Concerns were widely expressed this week about a Chinese intelligence-gathering ship loitering off eastern Australia to spy on our biggest defence exercise. This is one of many cases where Prime Minister Scott Morrison will have to make hard decisions about when to assert Australia’s interests against a determined China promoting its own agenda.

A new cold war with China is playing out in all but name. Australia will be at the front line of much of this because we will increasingly be tested by the United States’ asking, ‘Are you with us?’, while China asks, ‘Are you against us?’

All the indications are Morrison understands that our worsening strategic situation will force Australia into an even closer military alliance with the US.

When the prime minister takes up President Donald Trump’s invitation to visit the White House, he will do so confident that the alliance relationship is strong, but with a clear understanding that more will need to be done to counter Chinese influence in the region.

In all likelihood, that will mean considering an increase in defence spending beyond the current target of 2% of GDP and doing even more to build Australia’s military presence in the region.

The old Australian strategy of trying to balance between these forces won’t work for much longer because China’s increasingly aggressive international behaviour is starkly at odds with our long-term security interests.

Three little-noticed recent developments serve to highlight a headlong slide towards a new cold war between the Chinese Communist Party’s leadership on the one hand and the rest of the Asia–Pacific and, frankly, all democracies on the other hand.

Each incident shows how Beijing positions itself for tactical advantage. Although China’s leaders often talk about the need for countries to pursue ‘win–win’ cooperation, Beijing is intent on manoeuvring to win advantage for itself at the expense of its neighbours.

As Defence Minister Linda Reynolds said in a carefully worded speech in London this week, ‘The longer we leave it unchecked, the bolder they become.’ Reynolds didn’t name China, but she didn’t need to when describing ‘countries prepared to flout the rules-based order’. These days, even a British audience understands that China presents the biggest strategic threat to global stability.

So, to the recent incidents, the latest in a long succession of deliberate Chinese actions to assert its power regionally and globally.

First, in Beijing, China’s Defence Minister Wei Fenghe hosted the ‘Fourth Forum for Senior Defense Officials from Caribbean and South Pacific Countries’. It’s difficult to comprehend how China could identify important defence interests in either location, but Wei was reported as saying that China wanted to deepen military exchanges and cooperation with Caribbean and Pacific island countries ‘under the framework of the Belt and Road Initiative’.

So much for the claim made by Beijing’s backers in Australia that the BRI is a harmless vehicle for infrastructure investment. It’s clear in Chinese strategic thinking that the BRI is a means to assert influence. Where commercial ports might cement an economic relationship, Beijing’s aspiration will be to build military ties, seeking access and engagement.

This helps to explain China’s interests in establishing a military base on Vanuatu and also why ostensibly independent Chinese businesses have pressing interests to build ports and airports in commercially unviable locations everywhere from Papua New Guinea’s Manus Island to French Polynesia in the Pacific and from the Seychelles in the Indian Ocean to Djibouti on the Horn of Africa.

China will continue looking for opportunities to establish military bases in the Pacific, which will greatly complicate Australian and American defence planning. That is precisely why the CCP wants such a facility; it’s not about delivering Wei’s confected list of cooperation in ‘anti-terrorism, peacekeeping and disaster relief’.

The second incident took place last weekend. According to the Vanuatu Daily Post, six individuals of ethnic Chinese origin were detained in Port Vila by Chinese law enforcement officials working incognito, held on the premises of a Chinese-owned company and then extradited from the country without any legal process on a chartered Chinese aircraft.

There are precedents, including in Fiji, where the Chinese state has abducted individuals who may have broken Chinese laws to face legal proceedings in China. The latest case in Vanuatu is particularly disturbing because it reportedly happened with the tacit support of some senior politicians but outside of any national legal framework.

The Vanuatu Daily Post editorialised: ‘Our development partners—who claim to stand for an international rules based order—should remind Vanuatu what those rules are … Vanuatu is not China. But today, it’s looking more like it than ever before.’

