Australia was scrambling to counter the move by sending its own Foreign Minister Penny Wong to Fiji to shore up support in the Pacific.
Scott Morrison says he followed security officials' advice in managing relations with the Solomon Islands after the South Pacific neighbor's leader alleged he'd been threatened with invasion.
The announcement comes amid concerns that other Pacific island countries financially weakened by the pandemic and its impact on tourism could be lured by China into similar deals.
Under the Solomon Islands' terms of a draft agreement, China could send police, military personnel and other armed forces to the Solomon Islands "to assist in maintaining social order."
The announcement comes amid growing concern by the U.S. and its allies about China's growing military assertiveness and Washington's concern of Russia using the weapons in Ukraine.
The Solomon Islands said that despite a recent pact with China, it won't allow the major power to build a military base, and the two are only collaborating on security and naval refueling.
One Asia-Pacific security observer says Australia, New Zealand and the U.S. would all be "very concerned" about the draft agreement.