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As China continues to ramp up its efforts to coerce and control the Indo-Pacific, Australia has increasingly found itself walking a tightrope, balancing between our economic and strategic security interests in a dilemma of our creation that we seem intent on doubling down on.
Australia’s relationship with China has undergone a profound transformation since the early 1970s, evolving from a cautious diplomatic opening to one of if not the most consequential and complex bilateral relationships in Australian foreign policy.
When the Whitlam government formally recognised the People’s Republic of China in 1972, the decision was driven by a desire to engage a rising Asian power and recalibrate Australia’s external posture away from an almost exclusive reliance on traditional Western partners.
In the decades that followed, successive governments sought to balance strategic caution with pragmatic economic engagement, laying the foundations for what would become a deeply interdependent, almost co-dependent relationship.
Through the 1980s and 1990s, Australia embraced China’s integration into the global economic system. Canberra strongly supported Beijing’s accession to the World Trade Organization and encouraged trade expansion as part of a broader shift towards economic liberalisation.
As China’s industrial rise accelerated, Australia emerged as a critical supplier of iron ore, coal, natural gas and high-quality agricultural products. By the early 2000s, China had become Australia’s largest trading partner, fuelling national prosperity and underpinning structural economic shifts away from manufacturing and towards resource extraction and services.
This economic symbiosis was often framed as mutually beneficial, with political leaders emphasising that in the “End of History”, Australia did not have to choose between security alliances and economic opportunity.
However, the rapid growth of China’s strategic ambitions and its willingness to use economic leverage as a tool of statecraft complicated this narrative. From the mid-2010s onwards, concerns about Beijing’s influence operations, assertiveness in the South China Sea, coercive diplomacy, and the Belt and Road Initiative sharpened debates within Canberra about national security, sovereignty and resilience.
Australia’s 2018 foreign interference laws and the exclusion of Huawei from 5G networks marked an inflection point, signalling a clear shift from benign engagement to one of strategic hedging.
The era of great-power competition has further magnified these tensions.
As China seeks to reshape regional rules, norms and power balances, Australia found itself navigating an increasingly contested Indo-Pacific. Its alliance with the United States, anchored by ANZUS and deepening through AUKUS remains central, yet the economic dependence on China persists, creating undeniable structural vulnerabilities.
This dual reality forces policymakers to manage simultaneous imperatives: maintaining economic stability, enhancing defence capability, building diversified markets, and reinforcing Australia’s role within a networked regional security architecture.
Today, the relationship is characterised by a delicate equilibrium, neither partnership nor confrontation, but a pragmatic coexistence shaped by competition, selective cooperation and persistent distrust.
Australia’s challenge is to sustain strategic autonomy while contributing to a stable regional order, managing the risks inherent in a relationship that is both indispensable and increasingly fraught.
As Australia has sought to walk a tightrope, successive Australian governments have sought to downplay the challenges and risks associated with the continued dominance of Australia’s economic prospects by Beijing while we seek to maintain our strategic sovereignty.
While the Albanese government is walking high following the successful conclusion of renewed and expanded strategic and security relations with Indonesia, China and its role in reshaping the global “rules-based order” continues to dominate Australian policymaking.
The latest such example of this is a speech given by Minister for Foreign Affairs Senator Penny Wong at the Australian Institute of International Affairs Gala Dinner on Monday, 17 November in which she sought to continue the delicate balancing act that is increasingly running out of rope.
Reaffirming our commitment to a world order that no longer exists
As has become common among Australia’s policymaking community and those of similarly placed nations, the foreign minister actively asserted the nation’s continuing support to the post-Second World War, “global rules-based order” that has been responsible for the immense wealth and stability enjoyed over the past 80 years.
Senator Wong said, “We can all see our world is becoming less certain and less stable. More people are displaced. More people are hungry. There is more conflict – in Sudan, Ukraine, Gaza and elsewhere. Australia will always make our contribution, as part of multilateral efforts to protect civilians and uphold international law – because living in peace shouldn’t be contingent on where you were born.
“Having said that, our overriding responsibility as a middle power of the Indo-Pacific is to support peace, stability and prosperity in this region,” she said.
