Australian Prime Minister Anthony Albanese, in his 2023 Lowy Lecture, emphasized that Australia’s foreign policy and national security are defined by a “complementary focus” on capabilities and relationships. Australia’s role as a middle power is bound by “shared opportunity” and “collective responsibility.” This is certainly true for the Indo-Pacific (described by Australia’s Foreign Minister Penny Wong as “the most consequential region of our time”), where intensifying geostrategic competition between China and the United States has complicated the fragile geopolitical landscape, and in turn impacted Australia’s security. 

This year, the Albanese government released its inaugural “National Defence Strategy” (NDS), which reiterated the importance of deterrence, security, and stability in the Indo-Pacific region and, in turn, the defense of a rules-based global order for Australia’s national security interests. 

But what does this mean for Australia’s strategic priorities and efforts to contribute to sustaining order in this region? Will Australia harden its stance on China, given the evolving nature of geopolitics and increasing ideological divisions across the world? What would be its trajectory with major Indo-Pacific stakeholders, including the other Quad partners and the European Union (EU)?

China: No Longer the Bugbear?

First, we need to understand the whims and waves of Australia’s relationship with China in recent years. When Australia released its foreign policy white paper in 2017, today’s highly divisive and fragile global geopolitical landscape was just emerging. The “America First” Donald Trump presidency had begun to cause ripples with its withdrawal from the Paris Climate Accord and its hostile stance toward NATO and other U.S. allies. Meanwhile, the U.S.-China trade war was gathering wind amid speculations of an Australia-U.S. rift over a refugee deal. 

Notably, Australia-China diplomacy was at one of its lowest points at the time, primarily due to allegations of Chinese interference in Australia’s politics. The COVID-19 Pandemic and Australia’s calls for investigations into China’s role could not have been predicted, even as the Australia-China trade war was largely a result of Australia’s foreign influence crackdown. Australia’s Huawei ban could be seen as another milestone in the deterioration of relations.

As a result, Australia’s shift to the U.S.-led Indo-Pacific was concretized—even as the government of Prime Minister Julia Gillard had first endorsed the “Indo-Pacific” construct in 2012. The government’s new approach was to pivot to the region and its local partnerships with the Association of Southeast Asian Nations (ASEAN), India, Japan, and South Korea, among others. Europe, however, was only vital as a major economic power. This may come to change due to the EU’s strengthening tilt to the Indo-Pacific and its sharpened stance on China, be it via investigations into Chinese trade practices or its recent criticism of China’s aggression in the South China Sea. 

Further, one of the main upshots of Australia’s new policy shift was the revival of the Quadrilateral Security Dialogue (Quad), composed of Australia, India, Japan, and the United States. The Quad’s previous version had been unceremoniously disbanded allegedly due to the then Australian government’s efforts to “disconnect” from the Quad and pursue closer relations with China. But China’s aversion to the Quad as a China-containment tool meant it only fanned Australia’s burning ties with China.

Nonetheless, the election of the new Albanese government has thawed diplomatic ties between China and Australia and reset some of the bitter rivalry. As a result, top leadership visits have concluded, high-level official dialogues have reopened, China has lifted trade restrictions worth about $20 billion, and both sides have discussed pursuing practical cooperation in trade, finance, agriculture, climate change, and education. 

Yet valid regional and national security concerns about China have not miraculously disappeared. China’s militarist actions in the Taiwan Strait and the South China Sea have only increased in intensity. China’s footprint in the Indian Ocean region and the Pacific is growing, Not to mention China’s growing collusion with authoritarian regimes like Russia, Iran, and North Korea. 

Against this continually increasing threat perception of China, Australia’s security-oriented strategic approach of the last government has been maintained. Australia has not only increased its defense budget (including an expansion of its maritime capabilities) but also has underscored its intent to pursue a more significant role in ordering the Indo-Pacific. Notably, it has boosted security and defense cooperation with its Indo-Pacific partners and security-oriented minilaterals, from the wide-ambit Quad to the more focused AUKUS. Albanese and Australian defense minister Richard Marles have pointed to the importance of “collective responsibility” and “collective security” in Australian strategy.

Strategic Equilibrium

Domestic politics also bear out the Australian focus on the Indo-Pacific. A Lowy poll in 2022 revealed that 43 percent of the respondents wanted Australia’s region, including Asia and the Pacific, to be the highest priority of their government’s foreign policy. Australia has not limited its engagements and is rightly exploring all forms of cooperation—bilateral, multilateral, minilateral, or trilateral.

