SYDNEY (Reuters) - The South Pacific archipelago of New Caledonia will on Sunday go to the polls to decide whether to become independent, with a vote in favour set to deprive France of its most significant territory in a region where China is expanding its influence. New Caledonia has grappled with the question of decolonisation for decades. In 2018, it voted against separating from France but with the independence vote stronger than polls had expected, its second referendum is being keenly watched. “France does not want to lose its foothold in the Pacific,” Denise Fischer, a former Australian diplomat in New Caledonia, told Reuters. “There were only 18,000 votes separating them last time when 33,000 people didn’t vote. There are now an additional 6,000 who also eligible to vote.” Tensions have long run deep in New Caledonia between pro-independence indigenous Kanaks and descendants of colonial settlers who remain loyal to France. A “yes” vote would see France lose its most import territory in the region and dent the pride of a former colonial power whose reach once spanned the Caribbean, large parts of Africa, Asia and the Pacific. New Caledonia’s economy is underpinned by annual French subsidies of some 1.3 billion euros ($1.52 billion) and nickel deposits that are estimated to represent 25% of the world’s total, and tourism. China has in recent years been expanding its influence in the resource-rich region, to the consternation of the United States and Australia. New Caledonia enjoys a large degree of autonomy but depends heavily on France for matters such as defence and education. Talks on the future of the island, 1,200 km (750 miles) east of Australia and 20,000 km (12,500 miles) from Paris, began in 1988 after a period of separatist conflict, including the “Ouvea cave massacre” in which 19 Kanaks and two French soldiers were killed. ($1 = 0.8532 euros)