Is Rudd ceding Australian influence in the South Pacific to China

The Pacific Islands can be divided into four spheres of influence: American,
Australian, New Zealander, and French....Australia’s
regional interests focus on the islands south of the equator, including the relatively large Melanesian nations of Papua New Guinea (PNG) and the Solomon Islands as well as Vanuatu....The U.S. government has both tacitly and openly supported Australia’s growing leadership role in the region.

The People’s Republic of China (PRC) has become a growing force in the
Southwest Pacific .....In order to garner political and economic influence in relation to Taiwan, the United States, and U.S. allies as well as to access raw materials, China has expanded its diplomatic and commercial presence in the region. By some accounts, the PRC has become the third-largest source of foreign aid to the South Pacific, which it largely provides without the kinds of conditions or performance criteria — some say heavy-handedness — that have engendered resentment among some Pacific Island countries toward their major benefactor, Australia. Although China’s influence is largely limited to diplomatic and economic “soft power,” some analysts worry about the PRC’s long-term intentions.
[Source:The Southwest Pacific:
U.S. Interests and China’s Growing Influence
(http://www.au.af.mil/au/awc/awcgate/crs/rl34086.pdf)]


Rudd on the other hand appears to consider China a partner in the South Pacific:

My view is how to unfold a future relationship with China....in a whole range of areas, and become genuine partners with China in the course of the 21st Century.... us working with China....working with the Chinese on some of our common challenges with the wider Asia-Pacific region, including the South Pacific.
(Rudd speaking to ABC Radio's Jim Middleton, http://www.abc.net.au/ra/connectasia/stories/s2169763.htm)

It should seem obvious that "working with the Chinese on some of our common challenges with the wider Asia-Pacific region, including the South Pacific" will mean Australia ceding at least some of its influence in the region.

The question is why cede that influence? How can it possibly be in Australia's interest to do so?

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