China rages at Taiwan's presence at Pacific ceremony

On the stage were traditional dancers, Pacific leaders and speeches pleading for unity and climate action.

In the audience, along with Anthony Albanese and other regional leaders, were delegates from external powers - including the two bitter enemies.

Palau is one of just 12 nations that recognise Taiwan, rather than Beijing, and Taipei has used the Micronesian nation's hosting rights to engage in diplomatic efforts.

That outreach extended to Foreign Minister Lin Chia-lung attending the opening ceremony on Monday night, prompting a stern reaction from Chinese officials. 

China's Pacific envoy, Qian Bo, said he had "serious concern" and lodged diplomatic objections at Taiwan's presence at the summit.

"We have made our position very clear to the government of Palau and the (Pacific Islands Forum) secretariat," he said.

Asked if there would be consequences, Mr Qian said "there will always be consequences".

"It should not have happened. We think it's very inappropriate," he said.

China and Taiwan share an unresolvable problem, with Beijing believing the US-backed island is an inalienable part of its territory, and Taipei claiming it is sovereign.

Beijing uses fierce diplomacy to subdue Taiwan's claims, urging other nations to acknowledge the "One China" principle, which asserts its authority.

This prevents the vast majority of governments from political engagement with Taiwan, though many nations - including Australia - hold strong economic links.

There is no PIF rule that prevents Taiwan's presence, with Palau President Surangel Whipps offering a pointed rebuke to countries looking to control the region.

"The world increasingly recognises the strategic important of our region and we welcome friends and genuine partnerships," he said in his opening address.

"Our partners are welcome to sail with us, but they do not chose our destination.

"The Pacific agenda must be driven by us, for us, and the Forum must remain the political home in which that agenda is shaped."

Mr Albanese asserted the right for PIF members to make their own groundrules.

"The Pacific Islands Forum determines what happens here, not any other country," he said.

There is a distinction between China and Taiwan's status within PIF, with China a "dialogue partner" which can sit around the table at formal sessions, and Taiwan a "development partner" with lesser rights.

While a diplomatic clash in Palau felt somewhat inevitable, it is not yet clear what the fallout will be.

Following his private complaints to Palau and PIF, and his public comments, Mr Qian said he would next take his umbrage to the dialogue partner meetings on Tuesday.

The incident was the obvious talking point from the ceremony, where Mr Whipps urged nations to maintain a focus on climate.

"Climate change remains the single greatest threat to the security and the well-being of Pacific peoples," he said.

Also on Tuesday, representatives from New Zealand, the US and Cook Islands announced a port upgrade to the Cook Islands at Penrhyn.

The US will spend US$50 million, and New Zealand US$10 million on the facility in the northernmost island in the Cook Islands, once a military base.

The development may also be used for extraction of deep sea minerals, a long-held desire of Cook Islands Prime Minister Mark Brown.

The 55th PIF leaders meeting has also been notable for a lengthy list of no-shows.

Leaders from Fiji, Kiribati, New Caledonia, Samoa, Solomon Islands and Vanuatu are not attending for a range of reasons, with Kiribati not sending political representation at all.

Mr Albanese said the summit would not lose its authority because of a few absences.

"This is a well-attended meeting of the Pacific Islands Forum, and I don't think it's productive to talk it down. I'm talking it up," he said.