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Abstract
For more than two decades, Australia successfully balanced its economic ties with China, its most significant economic partner, and its security alliance with the United States, its core ally. That era has ended. As US–China tensions escalate, Canberra faces difficult choices between the two great powers. The signing of the AUKUS (Australia–United Kingdom–United States) security pact in 2021 and other measures perceived as anti-China alignments signal that Canberra has abandoned its hedging strategy, siding with Washington against Beijing. This article critically examines this foreign policy shift from both theoretical and empirical perspectives. By placing Australia’s situation in a comparative context, it argues that for a middle power, unequivocally siding with one great power against another is a risky geopolitical move that could further intensify great-power rivalry.
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What an intending ally trusts to is not the goodwill of those who ask his aid, but a decided superiority of power for action.
—Thucydides
“The Melian Dialogue”
History of the Peloponnesian War
While being a close ally of the United States, Australia has significantly enhanced its cooperation with China, which became its largest trade partner in 2007. Despite the complexities of its geopolitical position between the established power (the United States) and the rising power (China), Canberra advanced a nuanced and pragmatic policy aimed at reducing US–China tensions. It navigated these tensions without excessively antagonizing either great power, effectively hedging its bets between them.
However, as US–China rivalry intensified, maintaining this hedging strategy became increasingly difficult. The era of low-cost diplomacy has ended. With great-power competition on the rise and China adopting a more aggressive stance, Australia’s 2021 decision to join the AUKUS (Australia–United Kingdom–United States) security pact marks a significant shift. The pact, which aims to help Australia build and deploy longer-range nuclear-powered submarines to counter a perceived growing threat from China, indicates that after more than 20 years of balancing relations with both China and the United States, Canberra has unequivocally sided with Washington. In other words, Australia has abandoned its hedging strategy and opted to consolidate its alliance with the United States.
This article employs a qualitative methodology to critically assess this foreign policy shift. It asks two questions: (1) What prompted Canberra to adopt an explicitly anti-China stance despite the significant benefits of Australia–China economic cooperation?; and (2) What are the implications of this behavioral change for Australia and US–China relations? The article examines Australia through the lens of hedging theories and further asks why a key middle power decided to abandon its hedging policy between two great powers and join the established great power in balancing against the rising power. What is the impact of a middle power’s transition from hedging to balancing on great-power relations?
The existing literature on hedging has primarily focused on identifying, categorizing, and explaining different patterns of hedging, while neglecting why a state might abandon its hedging behavior and how the shift from hedging to balancing affects regional and global geopolitics. This article argues that the end of hedging in Australia’s relationships with China and the United States results from the disappearance of structural uncertainty and systemic permissiveness, which are the foundations of hedging for smaller powers. It further contends that Australia’s transition from hedging to balancing will likely exacerbate the US–China rivalry.
To support these arguments and highlight the risks of transitioning from hedging to balancing, the analysis presents comparative evidence from other regions experiencing intensifying great-power rivalry, such as Ukraine and Georgia.
The article proceeds as follows: the next section defines the conceptual framework and examines the impact of hedging versus balancing on great-power rivalry. Section two applies this framework to the case of Australia, exploring Canberra’s shift from hedging to balancing and its impact on US–China rivalry. Section three extends the analysis beyond Australia, testing the article’s arguments with comparative evidence from Ukraine and Georgia.
The End of Hedging and Its Implications: A Theoretical Discussion
The term hedging is widely used in international relations literature, primarily to describe the behavior of small and middle powers. Hedging goes beyond simple nonalignment, involving proactive multivector engagements to maintain diplomatic flexibility and secure advantageous strategic positions. Often not the result of well-calculated long-term plans, hedging is a risk-management approach necessitated by the need for smaller states to survive under conditions of power asymmetry and strategic uncertainties.[1]
Practically, hedging is characterized by three main principles:
- Relative Equidistancing and Simultaneity: This requires not taking sides with competing great powers in a straightforward and all-encompassing way. Instead, it involves pursuing a dual-track, proportional, and, where possible, equidistant engagement to avoid overreliance on one power.[2]
- Opposing and Counteracting Measures: This entails pursuing mixed “engage-and-resist” strategies toward competing powers to keep strategic options open in a worst-case scenario. For example, Malaysia simultaneously forges defense partnerships with both the United States and China to offset the twin risks of uncertain US commitment and uncertain Chinese intentions.[3]
- Diversification of Stakes and Policy Options: This involves “not putting all eggs in one basket” by trying to pursue multiple policy options.
