Australian Prime Minister Scott Morrison on Thursday (Nov 8) announced a A$3 billion (S$2.99 billion) package to boost ties with Pacific island nations amid growing concerns about China's growing influence in the region.
Australia and China have been vying for influence in the sparsely populated Pacific which controls vast swathes of resource-rich oceans.
"While we have natural advantages in terms of history, proximity and shared values, Australia can not take its influence in the South-west Pacific for granted", he said.
Australian media reports Mr Morrison will today put forward the fund, which will invest in infrastructure like telecommunications, energy, transport and water.
Australia will also strengthen its links with police forces in the Pacific.More news: German Bundesliga report Borussia Dortmund v Bayern Munich 10 November 2018
For her part, Payne said that a prosperous China bears positive significance to the rest of the world, and Australia does not regard China as a military threat.
He will ask Parliament for an extra $1 billion in callable capital to Australia's export financing agency for investments in the region that have a "broad national benefit" for Australia.
According to an analysis by the Lowy Institute, China committed about US$1.8 billion (S$2.5 billion) in aid to South Pacific islands between 2006 and 2016, much less than Australia's provision of US$7.7 billion.
While China is Australia's largest trading partner, ties between the two governments have been strained in recent years over allegations Beijing was interfering in domestic politics and using donations to gain access.
Payne visited Beijing for the Fifth Australia-China Foreign and Strategic Dialogue.More news: Midterm elections results EXPLAINED: What the midterms mean for Trump
Mr Morrison's announcement on Thursday came days after a similar scheme was proposed by Australia's opposition leader Bill Shorten, who said if elected, he would set up a bank to support loans to Pacific island nations.
"This announcement will be a gauge of whether Australia can improve relations with Beijing while doing things that would have previously annoyed China", said Nick Bisley, professor of global relations at Melbourne's La Trobe University.
Ties between the two countries have been strained since Australia accused China of meddling in its domestic affairs late a year ago.
Speaking after a meeting in Beijing with Chinese Foreign Minister Wang Yi that marked a thaw in recently chilly relations, Payne stressed "the importance of Australia's welcoming of Chinese investment in Australia".
Earlier this month, Australia said it would help PNG develop a naval base, beating out China as a possible partner for the port development.More news: WWI: Macron and May pay tribute at Somme
In May, Australia said it would spend about $US145 million to develop an undersea internet cables to Papua New Guinea and Solomon Islands amid national security concerns about China's Huawei Technologies Co Ltd.