If this repeated line is starting to become tiresome, don’t worry, you’re not the only one who is getting tired of it, particularly as the “global rules-based order” is now, for all intents and purposes, in its death throes as the era of great-power competition and multipolarity begins to gather pace.
However, despite citing the conflicts in Europe, Africa and the Middle East, it seems as though the foreign minister, the government and, indeed, our public policy establishment are attempting to write cheques they won’t have to cash, for a system that quite demonstrably no longer exists.
Simply put, these grand, motherhood statements were fine during the unipolar moment, particularly following the end of the Cold War and the collapse of the Soviet Union, when the United States emerged as the sole and unchallenged global hegemon.
However, those days have well and truly passed and Australia’s policymakers need to urgently catch up for the sake of our economic, political and strategic interests as a nation in an era of increasingly complex, fluid and competitive region of the world.
Senator Wong does however seem to at least recognise this, saying, “The Indo-Pacific is where the world’s future is most being shaped. It is where we have the most on the line. It is where we can have the most effect.”
To this end, the senator sought to reinforce the Albanese government’s successful “stabilisation” of relations with China, following years of mutual hostilities, stemming from the COVID-19 pandemic and only further enflamed by the AUKUS agreement.
With Senator Wong saying, “We have stabilised relations with China, without compromising on our interests.”
This, of course, is all set against the backdrop of the continuing evolution of the regional geopolitical and strategic environment, something Senator Wong highlighted, “Now, let me be clear. I said that we have advanced every relationship we have in our region. But that doesn’t mean that our strategic environment is getting any easier.
“The change in the regional landscape is permanent. The disruption – the contest – is permanent,” Senator Wong said.
Middle power diplomacy in the face of destabilisation and disruption
It goes without saying that disruption and destabilisation are now the new normal for the Indo-Pacific at the local level and, more broadly, at the global level and is something Australia is increasingly going to have to grapple with.
Senator Wong does emphasise this, saying, “And they are premised on Australia’s ability to meet nations where they are at, drawing on all elements of our national power. You see this in south and south-east Asia, where we know that there is a need for more investment, goods and services to boost economic development and support the transition to clean energy.
“It’s in Australia’s economic and strategic interests to respond to these priorities. And it offers the assurance that comes with knowing that their success is our success; to create the shared value that fosters peace and stability.”
This has been done, according to the foreign minister by “Listening, not imposing. Consulting, not controlling” our neighbours, standing in stark contrast to the efforts of major regional and global powers, mainly China which is increasingly ramping up its efforts to assert its dominance and control over an ever-increasing sphere of influence across the Indo-Pacific.
By doing so, this places Beijing’s economic, political and strategic interests and ambitions toward the Indo-Pacific as diametrically opposed to those of Australia, which remains committed to the “global rules-based order” despite the ongoing fraying as previously mentioned.
The foreign minister then pivoted, emphasising the importance of the Australia–US relationship, adding, “The United States is our closest ally and our principal economic and strategic partner. The Indo-Pacific would not have enjoyed long periods of stability and prosperity without the United States and its security guarantee to the region, as well as its leading role as an investor.”
Giving rise to what the foreign minister defined as “middle power” diplomacy, whereby the sheer aggregate of “middle powers” acting in their shared interest they can influence and direct great powers to act in the regional or global interest rather than unilaterally in their own interests.
The foreign minister detailed the importance of this, adding, “And this is why middle powers are making purposeful efforts to contribute to a favourable balance – so no country dominates, and no country is dominated. I have described this as amplified middle power diplomacy – pursuing new alignments to better pursue our national interests, while evolving traditional ideas of like-mindedness.
She went further, “And what I mean is the efforts of middle powers to create more common ground, and to transform that into shared opportunities. I often hear this idea of ‘natural partners’, or that the circumstances that middle powers face are pushing countries together.”
And here is where we really get a departure from the rhetoric and the reality, particularly in the Australian context, the foreign minister stated that “middle powers” like Australia need to be “active and ambitious”, something at every level of public policymaking Australia continues to fall behind on.
Don’t believe me?
Just look at our period of “managed decline” where on every metric, Australia as a “middle power” continues to slide down the global rankings, from education to industrial diversity and capacity, economic productivity to cost of living, it all appears to be downhill, despite the rhetoric from the government.
