China’s ‘great friendship’ with Micronesia grows warmer, leaving US with strategic headache in Pacific

In China earlier this month, David Panuelo, the president of the Federated States of Micronesia, climbed the Badaling section of the Great Wall. And, according to Huang Zheng, Beijing’s ambassador to the Pacific nation, the countries’ “great friendship rose to even greater heights” during Panuelo’s visit.

Chinese investment in Micronesia reached similarly lofty levels in conjunction with Panuelo’s trip, which marked three decades of diplomatic ties and included meetings with President Xi Jinping and Premier Li Keqiang. Beijing has committed US$72 million in economic development deals, almost as much as its total investment of the previous three decades.

Micronesia is one of three Pacific nations with agreements with Washington, known as the Compact of Free Association (COFA), which allows their citizens to live and work in the US. In exchange, Micronesia, neighbouring Palau and the Marshall Islands grant the US exclusive military and defence access to their territorial waters – more than 2 million square miles of the Pacific that have been an essential element of Washington’s power projection in the region since World War II.

However, analysts warn Micronesia’s “great friendship” and tighter economic ties with Beijing could undermine this long-standing defence relationship with the US.