For years, successive Australian governments have viewed China's growing influence in Southeast Asia and the Pacific with alarm. They have enacted foreign interference laws, tightened investment screening, regulated university partnerships, and launched initiatives like the Pacific Step-Up and a Southeast Asia trade and investment plan. Canberra has also deepened security ties with Washington, aligning with U.S. efforts to balance, deter, and contain Beijing. AUKUS and the Quad, Australia's two flagship foreign policy projects of the past decade, are built on this logic.
Yet there is a paradox at the heart of Australian strategy. As I argued in my Quarterly Essay earlier this year, Australia's closest neighbors in Southeast Asia have responded to China's rise in ways that defy Canberra's expectations. While public opinion polls show widespread concern about Chinese influence and distrust of its intentions, no Southeast Asian government has shown interest in joining a coalition against Beijing.
This divergence is the most significant strategic rift between Australia and its neighbors since the Second World War. Understanding its roots and implications should be an urgent priority for Australian policymakers.
Hedging, not balancing
In realist international relations theory, small and medium powers facing a rising great power typically choose one of two paths: bandwagon with the rising power to gain favor, or balance against it by joining a countervailing coalition. Southeast Asia has done neither. Instead, its governments have chosen to hedge—engaging China economically and diplomatically while simultaneously building closer ties with the United States, Japan, India, and even Russia.
This hedging strategy reflects a pragmatic worldview shaped by colonial history, post-independence nation-building, and a deep commitment to regional solidarity. Southeast Asian states have learned to be entrepreneurial and flexible, adopting policies that work rather than adhering to rigid ideological principles. They view the post-1945 international order with more ambivalence than Australia does, seeing it as a framework created by great powers that often served their own interests.
Australia, by contrast, sees the world through a moral lens. Since the arrival of the First Fleet in 1788, Australians have tended to view power wielded by like-minded democracies as inherently moral, while power exercised by states with different values is seen as dangerous and illegitimate. This "strategic imaginary"—the set of implicit assumptions about how the world works—leads Canberra to side with the United States even when Washington's actions undermine the rules-based order Australia claims to uphold.
Australian leaders have consistently prioritized the preservation of American primacy over the short-term morality of U.S. actions. This was evident in Australia's support for NATO's bombing of Serbia in the 1990s, the 2003 invasion of Iraq, the Libya intervention in 2011, and now the U.S. strategy of balancing against China.
What Australia can learn
Southeast Asia's hedging strategy offers valuable lessons for Canberra. First, it demonstrates that engaging China does not mean capitulating to it. Countries like Vietnam, the Philippines, and Singapore have managed to maintain robust economic ties with Beijing while also strengthening their own defenses and building partnerships with other powers. They have not sacrificed their sovereignty or their ability to push back on specific issues, such as the South China Sea disputes.
Second, Southeast Asian states have been adept at using regional institutions like ASEAN to manage great power competition. By keeping the region's diplomatic architecture inclusive and neutral, they have avoided being forced into binary choices. Australia, as a dialogue partner of ASEAN, could learn from this approach rather than pushing for a more confrontational stance.
Third, the region's pragmatism highlights the limits of moralistic foreign policy. Australia's tendency to frame the China challenge in terms of democracy versus authoritarianism may resonate domestically, but it does not persuade Southeast Asian governments that face more immediate concerns, such as economic development, political stability, and managing their own domestic politics.
There are signs that Canberra is beginning to adjust. The current government has spoken of "stabilising" the relationship with Beijing and has sought to expand economic ties with Southeast Asia. But the broader strategic posture remains wedded to the idea that China's rise must be countered through deterrence and containment.
Australia does not need to abandon its alliances or its values. But it could benefit from a more nuanced understanding of how its neighbors navigate a complex region. As recent data shows, Western aid cuts in Southeast Asia have not been fully offset by Chinese funding, suggesting that the region values diversified partnerships. By studying the hedging strategies of its neighbors, Australia might find a more effective—and less isolating—path forward.
The stakes are high. If Australia continues to view Southeast Asia through the lens of its own strategic imaginary, it risks alienating the very partners it needs to maintain regional stability. Learning from Southeast Asia's pragmatic approach could help Canberra craft a policy that is both principled and effective.
