Much of today’s discussion about international relations is based on the assumption that, inevitably, China will rival the US in every way. As a consequence, conflict between these powers is at least possible and, in the eyes of some, likely. Flowing from that same argument is the proposition that China and the US should reach some kind of power-sharing accommodation in the Asia Pacific and that, in certain circumstances, Australia might be required to make a choice between Beijing and Washington.

I find much of this argument both muddled and lacking in a proper understanding of the forces at work, both in the bilateral relationship between China and the US, as well as within the Asia Pacific region. Indeed, I was astonished at the reaction of many people to President Obama’s speech to the Australian Parliament late last year. I thought it was a good speech, and I fully agreed with its policy content. It sounded no sour notes; it was realistic but not belligerent towards China; it restated long-standing verities of the US- Australia relationship.

To rotate 2,500 marines through Darwin is hardly an act of war. If a Coalition government had been in office, I doubt that the President’s speech would have been any different. Perhaps it was the use of the word ‘pivot’ which implied a change of direction. Yet that could not possibly be the case. The US has been in Asia since MacArthur accepted the Japanese surrender in August 1945. Much American blood and treasure was expended in two major land wars in Korea and Vietnam. True, in President Nixon’s Guam Doctrine of 1969, the Americans signalled that other countries had to do more to take care of their military defence, but the commitment to Asia remained strong. Significantly, the Bush administration deepened US involvement in Asia.

The Chinese leaders know and accept a lot more about our history and our system of government than we often give them credit for. They know the origins of the ANZUS Treaty. In my time as Prime Minister, I never felt that it was a barrier to deepening relations with China, or that the Chinese saw our American alliance as being directed against them. In fact, the Chinese respected the fidelity Australia had shown towards its links with the US, although they would never say so.

The fact is China’s rise is both good for China and good for the world. Of course, it will behave like any other rising power. It will spend more on defence, projecting both air and sea power. It is pointless expecting China to do anything else. No amount of diplomatic posturing or repositioning by other nations will alter China’s behaviour.

Meanwhile, China faces huge demographic challenges. She will grow old before she becomes rich, with the effect of the one child policy reverberating decades into the future. The contrast here with India could not be sharper. The Indian population between the ages of 15 and 24 — which is the largest for that cohort anywhere in the world — equals the entire population of Indonesia.

China’s position as the world’s second-largest economy is a function of her huge population. It could well end up with the largest economy in the world, but it will be anything but the richest. As Robert Kagan points out in The World America Made, the current per capita GDP in China is roughly $4,000 per head, compared with $40,000 in the US, Japan and Germany. It has been calculated that even if the most optimistic estimates of Chinese growth are achieved by 2030 her per capita GDP will be only half that of the US.

Pressure for more democracy in China will grow. It’s difficult to accept that growing economic liberalism will continue to walk hand in hand with political authoritarianism. The first newly enriched generation may accept authority, but their children will take affluence for granted and will demand more say in running their own lives.

Australia will always be closer to the US than China. After all, we have common values, institutions and history. But we don’t need to make a point of this to our Chinese friends and, in any event, they know it. We should continue to maximise our links with both countries. It should be the constant aim of Australian foreign policy to encourage co-operation between Washington and Beijing. There is nothing inevitable about a conflict between them. For one thing, China’s preoccupation with continued economic growth and, in the process, preserving the fragile balance between the haves and the have nots, in her own midst, leaves little room for foreign military excursions, unless she is provoked.

Australia should always keep in mind how different from our own is China’s political and legal system. We should not lecture China to change her system, nor should we blink when China’s authoritarian approach collides with our Western liberal tradition in ways that affect the interests of Australia or Australians. A nation in China’s current position will occasionally test the limits of a relationship. In 2006 an official of the Chinese Consulate in Sydney sought political asylum. The Chinese demanded his return to Beijing, and said that there would be consequences for the relationship if this did not happen. We replied that Australia had an independent bureaucratic process for adjudicating on such asylum claims, and the man’s fate would be determined in that way. The public service panel recommended that he be granted political asylum, and that happened. Our relations with China did not miss a beat.

We should welcome Chinese investment, just as in the past we welcomed British, American and Japanese investment. China does have a number of state-owned enterprises, so do other countries in Asia. This should not be a barrier to accepting their investments. In the past, Japanese companies investing here may not have been state-owned, but some of them were certainly state-told. Foreign capital flows remain as vital to our future economic growth as they have been to the past economic development of our country.

We will do a grievous disservice to our future if we ever think that some kind of choice is involved. It is possible to have a positive engagement with both, albeit of a different kind, given our different political systems. We should extend the courtesies of our Western democratic system to our Chinese friends. But we should do so in a fashion which does not compromise our values and traditions.