Nauru has accepted a loan worth about two point four million US dollars from China.
The loans appear to reaffirm diplomatic ties between the tiny South Pacific island nation and Beijing, rather than rival Taiwan.
Nauru's President, Rene Harris, said his impoverished nation had accepted the interest-free loan to help support unspecified economic and technical projects between the two countries.
The news agency, Reuters, says Nauru has been caught in a long-running diplomatic tug-of-war between China and Taiwan.
Taiwan was recognised by previous Nauru presidents in exchange for loans worth millions of dollars.
Nauru closed its embassy in Beijing in August, sparking fears it might be about to re-establish diplomatic ties with Taiwan.
It later said the mission was closed for economic reasons.
Nauru switched its recognition to Beijing from Taipei in July 2002.