As the secretary of the extreme left-wing group Socialist Forum during her student days in the mid 1980s, Australian prime minister Julia Gillard put her name to pamphlets advocating the end of the ANZUS alliance with the United States and the scrapping of the U.S.-Australian Pine Gap military facility in Australia’s Northern Territory. If she was asked then how her life would pan out in 25 years, the last thing she probably would have imagined was delivering a speech to Congress reaffirming that Australia is the firmest of all American allies, and that if she had her way, the six decade old ANZUS alliance would survive for many decades more.

The fact that she delivered just that speech yesterday is testament to the truism that even the most passionate left-wing Australian politician moves to the right when given the reins of power. But it is also an indication that Australia has abandoned any realistic hope of trying to manage China’s rise by shaping its ambitions. To be sure, diplomats in every regional capital continue to use Robert Zoellick’s phrase of encouraging China to be a "responsible stakeholder." But Gillard’s pronouncement that the ANZUS alliance is becoming more important in this Asian Century rather than less is all about China’s reemergence. Her declaring that Australians were "clear-eyed" about their differences with China—and pointedly contrasting the latter’s authoritarian rise with the emergence of democratic India and Indonesia—is telling. Hedging against authoritarian China by strengthening the U.S.-led hub-and-spokes security system in the region is now Australia’s preferred—and possibly only—option.

When Gillard’s predecessor, Kevin Rudd, became prime minister in December 2007, one of his first foreign policy acts was to withdraw unilaterally from the Quadrilateral Initiative involving the United States, Japan, India and Australia—a grouping Beijing referred to as an "Asian Nato" against China. As far as symbolism is concerned, the fact that the Initiative was probably stillborn is less relevant than the fact that then Foreign Minister Stephen Smith announced Australia’s intention to withdraw from the grouping while standing alongside his Chinese counterpart Wang Jiechi at a press conference. Rudd’s first overseas trip to Asia as leader included Beijing, but excluded Tokyo—Australia’s most powerful Asian ally. His idea was to help coax and ease China as a cooperative power into the regional order.

What changed?

First, Australians are now rejecting the narrative that China is simply becoming a much bigger version of Japan or South Korea: a private sector-led economy that would inevitably give rise to the emergence of a prosperous and independent middle class demanding political reform.

But the opposite has occurred. Since the mid-1990s, the Chinese Communist Party (CCP)—through favoring state-owned-enterprises—has tightened its grip on the most important economic levers in the country. Since the CCP dispenses the most valued business, professional, and career opportunities, the rise of the middle class is tied to the fortunes of the party. Far from clamoring for political reform, the primary gateway to success is party membership. It is no wonder that an estimated three quarters of the 80 million CCP members are middle and upper class urban citizens, with tens of millions wanting to join.

More broadly, because the structure of China's political economy means that its economic rise has disproportionately increased the wealth and resources of the state, this has enhanced Beijing's capacity to resist domestic and external pressure for change. In other words, the CCP has entrenched its hold on power into the foreseeable future even as China is embracing partial free market reforms. Indeed, the CCP is the big economic (and therefore political) winner of ongoing "reforms."

Second, and like many others in the region, Australians once believed that economic integration was meant to make China more cooperative and less assertive. Likewise, a China emerging and benefiting from the existing regional order was meant to ensure that Beijing would become a more rather than less satisfied rising power. But as its assertiveness in the East China, South China, and Yellow Seas throughout 2010 demonstrated, the opposite has occurred. While China is still too weak and isolated to substantially rework pre-existing regional rules and conventions, it has nevertheless become too strong to meekly accept an order that it did not itself create.

In the past, Australia’s security guarantor was also its most important trading partner. Back then, strategy was simple: Attach Australia to the most formidable naval power in the region which happened to be the United Kingdom (prior to World War II) and America (after World War II). For the first time in the country’s history, its largest trading partner is now also a potential strategic threat. It is no wonder that Prime Minister Gillard’s comments to Congress about American exceptionalism, its powers of renewal, and the famous "can-do" attitude are both a statement of committed belief and ardent hope.

John Lee is a foreign policy research fellow at The Centre for Independent Studies and a Visiting Fellow at the Hudson Institute in Washington, D.C. He is the author of Will China Fail?

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