The biggest change to Australia’s region since World War II is under way. Three forces are reshaping Asia and Australia’s place in it: the decline of one empire, the rise of another, and the emergence of a powerful neighbour on Australia’s doorstep. Amid this regional change, a fourth potent force is at play: an unmistakeable change in the character of Western liberal democracy, including in Australia.
My purpose is to describe these four forces and the challenge they present, not just to our place in the world but to our politics and identity. What is presented here, about the direction our region is taking, may seem alarming. We are a Western nation perched alongside Asia as it enters a post-Western era. We can’t stop the international forces I am about to describe. But we have a choice to make about how we meet the challenge, and a choice about whether we leave our fate in the hands of others or take the harder road towards self-reliance.
It doesn’t take much persuading these days to convince Australians that China is an important part of their future, because it is already so conspicuous. It is a major source of immigrants, students and consumer products, our largest trading partner, and it is credited with keeping Australia out of recession during the global financial crisis.
But what China means to Australia is a fraction of what it means to the world. China is also the largest trading partner to around 120 other countries. Roughly one-third of all the physical objects produced in the world are made in China. Its economy is now at least four-fifths the size of America’s and may even be the largest in the world, depending on how it’s measured. For the economic historian Adam Tooze, China’s rise represents nothing less than “the material dethroning of the West as the central driver of world history”.
Until not so long ago, China’s economic rise was only good news. It was lifting hundreds of millions of its own people out of poverty, producing cheap goods for the world, and creating wealthy consumers for our goods and services. But China’s rise was always going to create problems, including for our ally, the United States.
When the Cold War ended, the US became Asia’s uncontested leader. The hope, at the time, was that China would simply go along with that arrangement. The plan in Washington was that, even as China became richer, it would remain subordinate to the US. China would become something like Japan or Germany – economic powerhouses with no big independent foreign policy ambitions.
Clearly, that’s not how things are turning out. China is building the world’s biggest navy and quadrupling the size of its nuclear arsenal. It punishes American allies, including Australia, by imposing trade restrictions. Its behaviour in the South China Sea, where it has built artificial islands based on dubious legal claims, can be fairly described as territorial expansion. China is clearly not going to become a super-sized version of Germany or Japan.
This should worry us, but it should not surprise us. We can’t expect a country of China’s size to be content to remain subordinate to the US in its own region.
Consider what the US would do if the tables were turned. Washington has about 80,000 troops stationed in Korea and Japan, and a naval fleet home ported in Japan too. Imagine if China had 80,000 soldiers in Canada and a fleet permanently stationed in Cuba. Does anyone imagine that the United States – with all its wealth and all its pride – would stand for that?
So, we should assume China wants to lead, and that means subordinating the US and its allies, and even pushing Washington out of Asia altogether. That’s not because China is communist or because it’s a dictatorship. It is those things, and that makes China harder to deal with. But this is a simple question of scale. China is big and big countries demand leadership.
None of this would perturb any mainstream foreign policy commentator. But here’s where I swerve off the beaten path. Because the consensus in Australia is that, whatever challenge China presents to us, the Americans will help us face it. In fact, our entire national defence is built upon this premise.
China’s rise has made America’s position in Asia unsustainably weak. It used to be easy for America to make lavish promises to defend its partners and allies in Asia because no other country was strong enough to challenge it. That’s not true anymore. It would now be incredibly costly for the US to meet the commitments it has made.
It is still assumed, on the Korean Peninsula and in Taiwan, and even in Japan and Australia, that the US will be willing to risk the lives of thousands of its troops, and perhaps even nuclear attacks on its own cities, to defend us. But the US simply has no vital reason to accept such risks. The sacrifice would not be worth it.
It’s important to stress: saying America’s position in Asia is weak is not the same as saying America itself is weak. In fact, the United States has a reasonable claim to being the strongest and most secure nation in the history of the world. But that’s part of our problem. America has the world’s biggest military, a huge economy, thousands of nuclear weapons, and is separated from China by a vast ocean. It is so secure that it simply doesn’t need to be Asia’s leader. So, when a challenger as big as China comes along, we should not assume that the US will bear the burden of resisting it.
