As anyone who has been paying attention is aware, the emerging tensions between China and the United States have created a dilemma for Australia. Key elements of those tensions include ongoing friction over both countries’ trade, China’s posture in the South China Sea, and the ever-present problem arising from US military protection of Taiwan, over which neither we nor the United States challenge China’s claim of sovereignty.

In a nutshell, our dilemma arises from the fact that we have been reliant on the United States for our security since the fall of Singapore in 1942, but in recent decades China has become by far our largest trading partner. China represents a quarter of our two-way trade, taking about a third of our exports and providing about a fifth of our imports.

John Howard was able to assert with some plausibility that we didn’t have to choose between our ally and our major trading partner, but in the age of Xi Jinping and Donald Trump that assuredly doesn’t apply. Beijing and the Washington are becoming increasingly assertive and increasingly strategically competitive. Plausible scenarios in both the military/strategic and trade domains will force us to make choices, and we need to think carefully, ahead of time, about how we would handle as wide a variety of scenarios as we can imagine. This level of forethought will enable us to respond in a timely and appropriate way to such exigencies as do arise and, just as importantly, to signal to each of these great powers both what we expect of them and what they can expect of us.

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