As geopolitical competition intensifies across the Pacific, the United States is accelerating military construction in Palau, a remote island nation critical to Washington’s strategy to contain Chinese expansion. The move is part of a larger Indo-Pacific push, positioning Palau as a forward-operating hub just east of the Philippines and south of Taiwan.

U.S. Expansion in the Pacific

In 2025, the U.S. is upgrading Palau’s Malakal Harbor to allow American warships to dock, along with building logistics hubs and over-the-horizon radar systems. These include the Tactical Multi-Mission Over-the-Horizon Radar (TACMOR), capable of detecting Chinese hypersonic missiles across the Pacific theater. Sites for TACMOR include Angaur and Ngaraard islands—locations that have also attracted Chinese business interest.

Palau, which maintains full diplomatic ties with Taiwan, is one of only three Pacific nations to reject Beijing’s overtures. The U.S., under a Compact of Free Association, has military access to the islands and is now investing heavily in infrastructure designed to project force and safeguard Taiwan.

Chinese Leasing Near U.S. Radar Sites

Chinese individuals and companies have leased land near at least six strategic U.S. military locations in Palau. These include areas adjacent to airfields, ports, and the TACMOR system. Investigations by The Washington Post revealed connections between these investments and Chinese intelligence, transnational crime groups, and the CCP’s United Front Work Department.

One key figure is Hunter Tian, head of the Palau Overseas Chinese Federation. He leased 250 acres on Angaur for a resort shortly after U.S. radar plans were made public. Tian also facilitated meetings between Palauan officials and Wan Kuok Koi, a Macau mob boss known as “Broken Tooth,” who has been sanctioned by the U.S. Treasury for criminal activities and links to Chinese state interests.

Wan reportedly attempted to lease land near both TACMOR sites. Officials say such proximity would have enabled monitoring or disruption of sensitive U.S. operations.

U.S. and Palauan Intelligence Concerns

Jessica Lee, Taiwan’s ambassador to Palau, warned that in a conflict scenario, China could use these sites to sabotage U.S. operations: “If there is a ‘D-Day,’ the Chinese will be able to cut cables in Palau, activate devices on rooftops, whatever they can to delay a U.S. response.”

A hotel project near Malakal Harbor, the Belmond, owned by Chinese national Zhang Zhengrong, is viewed with suspicion by U.S. and Palauan security officials. Though Zhang denies involvement in espionage, records link him to Chinese scam networks and illegal campaign donations.

Former U.S. Navy officer Bryan Clark said facilities like the Belmond could intercept U.S. Navy signals or record acoustic data for torpedo targeting. “It’s close enough to launch fiber-optic drones or monitor radio communications,” he said.

Prince Group Ties and Gambling Allegations

Several properties allegedly connected to Cambodia’s Prince Group—a conglomerate accused of laundering money through casinos and illegal gambling—are also under scrutiny. These include the under-construction Ritzy Hotel near Palau’s main airport and a proposed luxury resort on Ngerbelas Islet.

Palauan security officials warn that these ventures are attempts to infiltrate the island’s political and economic systems. One risk report warned that the Ritzy may facilitate “illegal gambling and other illicit activities.”

Prince Group denies any operational involvement in Palau, but its chairman, Chen Zhi, is listed as the largest shareholder in companies tied to these developments. In response, Palau has placed several affiliated individuals on its “undesirable aliens” list.

Palauan Crackdown and U.S. Support

Since his reelection, President Surangel Whipps Jr. has expelled dozens of Chinese nationals and denied over 150 visas and permits—many linked to questionable investments. Whipps called on the U.S. to increase law enforcement support, including deploying DEA agents, cybercrime experts, and military police rotations.

“We’re on the front line,” Whipps said. “Don’t cut off your partners.”

The U.S. Embassy has echoed his concerns, warning that the pattern of overvalued land leases and strategic positioning is part of Beijing’s playbook for influence and disruption.

Strategic Stakes

China’s goal, analysts say, is to preposition assets across the Second Island Chain to challenge U.S. naval supremacy in the Pacific. “It’s a long game of soft power, crime networks, and infrastructure leverage,” said Abraham Denmark, a former Pentagon official.

The growing competition in Palau reflects wider regional struggles over strategic alignment, infrastructure, and sovereignty. With the stakes rising, the U.S. is betting that fortifying allies like Palau will be key to deterring Chinese ambitions in the Indo-Pacific.