An extraordinary global shift is underway as power diffuses from the traditional West to rising powers in the developing world.

Its Asian geography suggests that Australia should benefit from this shift; indeed, its economy has been catalysed for the past decade by the sale of commodities to China and other Asian powers. Australia has the good fortune of enjoying an intimate alliance with the world's preeminent power as well as deep economic ties to the rising superpower.

But its position between America and China will increasingly test Australia as it finds itself pulled and prodded by growing strategic competition between Washington and Beijing. For the first time in its history, Australia's primary economic partner is not its closest ally but its closest ally's emerging challenger. The days when Australia faced easy strategic choices and a benign external security environment are ending.

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