These attributes are interrelated and can be present in varying degrees in the hedging behavior of smaller states. Hedging can also combine defense, diplomatic, legal, or economic means.
Successful hedging enables smaller powers to navigate intensifying great-power rivalry and protect their national interests. Conversely, unsuccessful hedging can compromise smaller states’ strategic autonomy, economic well-being, and territorial integrity. It can lead to subservience, abandonment when stakes are too high, economic insecurity, entrapment in potential great-power conflicts, erosion of domestic authority, and even loss of territory and sovereignty.
In contrast, balancing aims to check and block an “aggressor.” Balancing is a “countervailing policy designed to improve abilities to prosecute military missions in order to deter and/or defeat another state.”[4] Whether external or internal, balancing “involves blocking the ambitions of the other side, taking actions to prevent it from achieving its goals of dominance.”[5] The middle position characteristic of hedging, which avoids choosing one side at the obvious expense of another, does not constitute balancing because it does not straightforwardly check, block, or otherwise detract from the power of the rising challenger.
Despite the popularity of hedging and balancing among international relations scholars, there has been little systematic work on why hedging strategies might fail or why a state might switch from hedging to balancing. Moreover, there has been scant attention paid to the implications of such a switch for great-power relations.[6] Hedging has typically been viewed as premised on structural uncertainty and systemic permissiveness.[7] Smaller states hedge when future developments in great power competition are uncertain—specifically, when the distribution of power among great powers is uncertain or unfixed, the source of imminent threats is unclear, and there is no intense balance-of-power competition between great powers, or it is unclear how this competition will unfold and affect smaller states.[8] These conditions are associated with the permissiveness of the geopolitical environment within which smaller states operate.[9]
Therefore, it can be inferred that smaller states will be less incentivized to hedge when structural uncertainty is low—when the power distribution among major great powers is certain or nearly certain, when the sources of threat are clear, when there is intense balance-of-power competition and high levels of enmity between the major great powers, and when it is clear how their competition is likely to unfold, whether trending toward greater cooperation or competition. In other words, states are less likely to hedge when the geopolitical environment within which they operate becomes less permissive.
Emphasizing the role of structural uncertainty in explaining the foreign policy shift away from hedging does not deny the influence of domestic political factors. In Australia’s case, domestic developments in the late 2010s, particularly within the security establishment and the rise of anti-China sentiment in public and political spheres, contributed to advocating for a firmer stance on China. However, this article considers structural conditions as the primary causal variable. Domestic political factors may have facilitated reaching the inflection point in foreign policy decision making, but they were not the primary causal driver. The growing domestic concerns about China are not unrelated to structural factors but are driven by them, especially as great-power rivalry intensifies.
The relative weight of systemic and domestic-level factors in explaining state behavior varies depending on whether the external environment is more threatening, insistent, and immediate.[10] China began to be seen as more threatening due to its continuous rise and changing structural position, accompanied by shifts in external behavior. Thus, it is more accurate to say that the role of domestic political factors in moving away from hedging depends on the condition of the international structure and affects the degree of change rather than the change itself, as neoclassical realists suggest.[11]
At the same time, there has been limited attention given to how the shift in behavior from hedging to balancing by smaller powers affects great power relations—a topic relevant to the broader discourse on middle powers’ agency and their potential impact on great power dynamics. In this discussion, smaller states are not seen merely as powerless actors but as entities with the agency to shape their external environments, or at least certain aspects of it.[12] They can manipulate great-power competition to their ends.[13] They can develop horizontal cooperation with other smaller states or take a diplomatic lead on important issues that serve their interests.[14] They can also exercise niche diplomacy, mediation, bridge building, and innovative practices.[15] Additionally, they can pursue solutions to international problems through multilateral channels or institution building, thereby positioning themselves as responsible international actors.[16]
Middle powers are adept at the “game of skill” and “the art of the indirect,” utilizing nonmaterial means to act as catalysts, facilitators, or managers in navigating between great powers.[17] Thus, smaller powers can either foster cooperation or exacerbate tensions between major powers.[18] In the Indo-Pacific region, for example, middle powers can leverage the rivalry between China and the United States to incentivize cooperation if it aligns with their strategic interests.[19]
From this perspective, hedging is likely to mitigate great power rivalry, whereas balancing tends to exacerbate it. Hedging strategies aim to manage structural uncertainty and influence great power behavior in ways that reduce their rivalry.[20] States practicing hedging seek to benefit from both competing great powers, preferring that their rivalry does not escalate into open hostility. For instance, Vietnam has demonstrated a preference for maintaining a balanced China–US relationship to avoid being drawn into intensifying great-power competition.[21] Similarly, Indonesia and Malaysia have taken cautious approaches or expressed reservations about alignments such as AUKUS, which are seen as potentially exacerbating regional polarization and escalating tensions among great powers.[22]
Because it is easier to hedge between friendly great powers, smaller Asian states are concerned about the potential for China–US rivalry to escalate into a hegemonic war. They strive to mitigate Chinese concerns while urging the United States to adopt a constructive approach toward China, possibly sharing power and leadership.[23] By maintaining a balanced approach without aligning decisively with either China or the United States, middle powers in Asia can significantly influence regional geopolitics. On one hand, they can prevent the solidification of the alternative system that China advocates, which would occur if they leaned toward China and bolstered its regional leadership. On the other hand, they avoid isolating China, a scenario that could arise if they unequivocally aligned with the United States. Therefore, hedging strengthens middle-power diplomacy and, amid structural uncertainty, is likely to mitigate great-power rivalry.
