CANBERRA -- Australia and the United States should cooperate with China in areas that support Pacific Island priorities rather than building any new security or diplomatic arrangements designed to compete with it, a new study from the Lowy Institute for International Policy said Thursday.

A new report, Big Enough for All of Us: Geo-strategic Competition in the Pacific Islands, by Jenny Hayward-Jones of the Lowy Institute, concluded that there's no evidence to suggest China has any grand strategic designs to dominate the Pacific islands despite its increasingly high profile in the region.

"Placing China's activities in the region in a geo-strategic paradigm akin to that of East Asia is, however, inappropriate and potentially counter-productive," the report emphasized.

According to Jenny Hayward-Jones, Australia and the United States should cooperate with China in this region. "The goal should be to maximize the benefits of China's new role in the region, while helping to minimize the negative consequences that do flow from some of China's commercial and development activities in the Pacific Islands," She added.

And she also said although China's trade with the region has increased sevenfold over the last 10 years, it still lags a long way behind Australia. "China is a very long way from approaching Australia's dominance of the aid, trade and strategic domains in the Pacific Islands region," the report added.