SYDNEY -- Weeks after breaking off diplomatic ties with Taiwan, the Solomon Islands has signed a deal with a Chinese company to develop the island of Tulagi.
The Solomon Islands' Central Province has tapped Beijing-based China Sam Enterprise Group to advance Tulagi's "investment, trade, infrastructure, agriculture, fishery, communication, tourism and other fields," the company said Thursday.
But there looks to be more to the deal.
Australian Financial Review reports that China Sam is trying to lease the island and its surroundings for up to 75 years. With the Solomon Islands located near a strategic waterway, the diplomatic coup of wrestling away the South Pacific islands now looks part of a broader game plan.
China Sam, which on its website vows to "always adhere to the leadership of the Chinese Communist Party," is a conglomerate that deals in chemicals, investments and trading. A news item on the site dated Thursday said the group "successfully signed a strategic cooperation agreement with the government of Solomon Islands."
Covering an area of 2.08 sq km, Tulagi has been prized for its deepwater harbor. The island, located north of Guadalcanal, was a South Pacific headquarters for Great Britain, then briefly occupied by Japan, during World War II.
The agreement "has sparked fresh alarm that it could pave the way for Beijing to establish a Pacific military base on a strategic gateway to Australia," the Financial Review wrote.
The moves have put the Australian government on edge. While acknowledging that investments in the Solomon Islands are a matter for the Solomon Islands government, a spokesperson for the Department of Foreign Affairs and Trade said the Australian government views "the establishment of any foreign military bases in Pacific island countries with great concern."
Without specifically mentioning China, the spokesperson said: "All parties investing in the Pacific should act transparently, uphold international standards and meet the genuine need of citizens of the Pacific."
The Tulagi investment comes after reports last year that China is considering installing military equipment at a large-scale port it is building in Vanuatu, another South Pacific island nation.
Around the time the Solomon Islands decided to switch diplomatic ties to China, Taiwanese officials warned that Beijing is looking to build a military base.
Both the Solomon Islands and Vanuatu occupy sea lanes connecting the U.S. and Australia. If China builds ports and airports on those islands capable of military use, China could be able to monitor the activities of both the U.S. and Australian militaries.
Peter Jennings, director at the Australian Strategic Policy Institute, sees potential for military engagement if Tulagi is leased by the Chinese. "It would be wrong to treat this as purely a commercial development," he said.
The U.S., Australia and Japan have pushed back by stepping up support and other involvement in South Pacific countries under the banner of a "free and open Indo-Pacific."
However, Kiribati also cut off diplomatic ties with Taiwan. The only South Pacific counties left that stand with Taiwan are Tuvalu, Palau, the Marshall Islands and Nauru.
The populations and economic scales of all four island nations are minimal. Tuvalu and the Marshall Islands both have to contend with the risk of rising sea levels eating away land mass.
China is all but certain use those factors to its advantage when it dangles expanded trade, as well as support for levees and other infrastructure, in a quest to pressure other nations to cut ties with Taiwan.
Tulagi is home to less than 2,000 people, which suggests that strategic goals are what is pushing a Chinese enterprise to expand to the island. China already exerts a hold in the South China Sea, Jennings said.
Beijing "is now working with the Southeast Asian countries and Pacific countries as hard as it can to split those countries off from the United States," Jennings added.