Yet for the foreign minister, “Australia cannot afford to stand still while tectonic plates are shifting around us – because in these circumstances, that would mean going backwards. So we will not stand still. We will continue to work with purpose and energy to protect and promote Australia’s interests.
“This is also the context to understand our efforts to stabilise our relationship with China, including to see all impediments on Australian exports lifted, without compromising on our interests.” Going further, the minister then contradicts her statement about the United States, saying, “China is our largest trading partner, the world’s second-largest economy and a key player on climate action.”
“We still see economic integration as providing a critical incentive for peace, while managing potential vulnerabilities ... My point here is that we should not be distracted by any false binary around this relationship – any claim that safeguarding our sovereignty is somehow mutually exclusive with productive economic ties. Our relationship is more complex than that. Our region is more complex than that.
“What we want is a relationship that allows us to cooperate and engage with China, while prosecuting our national interests and building security and prosperity in our region.”
Now’s the time for action
Building on this, the foreign minister then added more to her messaging, seemingly calling for actions on the very area her government (and to be fair others, particularly since the 2016 period, if not earlier) has continued to neglect and fall well short on as measures for Australia securing its own interests in the region, despite renewed multipolarity and great power competition.
Foreign Minister Wong added, “In the face of these challenges, resilience is a priority domain for government, and for a foreign minister – along with the region, relationships and the rules.
“The strength of our democracy and the trust in our institutions are central to navigating a world that is more divided, more contested and more insecure. So is our economic strength – to influence, to engage, and to resource the strategic action that we need to take – including the investments in military capability to underwrite our diplomatic efforts.
“Our whole-of-nation efforts to build resilience must continue at pace. We must maintain our social cohesion while we navigate divergent views – understanding that our diversity strengthens us at home and also enables us to find common ground with so much of the world.
"We must protect our young people from the pervasive pull of social algorithms, which is why the Albanese government has legislated to delay access to social media until the age of 16.
She added, “We must find ways to regulate and build trust and confidence in AI at home and multilaterally, ensuring AI adoption proceeds in a safe, secure and responsible way. We must combat interference and espionage and build our cyber security, including by working with partners to attribute malicious cyber behaviour to state-linked actors.
"We must diversify our economy and diversify our economic relationships. Our economic security demands not just that we expand who we export and sell to, but what we make, to become more resilient and more productive.”
So where is the action? Because we have been hearing all of this for the better part of a decade now, yet we continue to spin our wheels.
Final thoughts
In the end, it comes down to this: Australia must shoulder full responsibility for its own security, prosperity and national resilience.
No excuses, no shortcuts. Nothing else in public policy comes close in importance.
If that means shaking a few political comfort blankets, then so be it. This isn’t optional anymore, it’s essential. Australia has to get serious, and fast, about building the independent strength to defend our interests and shape our future, alongside the United States and our regional partners, but never reliant on them.
And that starts by facing some hard realities.
First, the Indo-Pacific has become the sharp edge of global competition. China, India, Pakistan, Thailand and Vietnam are all stepping up. Japan and South Korea are reasserting serious power.
The contest isn’t lurking in the distance, on the other side of the globe, no, it’s on our doorstep, and it’s not going anywhere. This is the new normal.
Second, without real investment, genuine reform and a long-term national plan, we won’t just fall behind – we’ll be overtaken. If we fail to act, the next generation of Australians could inherit a country overshadowed by nations that chose to be stronger, richer and more confident.
For too long, Canberra has reached for easy wins instead of real strategy. Governments of every colour have traded long-term security for short-term politics. But the world has changed beneath our feet, and business as usual simply won’t cut it.
As China expands its influence across the region, we face a stark fork in the road: sit on the sidelines or help shape the future of the Indo-Pacific.
The choices we make now will determine whether Australia thrives in this new era or gets pushed aside by it.
So please, foreign minister, spare us, we’ve heard it all before.
Get involved with the discussion and let us know your thoughts on Australia’s future role and position in the Indo-Pacific region and what you would like to see from Australia’s political leaders in terms of partisan and bipartisan agenda setting in the comments section below, or get in touch at
Stephen Kuper
Steve has an extensive career across government, defence industry and advocacy, having previously worked for cabinet ministers at both Federal and State levels.
