In the gritty, steamy streets of Papua New Guinea\u2019s capital Port Moresby, signs of China\u2019s push into the Pacific island nation are inescapable. A Chinese worker stencils a logo for China Railway Group outside the new national courthouse it\u2019s building; China Harbor Engineering Group laborers tar roads under the searing midday sun. \u201cLittle by little they are taking slices of our businesses,\u201d said Martyn Namorong, who campaigns to protect local jobs and communities as China ramps up infrastructure spending in the resource-rich nation, often bringing its own workforce. \u201cMy people feel we can\u2019t compete.\u201d The nation of 8 million people is the latest frontier in Beijing\u2019s bid for global influence that\u2019s included building artificial reefs in the South China Sea, a military base in Africa and an ambitious trade-and-infrastructure plan spanning three continents. China\u2019s thrust into the Pacific islands region, a collection of more than a dozen tiny nations including Fiji, Niue and Timor Leste scattered across thousands of miles of ocean, has the U.S. and its close ally Australia worried. The region played a key role in World War II and remains strategically important as Western powers seek to maintain open sea lines and stability. For Beijing, it offers raw materials, from gas to timber, and a clutch of countries who could voice support for its territorial claims. \u201cWe\u2019ve seen a huge surge in China\u2019s state-directed economic investment and mobilization of an enormous amount of capital in the Pacific which clearly has a strategic intent,\u201d said Eric B. Brown, a senior fellow in Asian affairs at Washington-based think tank the Hudson Institute. \u201cThe sovereignty of these nations could be compromised by these predatory economic methods. And that could create a military threat to countries such as Australia and effect the ability of the U.S. Navy and its allies to maintain freedom and order in the Pacific.\u201d Debt Trap China\u2019s lending practices related to the Belt and Road Initiative have raised concerns among the International Monetary Fund and the Trump administration that poorer countries wouldn\u2019t be able to repay heavy debts. Sri Lanka is considered an example of what could go wrong for developing nations: China received a 99-year lease for a strategic port after the government in Colombo couldn\u2019t repay loans. Indeed China has overtaken Japan as Papua New Guinea\u2019s largest bilateral creditor and by the end of the year PNG will owe it about $1.9 billion in concessional loans \u2014 almost a quarter of its total debt burden. Standard & Poor\u2019s in April lowered the nation\u2019s sovereign credit rating to B from B+, citing rising costs of servicing debt that\u2019s climbed above 30 percent of gross domestic product and is expected to reach about 40 percent by 2021. The IMF warns that other recipients of Chinese money in the region \u2014 tiny nations such as Samoa, Tonga and Vanuatu \u2014 have moderate to high risks of debt distress. While the largess flowing into the Pacific from Beijing is a fraction of the $350 billion of Chinese aid distributed globally since 2000, it\u2019s still big money for the nations, most with populations under 1 million. In April, the French Polynesian government approved construction of a $320 million Chinese fish farm. Military Presence Hugh White, a professor of strategic studies at the Australian National University in Canberra, says \u201cthere\u2019s no doubt\u201d China could seek to establish a military presence in the Pacific in the future, cashing in its influence with \u201cone of these small, vulnerable states.\u201d \u201cIt intends to become the primary power in east Asia and the western Pacific,\u201d White said. Governments in the region have sought to strike a balance between accepting China\u2019s cash and resisting moves that would raise concern among Western military powers. Vanuatu in April denied media reports that China had approached it to build a permanent military base in one of its harbors. The office of PNG\u2019s Prime Minister Peter O\u2019Neill, who\u2019s due to meet President Xi Jinping in China later this week, didn\u2019t reply to repeated requests for comment. When O\u2019Neill visited Beijing in 2016, he pledged support for China\u2019s military build up in the South China Sea. In December, a month after China promised to construct $3.5 billion of roads, O\u2019Neill said PNG will continue to be a \u201cstaunch partner.\u201d Beijing\u2019s push into the Pacific islands risks further straining ties with key trading partner Australia \u2014 which views the region as its own diplomatic backyard and has been increasingly critical of China\u2019s economic and military muscle-flexing. During a visit to the region this month, Foreign Minister Julie Bishop said \u201cwe want to continue to be the partner of choice for nations in the Pacific.\u201d Her government on June 13 signed an agreement to build a new undersea telecommunications cable to the Solomon Islands, squeezing out a bid by China\u2019s Huawei Technologies Ltd. Papua New Guinea has traditionally looked to Australia \u2014 from which it won independence in 1975 \u2014 for a helping hand. Outside of the capital, the nation\u2019s woeful roads network has helped push prices of food staples beyond what many can afford. It\u2019s also struggling with an illiteracy rate of 35 percent, poor tax collection and endemic corruption. Australia is still its largest donor, contributing more than three-quarters of total aid and loans compared to China\u2019s 14 percent. Yet the majority is directed to improving corporate governance, while Beijing has focused on infrastructure and major works. \u2018Red Carpet\u2019 Nursing a cool drink at a sports club in Port Moresby, British-born business adviser Paul Barker said China was stepping into a vacuum left by the west. \u201cThe government in Beijing has rolled out the red carpet and our leaders seem to be a bit intoxicated by the experience,\u201d said Barker, who\u2019s lived in his adopted nation for more than four decades. Australia\u2019s assistant trade minister Mark Coulton acknowledged the merits of China\u2019s investment as he sat in one of Port Moresby\u2019s few five-star hotels near the Beijing-gifted convention center where APEC leaders will meet in November. \u201cYou can\u2019t deny your neighbor if someone is looking to build something they really need,\u201d he said. \u201cOur role is to give the PNG government and people the ability\u201d to \u201chandle influxes of foreign aid like those that are now occurring.\u201d China\u2019s foreign ministry, which didn\u2019t respond to a request for comment, in April said Pacific island nations weren\u2019t in the \u201csphere of influence of any country\u201d and called on Australia not to interfere. Wang Dong, an international relations professor at Peking University, dismissed concerns that large concessional loans leave nations vulnerable to \u201cdebt-trap diplomacy\u201d and said China\u2019s expanded role in the Pacific is a natural consequence of its growing economic clout. \u201cIt\u2019s scaremongering to think this will lead to any military design or ambition in the Pacific,\u201d Wang said in a phone interview from Beijing. \u201cWe will see China increase its presence there and it will keep helping these countries build their infrastructure.\u201d China is in the region to stay, said Jonathan Pryke of the Lowy Institute, a Sydney-based think tank. \u201cChina has entered the Pacific in a significant way,\u201d said Pryke. \u201cIt\u2019s upended the status quo and caused anxiety, because no-one knows what its end-game is."