Australia may be the country that does the best job observing and assessing the evolving dynamics

between Asias two giants, China and India. Chinese strategists keep a very close eye on the research outlets and debates within Australia. One of the most powerful intellectual innovations by Australian international relations scholars in recent years is the concept of Indo-Pacific Asia. It is a concept that has inspired many Chinese strategic thinkers and planners to begin to look at Chinas grand strategy across a wide Indo-Pacific swath.

Within only a few years, Asia will not only be the worlds largest producer of goods and services, it will also be the worlds largest consumer of them. It is already the most populous region in the world. In the future, it will also be home to the majority of the worlds middle class.

The Asian century is an Australian opportunity. As the global centre of gravity shifts to our region, the tyranny of distance is being replaced by the prospects of proximity. Australia is located in the right place at the right timein the Asian region in the Asian century. In the past 20 years, China and India have almost tripled their share of the global economy and increased their absolute economic size almost six times over. By 2025, the region as a whole will account for almost half the worlds output. Many millions of people will have been lifted out of poverty. They will live longer and be better connected to the world. /6 The United States will remain the most powerful strategic actor in Asia for the foreseeable future. But the economic growth and broader international interests of Asias large powers, especially China and India, are changing the established strategic order. Rising national wealth is allowing states to modernise their defence forces, to acquire more advanced capabilities and to project power. At the same time, economic growth will put more pressure on energy, water and food resources. Existing regional strategic tensions remain, such as North Koreas nuclear program and unresolved territorial disputes. Australias strategic landscape is becoming more crowded and

complex./7

Asia will not just be the most populous region in the world. Asia will be the biggest economic zone, the biggest consumption zone and the home to the majority of the worlds middle class. 49 Despite their smaller size, Indonesia, Malaysia and other countries in Southeast Asia are expected to grow rapidly and make solid contributions to regional growth. Southeast Asias cumulative economic, political and demographic weight is growing. With a combined population of 600 million, these countries have embarked on a drive, through the Association of Southeast Asian Nations (ASEAN), towards regional integration and connectivity by 2015. /51 By 2025, four of the 10 largest economies in the world will be in the regionChina (first), India (third), Japan (fourth) and Indonesia (tenth). Asia is likely to account for almost half of the worlds economic output, with China accounting for about half of that 52 Driven by Asias economic rise, the Indian Ocean is surpassing the Atlantic and Pacific oceans as the worlds busiest and most strategically significant trade corridor. One-third of the worlds bulk cargo and around two-thirds of world oil shipments now pass through the Indian Ocean (IOR-ARC 2012). Regional cooperation to ensure the safety and security of these vital trade routes will become more important over coming decades. Some observers have raised a new IndoPacific conception of the Asian region. Under such a conception, the western Pacific Ocean and the Indian Ocean would come to be considered as one strategic arc. This conception is being driven by the increased economic interaction between South, Northeast and Southeast Asia and the importance of the lines of energy supply to Asia from the Middle East. For Australia, either the IndoPacific or trans-Asian conceptions could shape, in different ways, our economic, political, security and environmental interests./74 Northeast Asias evolution is likely to be marked by both growing economic

integration and continuing competition. China and Japan enjoy the third-largest economic relationship in the world. China is Japans largest export market and its largest source of imports./75 Cultural diversity is at the centre of Australias identity. The face of Australia has changed dramatically in recent decades and Asia is now an important part of our identity. /77 In the early decades after Federation in 1901, Australias mindset was oriented mainly towards the British Empire and Europe. Following World War II, Australia shifted its strategic focus to the United States and countries closer to home. And over time Australias economic focus also has shifted into the region. World War II was a major strategic shock for Australia. The fall of Singapore in 1942 marked a new chapter. Australia shifted its attention squarely to Asia and developed a security partnership with the United States. /78 Meanwhile, the Cold War reinforced Australias preoccupation with sustaining major power (notably United States) military and wider engagement in the region. The conclusion of the ANZUS Treaty in 1951, which cemented our US alliance, was a landmark. Australia also encouraged the United Kingdom to retain its military and wider influence in the region into the 1970s. These strategic considerations lay behind Australian policy in relation to Vietnam, including the decision to deploy Australian armed forces there. They were also prominent in Australias decision to support Malaysia diplomatically and militarily when it was facing threats from the Sukarno government in Indonesia during the confrontation (Konfrontasi) period.79 We have supported the bids of two regional partners, Japan and India, to secure permanent membership of the UN Security Council. The Group of Twenty (G20) gives us close engagement with China, Japan, India, Indonesia and South Korea. 80 Australia has long been committed to economic integration with the region. The Whitlam Governments recognition of the Peoples Republic of China in 1972 and the

