As US-China rivalry heats up, can Australia defuse the risk of superpower conflict?

As spy stories go, the recent foray and ultimate demise of China’s surveillance balloon across the United States is not very promising. Beijing probably did not learn any state secrets, and the eventual downing of the unmanned aerial system once it was safely over water is hardly the stuff of Le Carré.

Yet the balloon incident is a powerful illustration of why Australia’s foreign affairs minister, Penny Wong, has been calling for the US and China to put in place “guardrails” to manage their competition responsibly.

Coming only months after the much-heralded summit between US president Joe Biden and Chinese leader Xi Jinping, the incident is a fresh reminder that US-China rivalry is here to stay. While many countries hoped that top-level diplomacy could help establish more stable ties between the superpowers, less than three months later, the US secretary of state, Antony Blinken, was forced to postpone his planned travel to China during which he would have taken forward the agenda agreed by the leaders.

The incident also highlights how domestic factors in both China and the US could shape their relationship in unpredictable ways. Beijing’s opaque political system is leaving experts guessing about who authorised the mission and why China handled the incident so poorly. In the US, the visibility of this brazen incursion has strengthened the hand of China “hawks” who seek an even less compromising stance on China.

There were already deeply worrying signs about the trajectory of US-China ties, and a growing sense of fatalism in the US about the risk of conflict. A US air force general warned his officers last week that he believed a war with China was coming as soon as 2025. While US officials have distanced themselves from his comments, these undisciplined remarks help normalise the idea of conflict between the two superpowers.

All of this amounts to a deeply concerning picture from an Australian perspective. Wong’s speech in Washington in December rightly made it clear that Australia has an interest in stable US-China ties with better institutionalised safeguards to avoid crises. Importantly, she also made it clear that the onus was primarily on China to accept the overtures being made by the US. This principled statement of Australia’s interests is a big improvement on the approach of the previous government. As defence minister, Peter Dutton talked up the likelihood of Australia participating in a conflict, rather than focusing on the more basic and important point, which is that Australia should do everything in its power to prevent one.

Yet what can Australia feasibly do to help lower the risk of superpower conflict? The 2023 Asia Power Index, released by the Lowy Institute this week, confirms that US-China competition is likely to be the defining feature of the Indo-Pacific in the decades ahead. Our data, which maps the power of 26 countries in Asia, shows that a growing chasm separates the US and China from the next most powerful countries in Asia. China is nearly twice as powerful as either India or Japan.

This means that contrary to the hopes of many regional countries for a “multipolar” region, in which power is shared among a diverse group of countries, the Indo-Pacific is more likely to be “bipolar”. The most important variables will be the US, China, and how they approach each other.