The same cannot be said for balancing, which entails clear alignment with one great power against another.[24] Transitioning to balancing accelerates the elimination of uncertainty about great power relations and poses risks to regional stability. Abandoning hedging and aligning with one power against another intensifies “us-versus-them” polarization, potentially leading to premature confrontation and hegemonic conflicts. Establishing or reinforcing an alliance with one great power that explicitly targets the other exacerbates tensions between great powers and dissatisfaction with the existing status quo. The shift from hedging to balancing in middle-power behavior signals a concentration of power rather than diffusion, reflecting a shift where perceived risks associated with uncertain great-power relations, previously managed through hedging, now pose immediate security threats demanding direct responses.
From “We Don’t Have to Pick a Side!” to Balancing against China
Being an ally of a competing great power does not automatically preclude hedging, provided the relationship avoids open confrontation. Alongside Australia, existing studies commonly identify other US treaty allies such as Japan, New Zealand, Canada, and Thailand as practitioners of hedging between China and the United States.[25]
Moreover, until recently, Australia did not consistently mirror the United States’ stance during episodes of US–China tensions. There were periods when US–China relations deteriorated while Australia–China relations improved, notably from 2016 to mid-2021, when tensions between Beijing and Canberra were effectively managed. The presence of an alliance with a great power significantly influences the dynamics of hedging, particularly how and when hedging transitions. A clear alliance presence heightens the likelihood that, when structural pressures mount, the smaller state will begin balancing alongside its larger ally against another great power. This readiness stems from the availability of protective options and the expectations of larger powers that their smaller allies will play more active roles in alliance strategies. In contrast, without assured allied protection, smaller states may lean toward bandwagoning with a threatening great power out of fear of isolation or coercion.
The situation becomes more complex when smaller states are uncertain about the reliability of their protective options—when defense assurances are ambiguous or lack concrete commitments. In such cases, smaller states may misjudge their strategic environment, assuming protective options exist when they do not. Under conditions of escalating great power rivalry, moving away from hedging can be particularly risky. Australia exemplifies the former scenario: its longstanding US alliance and history of strategic cooperation make bandwagoning with China less likely, favoring instead a posture of balancing alongside the United States against China.[26]
Canberra historically hedged by deepening economic ties with China while strengthening its alliance with the United States. During the Howard government (1996–2007), Australia pursued economic opportunities tied to China's rise while simultaneously engaging in the Trilateral Security Dialogue with Japan and the United States.[27] The Rudd–Gillard governments (2007–2013) maintained friendly relations with China while reaffirming the importance of the US alliance. Prime Minister Kevin Rudd’s decision in 2007 to withdraw from the Quadrilateral Security Dialogue (Quad) signaled Canberra’s caution about aligning too closely with Washington in its approach to China.[28]
Substantial Chinese investments flowed into Australia during this period. The Gillard government (2010–2013) continued to cultivate bilateral relations with Beijing. By 2012–2013, China had solidified its position as Australia’s primary trading partner, accounting for about 32 percent (AUD 78.1 billion) of Australian exports and 18.8 percent (AUD 44.5 billion) of imports.[29] This economic relationship prompted the upgrade of Australia–China relations to a comprehensive strategic partnership in 2014.[30] The following year, Australia made the strategic decision to join the China-led Asian Infrastructure Investment Bank (AIIB) as a founding member, marking a milestone in bilateral cooperation. Simultaneously, Canberra and Beijing finalized negotiations for the China-Australia Free Trade Agreement (ChAFTA).[31] These developments fostered a degree of economic interdependence that allowed Canberra to navigate the intensifying US–China rivalry with discretion, avoiding a consistent alignment with the United States’ more confrontational approach.
