet contract.

Payne visited Beijing for the Fifth Australia-China Foreign and Strategic Dialogue.

"Australia has an abiding interest in the South-west Pacific that is secure strategically, stable economically and sovereign politically", he said.

China has spent US$1.3 billion (RM5.4 billion) on concessional loans and gifts since 2011 to become the Pacific's second-largest donor after Australia, stoking concern in the West that several tiny nations could end up overburdened and in debt to Beijing. "I think, sadly, too often we have", Morrison said.

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Australia's announcement comes ahead of Chinese President Xi Jinping's visit to Papua New Guinea next week for the Asia-Pacific Economic Cooperation summit.

But amid a growing trade spat between the USA and China, Payne's visit was an opportunity for Canberra to leverage its economic relationship.

China and Australia agreed on Thursday to launch another round of tariff cuts in 2019, essentially ending trade restrictions between the two countries.

"Instead, China welcomes more quality goods from Australia entering the Chinese market", he said.

But Save the Children director Mat Tinkler says Australia's aid budget needs to be higher to make a real difference.

It is rare for foreign officials to publicly chastise China over its human rights record during a visit to the country.

Payne said the government judged that the acquisition would have resulted in "an undue concentration of foreign ownership by a single company group in what is our most significant gas transmission business".

Mr Wang signalled that Beijing was committed to continuing the recent thaw in relations. "We are confident Australia will translate its positive will of growing relations with China into actual actions".

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