Secret US embassy cables leaked to WikiLeaks and provided to The Age show Foreign Minister Kevin Rudd privately views China's growing economic and diplomatic activity as a direct challenge to Australia's south Pacific interests.

But Australian diplomats have also worked to wind back Taiwanese activity and have supported Chinese efforts to eradicate Taipei's remaining diplomatic toeholds in the region.

Early in the life of the Labor government, the US embassy in Canberra reported that ''[Prime Minister] Rudd is especially concerned with Chinese influence in the Pacific and sees Australian leverage ebbing thanks to massive Chinese aid flows''.

Australian concerns about China's Pacific ambitions are shared by US diplomats, with US embassies in Fiji and Port Moresby reporting regularly on the "international diplomatic chess match" being played by China and Taiwan.

While a ''fervent intention to isolate Taiwan diplomatically looms large'', US diplomats see China pursuing a broad south Pacific strategy that includes ''the search for natural resources, including fish … desires to gain influence over Pacific-island votes in international fora and, more generally, to demonstrate big-power status in the region''.

Former Chinese premier Wen Jiabao's attendance at a China-Pacific economic development forum in Fiji in April 2006 was seen as a watershed, signalling "a strong intent by China to strengthen its political influence in the region".

At the same time, US and Australian diplomats have also been concerned about the role of Taiwan's ''dollar diplomacy'' in fuelling corruption and instability in south Pacific countries. Taiwanese representatives admitted they were ''under increasing pressure … to keep pace with China's escalating involvement''.

US embassy cables record numerous Taiwanese efforts to ''buy support'' from the small group of Pacific countries that still maintain diplomatic relations with Taipei. Australia and the US have worked to wind back Taiwanese activity.

In April 2006, US diplomats reported that ''Canberra demarched the Taiwan representative in Australia, pressing Taiwan to stop engaging in destabilising activities in the Solomon Islands. Taiwan's initial response was a firm denial of any impropriety. Subsequently, the Taiwan representative clarified to Australia that funds legitimately provided by Taiwan to the government of the Solomon Islands may possibly have been misused.'' Australia also protested against a proposal for Taiwan to provide police training for the Solomon Islands.

Australia and the US also urged Taipei to decline a request by Fiji's military regime for arms and military equipment following Frank Bainimarama's 2006 coup.

A US embassy cable records that in early 2007 the Taiwanese trade mission in Fiji was approached with requests for arms and military equipment together with continuation of a $1 million a year Taiwanese "slush fund" provided to the Fijian prime minister's office.

Washington and Canberra successfully lobbied Taipei to reject the proposed weapons shipment.