If this is jarring, it’s because it has happened relatively quickly. The distinguished Australian foreign policy thinker Owen Harries titled a 2003 Boyer Lecture “And Then There Was One”, because at the time the US was the only superpower in the world. It’s worth adding that Harries did not assume this would be a permanent condition. Still, as late as 2009, prime minister Kevin Rudd confidently asserted that “the United States will remain the most powerful and influential actor out to 2030. No other power … will have the military, economic or strategic capacity to challenge US primacy.”
You will note that I haven’t mentioned President Trump so far, who is so often the focus of our alliance concerns. And why not? He has threatened to annex Greenland, make Canada the 51st state, and throw Ukraine under the bus. Still, it’s a mistake to focus on Trump because it invites us to believe that he was the cause of the power shift I am describing, and that things will return to something like “normal” after he leaves the world stage. They won’t. No previous US president could have prevented China’s ascent, and no future US president is going to risk their nation’s safety and prosperity by entering a competition with China that could lead to war.
This is not a Trump phenomenon. It is a permanent shift.
This is why AUKUS is such a jarring note in our national life. The agreement to supply Australia with eight nuclear-powered submarines, announced by the Morrison government in 2021 and now supported by the Albanese government, represents the biggest change in our alliance’s history. Yet it comes at exactly the moment when American reliability goes into permanent decline. AUKUS is an illustration of one of the least-attractive aspects of our national character: an insatiable desire to win the approval of Americans. Of course, the Americans sense this and they exploited it when we proposed AUKUS, which involves not just our biggest ever military purchase but billions of Australian dollars invested in US shipyards. In the 1930s, America built the gambling mecca of Las Vegas, an entire city in the desert dedicated to fleecing gamblers. If AUKUS demonstrates anything, it is that the Americans still have a talent for separating fools from their money.
Surveying Australia’s national debate about the two superpowers, I see two crucial errors: to borrow some language from the Cold War, Australia’s “doves” are too complacent about China, and our “hawks” are too complacent about America. Australia should be sceptical of both China and America as one rises and the other declines. And from this dual scepticism flows an obvious conclusion: we must do more to look after ourselves.
Does that mean we are friendless and alone? Of course not. The US will remain an important partner. In a crisis, Washington will sell us arms and provide intelligence and impose sanctions on our adversaries, much as it has been doing for Ukraine. But just like in Ukraine, America won’t risk its own troops in a fight against a nuclear-armed opponent because its vital interests won’t be at stake. To put it bluntly: America won’t have enough skin in the game.
Once we accept that our relationship with the US will become more transactional, the natural instinct will be to find a partner to replace it. But there is no replacement.
Our political leaders place great store in Australia’s upgraded security relationship with Japan, which is now a major arms seller to Australia. We hold regular ministerial talks, we have agreements allowing us to deploy military forces to each other’s countries, and there is appetite for even greater intelligence sharing and military exercising. These are all ingredients for what Japanese Prime Minister Sanae Takaichi already calls a “quasi alliance”.
But there are limits. With the US losing the incentive and motivation to maintain its leadership in Asia, the vast size of our region means we don’t have many other natural security partners. The sheer scale of the Asia-Pacific counts against an alliance-like security partnership with Tokyo. Japan is preoccupied with security threats far closer to home, and lacks the military capacity and ambition to be a significant power in our part of Asia.
What about India? It is in a slightly different category because of its size and still-untapped potential – one day, it will likely surpass the US in GDP terms. And again, Canberra places great store in our deepening security ties with New Delhi. But India is also too far away from Australia to be a close security partner. It is difficult to imagine that any security threat to Australia would ever be so vital to India that it would offer us help, and the same is true for Australia in its dealings with India.
Southeast Asia is more promising in geographical terms, but we will need to be selective. Countries such as Cambodia and Laos are already moving into China’s sphere of influence, and others may follow.
