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Introduction: Australia's Strategic Dilemma

In the past 20 years, China has given rise to become the second largest economic power in the world. Its GDP surpassed that of Canada in 1993, Italy in 2000, France in 2005, the U.K. in 2006, Germany in 2008, and Japan in 2009. In 2012 it surpassed the United States as the world’s largest trading nation (the U.S. remains the largest importer). China is now the number one trading partner of the 10 nations in the Association of Southeast Asian Nations (ASEAN), not counting the EU. Growing economic dependence upon China, however, raises long-term security issues for all Asian trade partners, given their strategic proximity to ambitious China. This is also true for Australia, just 200 kilometers from Indonesia at their closest points. Canberra, unable to shore up a security guarantee from Beijing, has increased its purchase in the security insurance policies of Washington.