Australia’s hedging strategy was articulated in high-level statements affirming Canberra’s stance of not aligning exclusively with either the US or China amid their rivalry. Prime Minister Julia Gillard emphasized, “For Australia this is not an either-or question . . . Australia can maintain a close strategic alliance with the US while also enhancing its friendship with China, despite Beijing’s growing military and economic clout in the Asia-Pacific.”[32] Former Australian Defence Minister David Johnston similarly noted, “we see the there is a balance between our relationship with China and sustaining our strong alliance with the United States.”[33]
Meanwhile, Australia’s military cooperation with the United States was deliberately designed not to provoke China. While Canberra acknowledged the South China Sea (SCS) as a significant regional issue, it underscored its status as a nonclaimant state and refrained from taking sides in the disputes among claimants.[34] Australian Foreign Minister Julie Bishop reiterated Canberra’s neutral stance during the China–US trade conflict, advocating for WTO mechanisms to resolve disputes rather than choosing sides, thereby maintaining a distance from US policy on China-related matters.[35]
In 2018, Prime Minister Malcolm Turnbull claimed that “it is a mistake to assume that China will assume vis-à-vis the United States the role of the Soviet Union in the Cold War” and that “we look forward to working with China on Belt and Road Initiative projects.”[36] Economically intertwined with China and strategically aligned with the United States, Australia navigated a delicate balance, reluctant to adopt an explicitly anti-China posture while deepening its strategic cooperation with the United States. This approach was shaped by conditions of structural uncertainty surrounding the evolving US–China rivalry and its implications for future global order and strategic challenges, guiding Canberra’s cautious approach to avoiding overt antagonism toward China.
It is challenging to empirically discern the precise impact of Australia’s hedging strategy on the US–China relationship, given the multitude of factors influencing this dynamic where Canberra’s actions are not paramount. However, there are instances illustrating Australia’s efforts to mitigate tensions between the great powers and encourage a constructive approach between China and the United States. In 2014, Australia successfully organized the annual trilateral Kowari military exercises in North Queensland, leveraging its bureaucratic and military resources to enhance regional influence and foster measures aimed at reducing US–China rivalry. Despite escalating regional tensions, Australia hosted these trilateral exercises six times between 2014 and 2019, focusing on building confidence, trust, and effective communication among all three nations.
According to then–Australian Chief of Army Lieutenant General Rick Burr, “By holding exercises such as KOWARI, we promote friendship and cooperation between Australia, the US and China, enhancing the security of our region.”[37] Participation in Kowari compelled both China and the United States to demonstrate their commitment to engagement in the Indo-Pacific region. This initiative was deemed crucial in mitigating tensions because, as former US Department of Defense official Drew Thompson stated, it was "antithetical to the United States and its partners in the region," highlighting that US involvement is a gesture of loyalty and respect toward Australia.[38] Nevertheless, as some experts emphasise, “KOWARI exercise conveys the basic point that China is not Australia’s enemy” and, hence, is not a threat to the US–Australia alliance or the Indo-Pacific more broadly.[39]
Australia’s hedging began to wither away and morph into anti-China balancing with the United States as structural uncertainties, foundational to hedging, diminished. With China’s ascent challenging US dominance, the global power dynamics shifted, fostering more assertive foreign policies and contentious environments in the Indo-Pacific involving both China and the United States.
Canberra’s perception of China underwent a transformation. The 2016 Australian Defence White Paper explicitly stated that “Australia opposes the use of artificial structures in the South China Sea for military purposes. Australia also opposes the assertion of associated territorial claims and maritime rights which are not in accordance with international law, including the United Nations Convention of the Law of the Sea.”[40] The same White Paper also underscored a heightened strategic risk environment requiring increased preparedness.
In line with this shift, the 2017 Foreign Policy White Paper highlighted that “Australia is particularly concerned by the unprecedented pace and scale of China’s land reclamation activities.”[41] This reflected a growing view of China as a state pursuing power maximization potentially leading to conflict, rather than a security-seeking actor.