Although it will never replace the US, there is one nation that does have vital interests that align with ours. Indonesia is close to Australia and has vast economic potential, enough to resist ever being pulled into China’s orbit. Almost 290 million people dispersed across an archipelago that covers Australia’s northern approaches, and boasting consistent growth that will see it enter the top five economies in the world by the middle of the century. Ladies and gentlemen, Australia is about to have a great power on its doorstep.
For Australia’s security, Indonesia ranks above every other nation. If we get this relationship wrong, the dangers are immense. Soon, Indonesia will be wealthy and strong, and we will not want it as an enemy. We’ve had an antagonistic relationship with Jakarta before, and even faced off against Indonesian troops in the so-called Konfrontasi of the early 1960s. But Indonesia was a poor country then, with little military power or influence on the regional stage. Today, Indonesia is Southeast Asia’s leader and soon its economy will surpass ours. From there, the gap will only widen. For Australia, then, the stakes in the relationship continue to grow. The more powerful Indonesia becomes, the less we can afford a breach with Jakarta.
But if we get this relationship right, Indonesia offers a natural barrier against threats from third countries. And the good news is Canberra and Jakarta share one crucial interest: neither Australia nor Indonesia wants China to dominate our region. Right there is the kernel of a deeper partnership with Jakarta. It can be something like an alliance dedicated to ensuring that no outside power ever dominates the region we share.
Of course, that ambition remains distant and Jakarta may never be the partner we would like it to be. But with that vital interest in common, many barriers can be overcome, including the fact that Australia and Indonesia do not have what our politicians call “shared values”. If that sounds coldly transactional, then so be it. We Australians cherish our political traditions, but we’ve never insisted that our regional partners adopt our ways.
If considering Australia’s own democracy seems a strange departure in a lecture about Australia and Asia, it’s worth remembering the intimate relationship between national and international politics. The United Kingdom is, like us, a liberal democracy and an island lying just off a powerful continent. Ten years ago, the UK comprehensively sabotaged its own economy and its relationship with its neighbours. I don’t need to dwell on the damage Brexit has done since: according to The Economist, it has taken between 2.5 and 8 per cent off Britain’s GDP. Only one-tenth of Brits now say Brexit has made their life better.
Why did it happen? We’re told it was about xenophobia and anti-European sentiment. Yet despite some truly ugly outbreaks of racial violence, Britain remains a fundamentally liberal and tolerant society. And don’t forget, the defining message of the Brexit campaign was not about keeping foreigners out, it was about taking back control.
That slogan – take back control – is a clue to what’s really going on, not just in the UK but in every Western democracy touched by the rise of right-wing populism, including ours. The lesson of Brexit is not that British voters were xenophobic but that they distrusted their own elites.
In every Western democracy, the gap between voters and their political leaders has widened to a chasm because the connective tissue between voter and government has decayed. That connective tissue is the political party.
The decline of the centre-right and centre-left parties that dominated Western democratic politics in the second half of the 20th century is the signature political phenomenon of our time. Those parties represented well-defined constituencies. The centre-left clustered around unions and the working class; the centre-right around business small and large, and the middle class. But every force that once tied big political parties to a defined constituency – unionism, manufacturing, religion, class and even race – has withered.
The effect on the big parties has been catastrophic. It was the weakening of the Conservative Party at the hands of its own Eurosceptics and Nigel Farage’s UKIP that triggered the Brexit referendum. Major parties have declined all over Europe too, creating openings for new political forces.
In Australia, the collective membership of the Labor and Liberal parties couldn’t fill the MCG. At the 2007 federal election, 43 per cent of voters put Labor first. By 2025, even though Labor won the election convincingly, that figure was 34 per cent. The trends are roughly the same for the Coalition. The primary vote is now split an even three ways, with independents and small parties also getting roughly one third.
