The world views Australia as a Western-style nation, distant from the intense tensions and conflicts that characterize today’s international reality. The prevailing perception of this country is that of a land rich in natural resources and breathtaking landscapes, ranging from coral reefs to deserts. According to the United Nations’ World Happiness Report, Australia is one of the happiest countries in the world, and its lifestyle is among the most envied for its sense of ease. However, the geopolitical landscape has profoundly changed in recent years, and Australia is now facing challenges that no longer allow it to live in tranquillity.
It is now widely acknowledged that, unlike in the last century, the world’s centre of gravity is no longer located on the Atlantic Ocean, but on the Pacific. South Asia, Southeast Asia, and East Asia now account for more than half of the global population. Almost a third of global trade today passes through the South China Sea alone. The Indo-Pacific region is set to determine the course of this century.
At the end of the Second World War, the Cold War remained a predominantly European affair. This bipolar strategic context saw the emergence of the Bretton Woods system, which laid the foundations of what we now call globalization. For the United States, globalization was — and has always been — a security policy first and an economic one second, designed to strengthen and unite the anti-Soviet bloc.
Despite its considerable distance from both the Iron Curtain and the Bamboo Curtain, Australia strengthened its strategic and political ties with the United States.
Following the collapse of the Soviet Union in 1992, a book by American political scientist Francis Fukuyama caused a stir by arguing — as its very title proclaimed — that history had ended and that liberal democracies were inevitably destined to spread across the globe, or even to be exported: this was the vision of the new world order.
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Benefiting from the economic rewards of globalization, protected by U.S. military power and its nuclear umbrella, and facing no immediate threats, most Western countries around the world reduced their already modest military spending, and Australia was no exception.
Today, Western countries are realizing that the strategic policies pursued in recent years can no longer be considered a viable option — even tactically — in a world where history is far from over. Furthermore, another major shift has shaken the global geopolitical and geoeconomic landscape: the rise of China.
China is now not only an economic giant but also a military one. Since Xi Jinping became President of China in 2013, Beijing’s government has increased the military budget by around 10% annually. In 2023, China’s military budget reached $224 billion, second only to that of the United States. Moreover, China’s navy has even surpassed that of the United States in terms of the number of ships in service, though not yet in tonnage.
To complete a picture that has grown increasingly bleak for Australia, tensions are high not only in the Taiwan Strait but also in the South China Sea and the South Pacific.
It is therefore no surprise that Australia has recently announced a significant increase in defense spending, with an additional AUD 1 billion allocated in the federal budget.
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China has intensified its military presence in the Pacific, particularly in the South China Sea, and has sought to expand its influence across various Asian nations. In response to these dynamics, Australia is accelerating its military modernization program, focusing on three key areas: building submarine infrastructure, producing guided weapons, and acquiring advanced missile systems. China’s emergence as a superpower has also prompted other countries in the region, such as Japan, to boost their defense investments. These developments were further encouraged by pressure from the Trump Administration, which urged U.S. allies to take a more active role in defense and to commit greater economic resources to regional security.
Australia’s intensified defense investments carry significant implications for Asia-Pacific geopolitics. While Australia aims to ensure its own security and maintain a regional balance of power, its moves are perceived as provocative by China, fuelling an escalating arms race. Projections indicate that global military spending in the region will grow substantially in the coming years, from $800 billion in 2024 to over $1.1 trillion by 2029, with countries such as Japan, South Korea, and Australia preparing for a new geopolitical scenario. This increase in defensive capabilities could strengthen alliances among Western powers, including the AUKUS bloc, an acronym for Australia, the United Kingdom, and the United States.
More than an alliance, AUKUS is a pact designed to provide Canberra with nuclear-powered submarines, enabling Australia to achieve greater strategic depth and contribute to security in the western Pacific Ocean. However, this trilateral agreement, though drafted without explicit mention of China, is widely seen as an initiative to patrol the Indo-Pacific region. The three bloc nations have pointed out that AUKUS should not be interpreted as a NATO-style alliance with formal mutual obligations between the three members.
“AUKUS contains no provisions suggesting such a concept, nor have any of the measures taken so far aimed to turn it into an alliance.” In any case, it is clear that AUKUS, alliance or not, exists to strengthen Australia’s navy and deterrence capabilities so it can contribute to maintaining the liberal order and geopolitical status quo in the Indo-Pacific region.
To this end, the United States is now consolidating its presence in Australia, particularly in the Northern Territory, at the Pine Gap intelligence centre and the Tindal air base.
Thanks to its geographic location, Australia occupies a strategic position in relation to the South China Sea and Taiwan: distant enough to be out of range during the early stages of a potential conflict, yet close enough to allow the United States to regroup, resupply, and launch counterattacks in a second phase.
As a result, Australia could find itself at the centre of a possible Sino-American conflict, facing the prospect of devastating collateral damage. In this shifting strategic context, Australia finds itself simultaneously economically dependent on China and a junior partner in a risky military pact with the United States — a historical ally to which Canberra simply cannot say no.
Elenoire Laudieri
The writer is an analyst and expert on diplomacy.
