Australia, Japan and the United States are moving openly now to balance the rising economic and military power of China, and their primary strategic lever is nuclear energy.

Last week’s first ministerial strategic dialogue between the three nations illustrated what international political theorists would call their shared realist approach to China. It is an approach that aims to ameliorate or avoid conflict by encouraging India’s emergence as a regional economic and military counterweight to China.

In pursuit of this policy, the adequacy of India’s nuclear energy resources was a significant topic at the Sydney discussions involving Prime Minister Howard, the US secretary of state, Condoleezza Rice, Australia’s foreign affairs minister, Alexander Downer, and Japanese foreign minister Taro Aso.

The Sydney dialogue came barely two weeks after President George Bush signed a landmark deal to supply civil nuclear technology to India in return for India opening some of its nuclear reactors to the International Atomic Energy Agency. It also came barely a week after John Howard, visiting India, said Australia would not, despite the US deal, end its ban on uranium sales to India because India would not sign the Nuclear Non-Proliferation Treaty, or NPT.

To further complicate the environment, the dialogue came only two weeks before the planned visit to Australia of the Chinese prime minister, Wen Jiabao, to sign a contract to buy 10,000 tonnes of uranium a year from Australia - and possibly to ask politely what the US-Japan-Australia dialogue was really all about.

The response to this state of affairs at the Sydney dialogue was a coordinated exercise in balance-of-power realism over three days. Rice stressed what she called the multi-ethnic, vibrant, democratic character of India and its need for adequate civil nuclear power. Downer characterised the US-India nuclear deal as “an important step forward” supported by Australia, thereby hinting that the door was at least open to ending the ban on uranium sales to India.

Twenty-four hours later Prime Minister Howard, stressing India’s good record in the 30 years since it exploded a nuclear device, said Australian officials would be sent to India and the US to get more information on the US-India deal. He said policy would not change immediately, but signalled that Australia was loitering with intent to end its ban by adding: “like all policies you never say never”.

Clearly Australia was preparing to follow where the US had led on helping India to secure nuclear energy resources adequate to enable it to compete with and balance China. But Downer was sensitive to Australia’s domestic and international difficulties, given its strong support of the NPT and the proliferation security initiative which seeks to discourage nuclear weapons proliferation. He was also sensitive to the potential difficulties of denying uranium to other nations including Pakistan and Israel if Australia ended its ban on India. And, of course, he was sensitive to China’s suspicions about the Sydney dialogue and to uranium sales to India. China is an NPT signatory and has given Australia assurances that its uranium will be used solely for civil power supplies.

So by Saturday Downer was highlighting another reason for selling uranium to India. He said the dialogue had been discussing the implications “for all of us and obviously for international stability and security” arising from “the shortage of energy resources in the world”. Moreover the US, Japan and Australia were planning semi-official one-and-a-half track diplomatic talks between officials and academic experts on the energy security issue. The subscript was obvious: the international consequences of starving rising powers of energy were at least as risky as the consequences of possible nuclear proliferation. (Nobody mentioned the example provided by Japan’s actions more than 60 years ago. Nor did they mention, in public at least, the deeply hostile Sino-Japanese relationship prompting Japan’s ongoing review of its constitutional constraints on military activities).

In a final statement the three foreign ministers praised India’s decision to place its civilian nuclear facilities (that is, 14 of its 22 reactors) under international safeguards as “a positive step towards expansion of the reach of the international non-proliferation regime”. It seems only a matter of time before the environmental argument for nuclear energy will emerge as another counter to concerns about weapons proliferation. Rice in fact mentioned in passing that nuclear energy was clean, although she did not claim directly that nuclear energy could ease global warming and climate change.

Obviously Australia will not find it easy to end its ban on uranium sales to India. It will be seen domestically and internationally as a step away from the global non-proliferation regime. Downer and Howard will doubtless take some comfort from the confusion and conflict within Labor over uranium policy broadly, but Green opposition will be ferocious.

Nevertheless, Australia has established a defensible position for Prime Minister Wen’s impending visit. Howard and Downer will doubtless stress the importance of energy security to rising economies and the environmental benefits of nuclear power to a world concerned about climate change. Clearly while the US, Japan and Australia want to balance China, they do not want to contain its growth by denying it vital energy supplies - as the Australian sale demonstrates.

Prime Minister Wen will be under no illusions that China’s rise is being examined intently inside the US-Japan-Australia strategic dialogue. But equally he will know that China is too important.