establishment of diplomatic ties was a milestone. The 1976 Basic Treaty of Friendship and Co-operation with Japan was another landmark.2 The loss of British markets, especially when the United Kingdom joined the European Common Market in the early 1970s, also spurred a search for new markets in Asia.82

K Rudd, (Prime Minister of Australia), Address to the Asia Society Australasia Centre, Sydney: Its time to build an Asia-Pacific Community, 4 June 2008, viewed on 15 November 2009, http://www.pm.gov.au/media/Speech/2008/speech_0286.cfm Prime Minister Rudd added another strand to discussion on regional cooperation in a speech on 4 June 2008 to the Asia Society Australia/Asia Centre, Sydney, when he argued that it was desirable to review the long-term vision for the architecture for the Asia Pacific region. 17 Strong and effective regional institutions, he argued, are needed that will underpin an open, peaceful, stable, prosperous and sustainable region. Regional institutions are important in addressing common challenges that no one country can address alone. These challenges, he stated, include: Enhancing a sense of security community (we have something to learn from Europe where centuries of animosity have been transformed into an unparalleled degree of transnational cooperation); Mr Rudd said that we need to have a vision for an Asia Pacific Community to be achieved by 2020: this vision needed to embrace, *a+ regional institution which spans the entire Asia-Pacific regionincluding the United States, Japan, China, India, Indonesia and the other states of the region, and *a+ regional institution which is able to engage in the full spectrum of dialogue, cooperation and action on economic and political matters and future challenges related to security. Mr Rudd argued that At present none of our existing regional mechanisms as currently configured are capable of achieving these purposes. He proposed

a regional debate about where we want to be in 2020. /6

Australias proposal for an Asia Pacific Community: issues and Prospects Australias proposal for an Asia Pacific Community: issues and prospects Parliamentary Library Information, analysis and advice for the Parliament RESEARCH PAPER 1 December 2009, no. 13, 2009 10, ISSN 1834-9854 Dr Frank Frost Foreign Affairs, Defence and Security Section

With tensions rising from conflicting territorial claims in the East China and South China seas, the region increasingly resembles a 21st-century maritime redux of the Balkans a century ago -- a tinderbox on water. Nationalist sentiment is surging across the region, reducing the domestic political space for less confrontational approaches. Relations between China and Japan have now fallen to their lowest ebb since diplomatic normalization in 1972, significantly reducing bilateral trade and investment volumes and causing regional governments to monitor developments with growing alarm. Relations between China and Vietnam, and between China and the Philippines, have also deteriorated significantly, while key regional institutions such as the Association of Southeast Asian Nations (ASEAN) have become increasingly polarized. In security terms, the region is more brittle than at any time since the fall of Saigon in 1975. Like the Balkans a century ago, riven by overlapping alliances, loyalties, and hatreds, the strategic environment in East Asia is complex. At least six states or political entities are engaged in territorial disputes with China, three of which are

close strategic partners of the United States. And there are multiple agencies involved from individual states: In China, for example, the International Crisis Group has calculated that eight different agencies are engaged in the South China Sea / 1 alone. Furthermore, these territorial claims -- and the minerals, energy, and marine resources at stake -are vast. And while the United States remains mostly neutral, the intersection between the narrower interests of claimant states and the broader strategic competition between the United States and China is significant and not automatically containable.

A Maritime Balkans of the 21st Century? East Asia is a tinderbox on water. BY KEVIN RUDD | JANUARY 30, 2013 6/17/13 A Maritime Balkans of the 21st Century? - By Kevin Rudd | Foreign Policy www.foreignpolicy.com/articles/2013/01/30/a_maritime_balkans_of_the_21st_century_east_asia?prin t=yes&hidecomments=yes&page=full http://www.foreignpolicy.com/articles/2013/01/30/a_maritime_balkans_of_the_21st_century_east_asi a