These shifts occurred amidst escalating US–China rivalry, drawing Australia inevitably into the fray. In 2017, Australian Prime Minister Turnbull asserted that the United States and its allies in Asia should thwart China’s ambitions to dominate the region, advocating for the preservation of the US-led regional order.[42] During his keynote address at the June 2017 Shangri-La Dialogue in Singapore, Turnbull stated that “some fear that China will seek to impose a latter-day Monroe Doctrine on this hemisphere in order to dominate the region, marginalising the role and contribution of other nations, in particular the US.”[43]
Then–Foreign Minister Julie Bishop echoed these sentiments, emphasizing that the “United States must play an even greater role as the indispensable strategic power in the Indo-Pacific.” She also called on China to “embrace democracy to seek economic prosperity and social stability.”[44] Concurrently, in 2017, the Australian Security Intelligence Organisation (ASIO) raised alarms about the Chinese Communist Party’s influence on Australia's political system.
In 2018, the Australian government took further steps by banning Chinese tech giant Huawei from participating in Australia’s 5G telecommunications network, citing security concerns. Turnbull continued to critique China’s actions in the SCS, characterizing them as provocative and suggesting that Australia needed to consider a more balanced approach toward China.[45]
The COVID-19 pandemic exacerbated US–China rivalry and accelerated the deterioration of Australia–China relations. On 22 April 2020, following a phone call with US President Donald Trump, Australian Prime Minister Scott Morrison initiated an independent international inquiry into the virus’ origin—a move China vehemently opposed.[46] In response, Beijing criticised Canberra for “political manoeuvring,” severed ministerial-level diplomatic and trade dialogue with Canberra, and imposed significant restrictions on trade and people-to-people exchanges with Australia. The rapid downturn in relations led some observers to argue that Australia appeared more willing than its allies such as the United Kingdom, Canada, and New Zealand to confront China despite substantial economic ties.[47]
These COVID-related foreign policy decisions were influenced by Australia’s domestic politics, particularly the Morrison government's effort to leverage growing anti-China sentiments. However, Morrison also emphasized that “our region . . . is the focus of the dominant global contest of our age” in which “the institutions of patterns of cooperation that have benefited our prosperity and security for decades are now under increasing—and I would suggest almost irreversible—strain,” indicating the impact of external structural changes on Australia’s strategic outlook.[48] Moreover, the return of Labour leaders to power in May 2022 did not lead to a significant shift in Australia’s China policy, especially concerning military-strategic cooperation with the United States. This underscores that while domestic politics play a role, they do not fully explain Canberra’s shift from hedging to balancing in its foreign policy.
Canberra’s shift to balancing was not merely diplomatic and rhetorical but also involved active participation in anti-China strategic partnerships. In April 2020, the Australian warship HMAS Parramatta conducted exercises with three US Navy ships in the South China Sea, described as a response to China’s intensified activities during the COVID-19 pandemic.[49] In October of the same year, Australia re-joined the Malabar exercise, reversing its previous stance of avoiding military involvement in the Quad, which aims to establish an “Arc of Democracy” around China with the United States, Japan, India, and Australia.[50]
On 1 July 2020, Australia released a new Strategic Defence Update, which signaled a departure from its 2016 Defence White Paper by acknowledging a rapidly changing external geopolitical environment. It announced a significant increase in the defence budget, up to 2 percent of Australia’s GDP (equivalent to AUD 200 billion) over the next decade, to enhance the Australian Defence Force’s capabilities in cybersecurity, high-tech weapons, and long-range antiship missiles.[51] This move demonstrated Australia’s explicit shift toward balancing against China. The United States welcomed Australia’s heightened balancing efforts, with President Joe Biden describing the US–Australia alliance as one of Washington’s “greatest strategic assets.”[52]
The most significant manifestation of Australia’s shift toward balancing against China occurred with the signing of the AUKUS pact in September 2021, involving Australia, the United Kingdom, and the United States. AUKUS provides Australia access to advanced American military technology, enabling Canberra to deploy and develop high-capacity nuclear-powered submarines. While the announcement of AUKUS did not explicitly mention China, the security pact has been widely interpreted as a direct response aimed at countering China’s influence in the Indo-Pacific.
Nuclear-powered submarines are considered crucial for operations far from Australia’s shores, potentially including areas near China, and are not typically required solely for defensive purposes. Conventional diesel-electric submarines are generally more cost-effective for defensive tasks against enemy ships. Therefore, Australia’s pursuit of nuclear-powered submarines underlines its intent to operate in coordination with the US Navy in more distant and potentially contentious maritime regions.[53] Indeed, President Biden highlighted that AUKUS aims to ensure peace and stability in the entire Indo-Pacific, addressing the “current strategic environment in the region and how it may evolve.”[54]
AUKUS and Australia’s enhanced security commitments to Washington mark a pivotal shift in Canberra’s foreign policy, signaling the end of its hedging strategy. Australia has prioritized strengthening its alliance with the United States over maintaining constructive relations with China amid the escalating US–China rivalry.
