As the distribution of wealth, influence and strategic weight in our world continues its profound transformation and the light at the end of the tunnel of the Covid-19 pandemic continues its ambivalent flicker, the Australia–China relationship has deteriorated badly. These developments are, of course, related in important ways and, by and large, we are appropriately focused on understanding these linkages as fully as we can. And we aren’t the only one finding the present transition a daunting challenge. Indeed, if we step back a little, it becomes clear that our worries are a small example of a very large challenge confronting the region as a whole.

On the one hand, we have the United States, the world’s pre-eminent state struggling to regain some measure of purpose and coherence. Since China confirmed in the 1990s that state capitalism could reliably deliver strong economic growth, its fourfold advantage over the US in population made it essentially inevitable that it would eventually become the largest economy in the world and gain all that would be associated with such a transformation. Washington downplayed this inevitability for too long, preferring to indulge the possibility that China would change or that the ‘unipolar moment’ could be made to last indefinitely.

Then came 9/11, the Iraq War, the global financial crisis, Donald Trump and the Covid-19 pandemic, a series of body blows that, on the one hand, brought the inevitable forwards and, on the other, tempted the Chinese state into progressively raising and accelerating its strategic aspirations.

Despite its inevitability, the eventual slippage of the US in international rank and status will be a difficult and emotional prospect and something that will have to be dealt with by a state that has in recent times seemed on the verge of a societal implosion. Nor should we lose sight of the fact that America’s clearest and most enduring advantage over China is a seasoned military that has been setting standards and redefining military conflict for decades.

Australia is heavily invested in America’s ability not only to recover its poise but to manage this transition away from primacy and sole leadership in a responsible and stabilising fashion. There are strong grounds for confidence but the stakes simply could not be higher.

On the other hand, we have China, a state that has for millennia had the economic, technological, cultural and military heft to dominate and shape its extended neighbourhood but which was thrown off course by the industrialising West from early in the 19th century through to the late 20th century. China is led by the Chinese Communist Party and characterises its rule as ‘socialism with Chinese characteristics’. The CCP, which took power by force—winning a civil war that lasted more than 20 years—has enduring sensitivities about its legitimacy and deep-seated instincts to view its environment—domestic as well as international—in adversarial terms.

The CCP faces the formidable challenge of acquiring the art of regional leadership, which means making China more open to dialogue and persuasion, becoming more relaxed about the concomitant exposure of domestic flaws and limitations, and providing assurance that there are indeed effective internal checks and balances on the power of the politburo (allowing regional states to lessen their reliance on external checks like alliance arrangements and the Quad). The CCP could profitably revisit the notion of soft power—indispensable to enduring leadership—and appreciate that this phenomenon is vastly more subtle than its own understanding of the concept admits.

At the heart of soft power is the capacity of a regime and a nation, as it goes about managing its affairs, to inadvertently generate an aura that others find appealing and reassuring and want to be part of. The irony is that getting one’s way without the appearance of demands, confrontation and dangerously resentful losers is a deeply entrenched Chinese cultural trait. Competition is as normal in China as it is anywhere else, but this preference prioritises indirect means of changing how others see the balance of their interests and the patience needed for such tactics to bear fruit. Indeed, the evidence is rather strong that, across the spectrum of economic, political and strategic objectives, the CCP has found that persistent subcritical pressure is highly effective, not least against democratic states. And it’s a tool that the party has the singular capacity to scale up or back without so much as a hint of due process.

Democracies tend to be deterred from reacting because the responses available to them are too easily portrayed as excessive and destabilising. The fact that China itself is effectively immune to retaliation in kind seems to have elevated this inherent advantage into something akin to a strategic asset. But these subcritical or grey-zone tactics completely miss the soft-power mark and have instead been associated with a rather pronounced shift in international attitudes towards China: a pivot away from relaxed and encouraging towards watchful and dubious.

None of this is immediately helpful to easing Australia’s current difficulties with China. Our reality, however, is that a powerful China is going to be with us for a very, very long time. Australia will have to get used to adapting to China’s preferences in many ways and across many fields. Some such adaptations will be positive and attractive, or at least painless, but others will be difficult to endure. Bearing in mind that China is also entering unfamiliar territory, it’s important that we use the present phase of the transition to define what we must be prepared to resist, to assemble as much regional support for that posture as possible and to find an acceptable mechanism for these boundaries to be addressed and absorbed into the fabric of regional diplomacy.

More broadly, our region needs to commit urgently to the collective development of guidelines that can support confident and predictable interaction despite seemingly conspicuous gaps between states in core values and in attitudes towards power and the role of the state.