Palau's Strategic Crossroads: Navigating Tensions Between China and the US

Mon Nov 24 2025 04:05:30 GMT+0200 (Eastern European Standard Time)

In the heart of the Pacific, Palau finds itself at a critical junction, grappling with the influence of China, the military presence of the US, and its steadfast ties to Taiwan. This small nation faces unique challenges in the ongoing geopolitical struggle.

Palau, a small Pacific nation with under 20,000 residents, is experiencing the repercussions of a complex geopolitical rivalry. With increasing Chinese investments and the US ramping up military installations, including a new radar system, Palau's relationship with Taiwan remains crucial. The island nation faces pressures on its sovereignty, balancing its past as a US territory and its current diplomatic ties. Local communities express concerns over the economic and environmental impacts of outsourcing relationships, as political strategies unfold in the backdrop of their daily lives.

The air above Palau's pristine waters smells of salt and breadfruit, and on calm mornings in Koror, Palau's commercial centre, the whirr of dive boat engines echoes across the bay.

A few years ago, those boats were filled with tourists – many from China – drawn to Palau's lagoons and limestone caves. Hotels were full, restaurants bustling, and fishermen could barely keep up with demand. But that is no more.

The boom – and the abrupt collapse – was no accident. Between 2015 and 2017, Chinese tourists made up around half of its visitors. Then, in 2017, Beijing reportedly ordered tour operators to stop selling packages to Palau, slashing the main source of tourism to the islands at the time.

Palau is one of only a dozen nations that still recognise Taiwan as a sovereign state, challenging a key component of China's foreign policy. The island's location makes it a desirable target for influence from global powers, especially as the US enhances its military presence, including upgrades at Malakal Harbour.

Palau's president, Surangel Whipps Jr., asserts that the nation will remain central to military activities due to its strategic location. With both the US and Taiwan expressing concern over Chinese influence, Palau’s identity and future are at a crossroads.

As tensions rise, local residents worry that their remote paradise may become a pawn in a larger geopolitical chess game, where their daily lives and sovereignty are at stake.