China’s rapid ascent and increased assertiveness in the SCS and beyond have significantly prompted a stronger balancing response from the US and its allies. The narrowing gap in material capabilities between China and the United States has expanded Beijing’s range of actions and emboldened it to pursue more assertive foreign policies. China’s emergence as a global economic power has necessitated the protection of vital sea lanes such as those in the SCS, leading to the development of a robust deep-sea navy.
As China’s capabilities and ambitions have grown, particularly perceived threats to its national security, the US has increasingly been viewed by Chinese officials, particularly within the security establishment, as its foremost security challenge and a power resistant to China’s rise.[55] This perception has fueled a more nationalistic and aggressive posture from China toward its neighbors, prompting a necessary response in the form of strategic balancing.[56] From this perspective, the United States’ efforts to solidify alliances in the Indo-Pacific region are not just predictable but essential in countering China’s challenge to the existing liberal international order.
However, while the structural imperatives driving US anti-China balancing are clear, the AUKUS pact may not automatically align with Australia’s national interests. The implications of this move are profound, impacting not only Australia–China relations but also US–China dynamics. AUKUS has exacerbated tensions with China, drawing criticism from prominent Australian international relations experts who argue that it risks entangling Canberra in a potential US-China conflict, which Australia has no interest in fighting.[57]
Canberra’s explicit alignment with what is perceived as a US-led anti-China coalition not only enhances Australia’s role as a force multiplier for the United States in its competition with China but also raises expectations of Australian participation in any potential conflict involving the United States and China. The acquisition of nuclear-powered submarines under AUKUS significantly extends the Australian Navy’s operational range across the Indo-Pacific, enhancing its strategic capabilities. These submarines could become a critical asset for the United States in a hypothetical conflict with China, bolstering Australia’s integration into US military strategy against China. As the rivalry between the US and China intensifies, there is a possibility that Washington may request Australia to deploy these new capabilities in support of US objectives against its perceived “enemy.” As the former Australian Prime Minister Paul Keating lamented: “We [Australia] are now part of a [US] containment policy against China.”[58]
In China’s eyes, this shift not only marks the end of Australia’s middle-power diplomacy but also contributes to a starker binary division in regional power dynamics between the United States and China. AUKUS is viewed in Beijing as a “US-led bid to constrain the rising Asian superpower [China]” and a “part of US grand strategy in tis intensified rivalry with China,” and even as a “critical step by the US to construct an Asia-Pacific NATO.”[59] Similar comparisons between AUKUS and NATO, and the broader geopolitical challenges involving China and Russia, are frequently discussed within the Chinese expert community. These comparisons underscore rising concerns about escalating military tensions between China and the United States.[60]
Adding to the complexity is the deepening ideological confrontation. According to the Joint Leaders Statement, beyond maintaining peace and stability in the Indo-Pacific, AUKUS aims to assist allies “protect” their “shared values,” a stance that is seen as a direct critique of China, especially under Xi Jinping’s increasingly authoritarian leadership.[61]
The Anthony Albanese government moderated its China-related rhetoric and attempted to repair the damaged relationship by visiting China from 4 to 7 November 2023. However, these actions do not reverse Australia’s shift toward balancing. Despite Beijing’s negative reaction, the Albanese government supported and began implementing the AUKUS nuclear submarines deal—the Morrison government’s most significant balancing initiative toward China.
Moreover, Canberra facilitated the United States’ long-term plans for a greater presence in Australia as it confronts China’s power in ways that go beyond AUKUS and defy the somewhat more friendly rhetoric. In October 2022, Canberra confirmed the deployment of US nuclear-capable B-52 bombers to the Tindal Air Base in the Northern Territory—another earlier agreement the new Labour government did not reverse. Experts view it as a provocative move aimed squarely at China and indicative of a “new urgency in Australian attempts to counter China’s growing military might.”[62] Beijing deemed it “escalating regional tensions” and “seriously damaging peace and stability in the region.”[63] A few months later, in April 2023, the Albanese government unveiled the public version of Australia’s 2023 Defence Strategic Review, focusing on the China threat and calling for closer security integration with the United States. Deputy Prime Minister and Minister for Defence Richard Marles hailed the document as “the most important shift in Australia’s defence posture in decades.”[64]
The complexity of the changes unfolding in Australia–China relations is further highlighted by the Chinese sonar pulse incident on 18 November 2023, which injured Australian navy divers. China defended its navy and called Australia’s complaint over the incident “vague and one-sided.”[65] Moreover, the Chinese government-controlled tabloid, the Global Times, quoted naval analyst Zhang Junshe, claiming the incident occurred not in Japan’s exclusive economic zone, as Australia asserts, but well within China’s national boundaries.[66] Happening immediately after Albanese’s seemingly successful visit to China, the incident indicates that in the context of intensifying US–China rivalry, Canberra’s attempts to fix the economic relationship with China do not mitigate the deeply entrenched balancing dynamics between the two countries.