The all-around effort is based on the concept of “strategic equilibrium,” as introduced by Foreign Minister Wong. In addition to stabilizing relations with China, the government has strengthened its alliance with the United States, deepened partnerships with big economies like India and Japan, enhanced its economic engagement with ASEAN and security partnerships with some ASEAN states, and increased developmental assistance to the Pacific and Southeast Asian regions, pursuing both connectivity and resilience for the broader region. 

Besides, Australia is also leaning toward a “whole-of-government approach to securing Australia’s place” in global affairs. The new government is allocating more investment into diplomatic resources, from spending on enhancing communications networks for cyber resilience to investments in regional partnerships like in the Pacific and Southeast Asia. This would help renew diplomatic focus on areas of core national interest. Yet, observers have called on the government to expand its outlook toward a “whole-of-nation” approach. 

Irrespective of the medium or mechanism, Australia’s key foreign policy priority today remains the Indo-Pacific region. 

Prioritizing Indo-Pacific Partnerships:

Undoubtedly, since U.S. President Joe Biden came to power, the Australia-U.S. alliance has not looked back. To further bolster regional and global security, the scope of the alliance has widened, ranging from collaboration on advanced AI and quantum to combating disinformation. Through the Critical Minerals Task Force, the two countries are enhancing supply chains for essential components used in electric vehicles, batteries, and solar panels. In the past two and a half years alone, the US has invested over $5 billion in Australia’s critical minerals sector. 

Additionally, the new partnership seeks to utilize satellite imagery to improve natural resource management and better address climate change. The alliance has also reiterated its unified stand on the need to maintain peace and stability across the Taiwan Strait and to resist any actions that escalate tensions or undermine the status quo.

Nonetheless, there are questions about the alliance’s relevance and credibility to Australia’s interests, especially given the U.S.-China tensions and Donald Trump’s return to the White House. In such a scenario, diversification and ties with Indo-Pacific states in Australia’s immediate neighborhood have become a “crucial consideration” for Australians in general. 

Wong’s extensive visits to the Pacific and Southeast Asia highlight that the two regions are at the top of Australia’s favored list for their strategic value. In the Pacific, the intent is mainly to counter China’s extensive involvement. Australia has increased its developmental and security investments for that purpose, becoming the region’s “dominant infrastructure financier.” 

In Southeast Asia, diplomatic outreach has been accompanied by greater economic engagement, including through a network of trade agreements. But more needs to be done. Accordingly, “Australia's Southeast Asia Economic Strategy to 2040” aims to boost regional ties and has already committed $505.9 million. This includes a Southeast Asia Investment Financing Facility to provide up to $2 billion in loans, guarantees, equity, and insurance to catalyze Australian trade and investment in the region. 

Among the ASEAN states, Singapore, Indonesia, and the Philippines have developed greater bonhomie with Australia. All are members of the Indo-Pacific Economic Framework for Prosperity (IPEF), which is improving regional supply chain resilience. There is also the new defense partnership known as the “Squad” (Australia, Japan, Philippines, and the United States), which will also seek to counter China’s reach in the Western Pacific. Australia’s outreach to Southeast Asia is a balance of economic security and broader defense interests. 

India, Japan, and South Korea, too, remain on Australia’s list of vital partnerships. With all three, Australia is involved in minilateral engagements, including MIKTA (Mexico, Indonesia, Korea, Turkey, and Australia). 

India is recognized as a key security partner, and India’s growing economic trajectory makes it all the more important as a primary diversification partner. The Comprehensive Strategic Partnership between Australia and India lays the framework for concrete and tangible avenues of cooperation, including defense industry cooperation and information sharing. Though the momentum between Australia and India has yet to take hold, there is still an assurance that Canberra will continue to see New Delhi as an indispensable partner in the Indian Ocean realm and beyond.

Australia is also looking to expand its South Asian trade opportunities and develop its partnership with India to the next level, including a new free trade agreement allowing greater market access, particularly in agriculture and manufacturing. The two sides also want to enhance their maritime and multilateral cooperation via trilaterals, such as with France, through new proposals and initiatives under the Indo-Pacific Oceans Initiative (IPOI) and the Indian Ocean Rim Association (IORA) mechanisms.