What Happened: A Chinese state-owned technology company reportedly signed an agreement with the Solomon Islands government on Sept. 22 to lease the entire island of Tulagi, one day after both countries established diplomatic ties, AFP reported Oct. 17. According to the report, the deal includes constructing a refinery and developing a special economic zone on the island.
Why It Matters: The decision by the Solomon Islands to switch diplomatic relations from Taipei to Beijing is allowing China to expand its presence in the region through financial aid and infrastructure investments. The decision raised suspicion from Australia that the lease could allow Beijing to use the island for dual-use applications, which could pave the way for a Chinese naval presence in the area.
Background: The Solomon Islands broke off its diplomatic ties with Taiwan in favor of mainland China in late September, prompting Beijing to commit to financial support and infrastructure projects for the island nation.