The Risks Associated with the End of Hedging: Comparative Evidence
The implications of Australia’s shift away from hedging in its China policy are complex and not easily assessed. However, examining cases such as Georgia and Ukraine suggests that abandoning hedging could pose significant geopolitical risks for smaller powers.
The cases of Georgia and Ukraine differ significantly from Australia, making these parallels questionable in a strict comparative analysis. Ukraine’s and Georgia’s geopolitical positions are more precarious, exposed, and challenging due to the higher intensity of the Russia–West confrontation. These two post-Soviet states are under immense pressure in their efforts to navigate the great-power rivalry that engulfs them. Conversely, Australia operates in a less intense and uncompromisingly polarized environment. China’s regional objectives are more ambiguous than Russia’s, which somewhat mitigates the intensity of China–US rivalry. Consequently, while China is viewed as a strategic challenge in the Indo-Pacific, there is no consensus on where that threat is most pressing.
Simultaneously, Quad and AUKUS differ fundamentally from NATO: they do not include collective defense commitments and are based on existing US-led alliances, which are not the result of multiple rounds of expansion into China’s strategic interests. Additionally, Australia’s geographical isolation from China and its robust alliance with the United States provide it with significant geopolitical flexibility in dealing with China.
Nevertheless, it is widely acknowledged that US–China competition has been visibly intensifying over the past decade, placing considerable pressure on smaller states in the Indo-Pacific, including Australia. Therefore, while Georgia and Ukraine may not directly compare to Australia, they offer cautionary parallels regarding the shift from hedging to balancing against assertive major powers.
In the Georgian context, President Mikheil Saakashvili initially pursued a hedging strategy upon assuming office in 2004. He sought to strengthen ties with the US to reduce dependence on Moscow. While engaging with Washington, Saakashvili also endeavored to improve relations with Russia, advocating for a new bilateral friendship treaty and emphasizing Georgia’s need for Russia as a “powerful partner.”[67] He also worked on signing a new bilateral friendship treaty with Russia. Similar to Australia’s earlier “we don't have to pick a side” stance toward China and the United States during the Kowari exercises, Saakashvili rejected the notion of a binary choice between Russia and the West. He argued that the dichotomy of “Russia or the West?” was outdated and impractical, aiming instead to achieve “the convergence of the American, Russian, and Georgian interests.”[68]
As long as Saakashvili pursued a hedging strategy, his relationship with Russia remained manageable. Moscow even agreed to withdraw four Russian military bases from Georgian territory, which Russia had the legal right to retain under previous agreements.[69] Additionally, Moscow played a constructive role in Georgia's political transition by leveraging its political influence and connections to facilitate the peaceful resignation of Saakashvili’s predecessor and political rival, Eduard Shevardnadze, following the Rose Revolution that brought Saakashvili to power.[70] Consequently, Georgia’s National Security Concept (NSC) of 2005, akin to Australian government documents of the early 2000s and 2010s concerning China, did not view Russia as a significant security risk or a serious military threat.[71]
However, Georgia decided to abandon hedging and fully commit to closer military alignment with the United States ahead of the April 2008 Bucharest NATO summit, which declared Georgia’s inevitable accession to the alliance. Georgia aligned itself with the United States’ most contentious foreign policies by deploying more than 2,000 Georgian soldiers in Iraq and signing a transit agreement permitting NATO to transport troops and equipment through Georgian airspace, ports, and territory.[72] Crucially, Georgia embraced the role of a “beacon of liberty,” challenging Russia in the Caucasus region—similar to how Australia began framing its stance against China in terms of “values.”[73] These actions, particularly the aspiration to join NATO, precipitated an irreversible deterioration in Russia–Georgia relations and culminated in Russia’s military invasion on 8 August 2008. In the aftermath, Georgia, lacking formal security guarantees from the United States or other NATO members, lost significant portions of its territory, namely Abkhazia and South Ossetia.