What is clear is that sovereign interests in small developing countries will do nothing to stop Beijing from acting as it wishes, often openly contemptuous of local politicians, officials and laws.

The third development happened at the beginning of July when China’s transport ministry, warning of ‘probable or imminent’ threats, raised security requirements to the highest level under the International Ship and Port Facility Security Code for Chinese ships transiting through the Strait of Malacca between Singapore and Indonesia.

The announcement surprised observers because the area has been stable, with lower levels of piracy than have been seen in years. No other country has raised threat levels for ships transiting the strait.

It’s possible the Chinese decision reflected concern about recent attacks on shipping near the Strait of Hormuz. But that’s half a world away and a different strategic story. More likely the decision to raise threat levels over the Malacca Strait is another step in China consolidating its control over the South China Sea.

In May 2018, China installed anti-ship cruise missiles and surface-to-air missiles on the three island facilities it has constructed in the South China Sea and, simultaneously with the Malacca Strait threat-level increase, Beijing held a major naval exercise in the region, firing a live anti-ship missile.

China has worked at great speed to strengthen its military hold over the South China Sea and to demonstrate its domination with exercises and frequent visits of combat aircraft. In 2012 President Xi Jinping created the ‘Central Maritime Rights Protection Leading Small Group’—the forum, personally chaired by Xi, where top CCP elites make policy for the South China Sea.

If Beijing wanted to, it could quite easily ‘close’ international access to air and sea space in the South China Sea to demonstrate its military control. What better way to do that than in response to an improbable threat assessment which claims that Chinese shipping faces unspecified threats in the nearby Strait of Malacca?

These developments are examples of what Reynolds said in London are ‘options for pursuing strategic ends just below the threshold of traditional armed conflict—what some experts like to call grey-zone tactics or hybrid warfare’.

There’s a general recognition in Canberra that, as Morrison said before the G20 meeting, ‘The balance between strategic engagement and strategic competition in the US–China relationship has shifted.’ What is perhaps tougher to publicly acknowledge is that Australia’s interests are equally affected.

The Chinese state’s policies are deliberately designed to undermine Australian interests in the Pacific while strengthening Beijing’s own hand. This is precisely the ‘zero-sum game’ Chinese diplomats accuse Washington of playing against them.

While Malcolm Turnbull took initial steps to lift Australia’s profile and presence in the Pacific islands, it’s Morrison’s decision to embrace a ‘Pacific step-up’ strategy that creates the basis for pushing back against China’s ‘we win, you lose’ approach.

An Australian military joint taskforce involving the supply ship HMAS Sirius will operate throughout the Pacific during July making port calls and ‘cementing our relationships’. Hopefully a softer Australian strategy emphasising a ‘like-minded approach’ with the island states will reduce local temptations to succumb to the attractions of well-funded Chinese engagement.

Amid the gathering strategic storm clouds, the urgent policy challenge for Australia is to apply some clear thinking to how we manage relations with China and with the United States. We are not a neutral bystander in a cold war that pits authoritarianism against the international rule of law.

First, it’s time for the federal government to prevent the states and territories and even local governments from electing to sign up to the BRI through memorandums of understanding as Victoria did last year. The BRI is designed to advance Beijing’s strategic objectives and on that basis it is incompatible with Australian interests.

Second, we should reject the calls from organisations like the think tank China Matters, which recently argued for Australia to ‘do our utmost to be an integrating force for the PRC in our region’ at the same time as claiming that ‘our interests are not always going to align with the interests of the United States’.

While that latter point may be true, it should be clear that a generation of enthusiastic attempts to make Australia economically dependent on China has done nothing to change Beijing’s strategic behaviour. Now the task is to make sure that economic dependence won’t compromise our ability to promote Australia’s national security.

It is idle to pretend as the China Matters organisation does that a new cold war isn’t playing out in the region. No one really wanted this outcome. The hope was that China would emerge as a more open and liberal-minded power as it got wealthier, but the opposite has happened. If a new cold war is our future, Australia must move quickly to stake out our position as an influential player in the region with a voice to be listened to in Washington and Beijing.