The result is that modern Australian governments achieve power while never really feeling that they are in charge. If a government doesn’t feel it has a mandate, it sets about trying to manufacture one. Perhaps you’ve noticed that the term “social licence” has crept into our political vocabulary – that’s an implicit acknowledgment of the democratic deficit I’m describing. Our governments launch endless inquiries and establish expert bodies to make decisions that were once considered to be within their own remit. These are all signs of governments desperately searching for new indicators of public approval and devising mechanisms to work around its absence. No truly confident government would feel the need.
The Howard government was the last under the old two-party settlement. Not coincidentally, that was also when Australia had its last major economic reform. If we have indeed become a timid nation, as former prime minister Paul Keating argues, then I think this is why. The missing piece is a sense of authority arising from democratic legitimacy. That’s what instils courage and policy boldness in governments.
For the first time in our history, we face a future without a powerful ally committed to regional supremacy. We face a future in which Asia will be led by an Asian superpower, one that has interests and ambitions that clash with ours. And we face a future in which our close neighbour, Indonesia, will have greater national power than us. All of this in a political environment undergoing its biggest realignment since the creation of the Liberal Party in 1944.
That final element, domestic politics, introduces a real point of jeopardy for Australia. The three international forces I have described should give Australia all the reason it needs for an entirely new national outlook. The changes to our region demand not just a new defence strategy or a new foreign policy, but an ambitious national reform agenda dedicated to creating a truly self-reliant Australia. Yet our domestic political malaise is frustrating our ability to meet the regional challenges described. The major parties are exhausted and fragile; they lack the energy and authority to embark on such a journey. The last big wave of Australian reform, in the 1980s and ’90s, was built on consensus between our major parties. If there is to be another wave of reform, it will need to be built on the ashes of the two-party system.
Right now, the boldness Australia needs has no political home. The far right offers nostalgia for a wholly imagined monoculture. The left is preoccupied with conservation and flirts with degrowth. The major parties offer technocratic tinkering. There is not a single political force in Australia today focused squarely on building Australia’s wealth and strength. The most telling evidence is that Labor, the Coalition and One Nation are now all, to one degree or another, retreating from immigration.
Given the temper of our immigration debate, perhaps the least-popular argument one can make right now is for Australia to get bigger. But immigration is our national superpower, and we do multiculturalism better than any country on earth. And although many factors go into producing a strong nation, sheer size is vital. When Singapore got rich in the 1970s, the world applauded. When China got rich in the 2000s, the world shook. The difference is scale. So we should recommit to immigration not because “diversity is strength”, to use the prime minister’s anodyne phrase, but because scale is strength. Retreating from immigration will make us materially weaker. It will also raise the drawbridge to talented and industrious people who want to make Australia home. It will cut us off from our region. A retreat from immigration is a retreat from Asia.
Yet our politicians now propose to take us to the precipice. If the political mood against immigration holds until the next election, voters will be invited to consign Australia to a shrunken, inward-looking future – our own version of the Brexit referendum. But Australia can’t afford to turn its back on Asia the way the UK turned its back on Europe. If there is a key to averting such a future, it is for Australians to internalise the fact that we can no longer rely on powerful friends. Creating the conditions for an Australia that stands strong and independent in Asia begins with a simple act of recognition: we must look after ourselves.
If that sounds confronting, remember that Asia is a source of immense opportunity as well as risk. It can also inspire us because, although we in the West are passing through a moment of profound cultural pessimism, in Asia the future is still a source of optimism. And no wonder – the people living in its gleaming new cities are, in some cases, only one generation removed from rural poverty.
Young Australians are travelling freely around the region and imbibing its culture. They see Tokyo’s urbanism, China’s cityscapes, Singapore’s garden-city infrastructure. These cities evoke a sense of promise.
It’s not that Australians are envious, exactly, because they know our lifestyle is unmatched. What they want is to capture the spirit of progress that animates those places. They want to live in a country where the future feels exciting and abundant, maybe even a little glamorous. And, like in those Asian megacities, they want a country where the future arrives fast. Let that sense of optimism guide Australia as we navigate the difficult choices ahead.