China is emerging as a strategic competitor of the United States in Southeast Asia and beyond.

The GFC has resulted in a reduction of US defence spending in areas vital for sustaining America’s technological military superiority. The US will have fewer resources to shape strategic developments in the Asia-Pacific. In the coming decade, the United States will rely heavily on its allies and strategic partners to cooperate to ensure regional security.

The GFC has also contributed to the emergence of Indonesia and Vietnam as major regional players.

2. China’s economic growth has resulted in rising defence budgets to support the modernisation and transformation of its military forces. They are developing roles and missions that will permit China to project power beyond its territorial sphere of interest into the Western Pacific and South China Sea. China’s efforts to safeguard its security by developing what it considers a reasonable force structure to deter the United States has created insecurity in several neighbouring states due to China’s assertiveness and lack of transparency.

3. The Obama administration is stepping up US engagement in Southeast Asia and is now willing to employ multilateral channels to promote its national interests. At the same time, the US is beefing up its military muscle in the Asia-Pacific.

4. Southeast Asia has experienced an arms-buying spree over the last half decade resulting in the introduction of new military technologies that can be operated at extended ranges and with greater precision. Current military modernisation programs contain elements of a naval arms race embedded in competitive rather than cooperative maritime strategies.

5. The maritime domain will continue to grow in importance in the coming decade. This raises the possibility of increased multilateral cooperation to ensure maritime security for trade and energy resources. But, vital sea lines of communication pass through the South China Sea where sovereignty claims are being contested.

6. The regional security architecture is evolving. The first meeting between ASEAN defence ministers and eight of their dialogue partners (Australia, China, India, Japan, New Zealand, Russia, South Korea and the United States) was held in Hanoi on 12^th October. The East Asia Summit will expand by including the US and Russia as new members, providing a possible venue for enhanced security cooperation.

7. Non-traditional security issues are increasing in salience and are shaping the security agenda.

8. Finally, Southeast Asia’s security environment continues to be shaped by the persistence of ‘everyday security challenges’ that are primarily domestic in nature and weaken state capacity. They have the potential to spill over and affect neighbouring states.

The major strategic trends impacting on Southeast Asia have produced tensions between states. They may be grouped into five clusters: Sino-Vietnamese maritime disputes; the security dilemma created by China’s military modernisation; the potentially destabilising effects of the diffusion of military technology; the corrosive effects of ‘everyday security issues’ and transnational security challenges.

Four major patterns of security cooperation combine and compete to shape Southeast Asia’s security environment: multilateral defence cooperation between external powers and individual Southeast Asian states (Five Power Defence Arrangements); US–led theatre security cooperation; Chinese-led exclusivist East Asian regional security cooperation; and ASEAN-centred multilateral efforts. Each of these patterns overlays the other and results in supporting and competing security cooperation.

Emerging security tensions erode confidence and trust among the states concerned and thus undermine multilateral cooperation and the viability of the region’s security architecture.

China and the United States each seek to shape a different regional order. China promotes multipolar security arrangements that uphold state sovereignty irrespective of the type of domestic political system in order to balance if not constrain the power and influence of the United States. China’s approach emphasises nominal equality among members of regional multilateral institutions and is particularly focused on exclusive East Asian regionalism. In reality, China is nonetheless first among equals.

The United States, in contrast, pursues a national strategy aimed at creating an Asia–Pacific security order founded on rules based multilateral institutions that promote universal values such as democracy and human rights under US leadership. The US relies on allies and strategic partners as the critical mass toward achieving these ends.

Southeast Asia will be unable to insulate itself from Sino-American strategic competition.

Australia will need to reassess its future role within this shifting strategic environment and devise a set of strategies in order to promote its national interests there. Australia’s strategic planners need to pursue a range of pathways to secure these ends. One pathway would involve encouraging the US to become more engaged in Southeast Asia as a region in its own right. Australia might help build regional support for that role where it could. Another pathway would entail building on and redirecting the presently existing web of security ties into a more robust multilateral framework. And a third pathway would involve Australia revitalising its own security ties with key Southeast Asian states in order to increase the region’s strategic weight in dealing with external powers.

Carlyle A. Thayer is Professor of Politics at the University of New South Wales at the Australian Defence Force Academy. This analysis is based on his Strategy Report recently released by the Australian Strategic Policy Institute.