A think tank in Australia says high level discussions between Australia and China should include working together in the Pacific.
Jenny Hayward-Jones of the Lowy Institute says better co-operation would send a signal to local states there is no value in playing off the two countries to attract more aid.
Australia and China signed an MOU on co-operation in April but Ms Hayward- Jones says Australia's latest Defence White Paper hinted at official concern about China's rise in the region.
She says an unhelpfully mixed message from Australia enables countries in the region to play on fears in their demands for aid with fewer strings attached.
"We're arguing that putting it on the agenda of politicians at a very high level would enable some trickle down, some practical guidance to offficials that they can now work on practical projects and deliver aid at the grassroots level."
Jenny Hayward-Jones says joint projects could include climate change mitigation work, high-yield crop development and disaster relief.