A strikingly similar pattern is observed in Ukraine, where then-President Viktor Yanukovych, during his tenure from 2010 to 2014, sought to hedge between Russia and the West. He asserted that Ukraine did not need to choose between the great powers, stating, “I intend to establish a stable, strong partnership with the European Union, Russia and the USA” and that “Russia is not preventing us” from achieving this goal[74]— a sentiment akin to the claims made by Gillard and Johnston regarding Australia’s stance between China and the United States. This diplomatic approach enabled Yanukovych to navigate the escalating confrontation between Russia and the West and to derive benefits from both sides.
However, similar to Georgia's experience discussed earlier, Ukraine encountered significant difficulties with Russia once the new regime in Kyiv, which had ousted Yanukovych, pursued an unequivocal shift toward the West. This shift included economic and military integration into Western institutions but lacked accompanying security commitments from the West. Positioned at the epicenter of Russia–West great-power rivalry, Ukraine suffered severe consequences. Moscow interpreted Ukraine’s pivot as an immediate security threat demanding a swift response, which manifested in the annexation of Crimea, the fueling of separatist movements in Ukraine’s Donbas region, and ultimately, a large-scale military invasion by Russia.
The cases of Georgia and Ukraine underscore the critical need for small and middle powers to exercise caution amid intensifying great-power rivalries. While Australia’s alliance with the United States is longstanding, recent developments such as AUKUS and other indications of closer alignment with Washington have significantly deepened Australia’s ties to the United States’ military strategy against China. This alignment raises the prospect that Australia may be called upon to defend “liberal values” against perceived threats from China, particularly in a scenario of heightened US–China military confrontation.
From Beijing’s perspective, Australia’s shift in foreign policy signals the end of its middle-power diplomacy and contributes to a more polarized regional power dynamic, perceived as the United States versus China. This perception reinforces Beijing’s view of Australia as a strategic platform for US influence in countering China, thereby heightening the risk of conflict.
Conclusion
The analysis of Australia’s shift from hedging to balancing suggests that as great-power competition intensifies and their confrontations become more overt, the space for middle powers to hedge diminishes. In response to escalating rivalry among major powers, middle powers often transition from hedging to explicit balancing by aligning themselves with one great power against another. However, this shift tends to exacerbate great-power competition by signaling alignment with specific camps, thereby prompting perceived threats and corresponding responses from the opposing side.
Russia’s invasion of Ukraine in February 2022 exacerbated the divide between the political West and the “non-West,” intensifying the rivalry between China and the United States. This geopolitical polarization places significant systemic pressure on smaller powers, demanding careful navigation and often requiring diplomatic finesse. When confronted with stark choices, the risks of miscalculation increase, and the flexibility of hedging diminishes. Unlike Australia, many middle powers lack the protective option of a robust defense alliance with the United States. For these countries, abandoning hedging could entail severe consequences such as vulnerability to external pressures, economic instability, entrapment in great-power conflicts, erosion of domestic authority, and even territorial or sovereign losses. ♦
Dr. Alexander Korolev
Dr. Korolev is a senior lecturer in politics and international relations in the School of Social Sciences, Faculty of Arts and Social Sciences, at the University of New South Wales (UNSW), Sydney. Before joining UNSW, Alex was an assistant professor of political science in the School of Asian Studies at the National Research University Higher School of Economics in Moscow (2012–2015) and a research fellow in the Centre on Asia and Globalisation at the National University Singapore, Lee Kuan Yew School of Public Policy (2015–2018). He received an MA in international relations from Nankai University, Zhou Enlai School of Government (2009), and PhD in political science from the Chinese University of Hong Kong (2012). He has been a visiting researcher in the Political Science Department at Brown University (2011–2012). His research interests include international relations theory and comparative politics with special reference to China and Russia; great-power politics; and China–Russia–US relations in East and Southeast Asia. He is currently working on a research project that explores how small and middle powers can survive and secure their national interests amid intensifying great-power rivalry. His recent articles appeared in various peer-reviewed journals, including International Relations, Foreign Policy Analysis, International Studies Review, Journal of Strategic Studies, Studies in Comparative International Development, Pacific Affairs, Asian Security, Chinese Journal of International Politics, The China Review, and other journals. His most recent book China-Russia Strategic Alignment in International Politics (Amsterdam University Press, 2022) explores the evolution of China-Russia strategic cooperation since the end of the Cold War.