Australia’s relationship with China in the period 2006–10 developed in a paradoxical manner. While the relationship grew deeper, became more broadly based and assumed unprecedented prominence for both countries, it also became exceedingly complicated, controversial and difficult to manage. During this period, China’s vital importance to Australia’s economy was further affirmed. China displaced Japan to become Australia’s largest trading partner and its biggest export market, a position that had been held by Japan for almost 40 years. Burgeoning trade ties with China not only shielded Australia from the global financial crisis that afflicted most of the Western economies from 2007 but also continued to underwrite Australia’s resources boom. During the years 2006 to 2007, the Coalition government led by John Howard continued its successful China diplomacy and strengthened the bilateral relationship, attaining a level and scope unmatched in any other period.

The Australian Federal Parliament stands magnificently atop Constitution Hill in Canberra as a symbol of the importance Australia attaches to its long and strong democratic tradition. The semiotic message of the Parliament’s architecture is that this is a people’s place, ‘a publicly accessible monument’, a place where its visitors will be as much a part of the fabric of its business as the business of the legislature. The Parliament has used technology to match this physical accessibility such that never has there been a period when greater access to the business and deliberations of the Parliament has been more possible. This accessibility has, however, been matched in the period under review by increasing physical constraints and barriers to access never envisaged at its creation: for the first time in the history of the Commonwealth, the Parliament was closed to the people – on the occasion of the visit of President George W. Bush in October 2003. In this way, the Parliament stands also as a symbol of the way the world has changed since the bombings of the twin towers in September 2001.

With the electoral defeat of the Howard government in November 2007, the incoming Rudd government attempted to revive active middle power diplomacy and extend Labor foreign policy traditions of global and regional multilateralism. The centrepiece of the latter was Prime Minister Kevin Rudd’s Asia–Pacific Community (APC), initially proposed as an ambitious European Union-style body additional to existing regional structures, none of which were considered adequate to a comprehensive and coordinated address of strategic dynamics. China’s rising economic and geopolitical significance and the growing importance of transnational security and environmental challenges were the chief items offered as the rationale for the APC.

Between 2006 and 2010, the bilateral relationship between Australia and Japan blossomed in new and important directions. Most significantly, Australia and Japan mobilised bilateralism into regional and global spheres, representing a balancing of relations in the areas of politics and security to complement the hitherto robust history of trade and investment. In an era of new security challenges and shifting geopolitical circumstances in the Asia–Pacific region and beyond, Australia and Japan included each other in their evolving regional diplomatic strategies. At the same time, political leaders in both countries dealt with the vexed issue of Japanese whaling in the Southern Ocean by playing to the charged emotions prevalent in their respective domestic constituencies, while simultaneously sending a ‘business as usual’ message between officials. The disconnect between policy-makers’ pragmatism concerning the political situation in the partner nation, on the one hand, and popular outrage stoked by media reports and official statements, on the other, undermined the momentum achieved in the broader bilateral relationship.

There is an extensive literature devoted to analysing the common features of the Four Dragons – Singapore, the Republic of Korea, Taiwan and Hong Kong. It is generally acknowledged that all emerged under authoritarian tutelage, although all are now experiencing pressures for democratisation; all prospered in a regional economic and security order underwritten by the United States, although one in which increasingly the United States is being displaced by Japan; all were the beneficiaries (although to an uneven degree and with uneven results) of a Confucian social inheritance. The approach taken by Australian policy makers to the Dragons is to a great extent a consequence of their rapid rise as major economic entities in the Western Pacific within the United States-dominated Pacific economy and security complex. Relations with the Dragons are relations with what, for Australians, is the vibrant Asia of rapid economic modernisation, as opposed to the timeless Asia of subsistence agriculture. The fact that these systems have ascended so rapidly is a particular test of each country’s capacity to engage with the region, given their relative lack of significance before the later 1980s.

Despite the recent focus on Asia, the relationship with the European Union (EU) has, between 1991 and 1995, remained very important to Australia in a number of ways. These have been years when the EU has established and maintained its place as Australia’s largest economic partner if investment is added to merchandise and service trade. The EU is the world’s largest trader, accounting for 20 per cent of world trade (as compared with the United States at 16.3 per cent, and Japan at 8.2 per cent). Further, the EU is the largest source of foreign direct investment (FDI) and one of Australia’s largest partners in trade in goods and services. For the EU, Australia is a growing market and provider of direct foreign investment and a potential base for EU companies in the Asia-Pacific region.

The defence policies of many countries in the world are in disarray. With the end of the Cold War, the United States and its NATO allies, as well as Russia and former members of the Warsaw Pact, are having great difficulties justifying their large defence forces. As a result, defence budgets are being slashed and force structures are being reoriented away from nuclear conflict and major conventional war. In Asia, however, strong economic growth is sustaining the largest increase in defence spending of any area of the world. This is taking place even though most countries in Asia face no palpable threat. Furthermore, few countries in the region have set out in the public domain reasoned arguments for their defence-force acquisitions. As a close ally of the United States and as an important regional power, how does Australia’s defence policy fit into these two divergent trends? Has Australia’s defence policy changed radically since the end of the Cold War? What about Australia’s economic and political engagement with Asia? Has it led to less anxiety in official circles about potential military threats from the north and has this resulted in any changes to the force structure?

At the end of 1995, the global economic environment appeared far more favourable to Australia than at the beginning of the decade. The worst fears of the early 1990s had failed to materialise. The Uruguay Round of negotiations in the General Agreement on Tariffs and Trade (GATT) had been concluded and GATT’s successor, the World Trade Organisation (WTO), established. With a successful outcome to the GATT negotiations, the threat of the global-trading system fragmenting into rival regional trading blocs largely receded. The establishment of the Single Internal Market in 1992 and the conversion of the European Community into the European Union with the Maastricht Treaty of the following year came and went with no evidence of adverse impact on its trading partners: ’Fortress Europe’ did not eventuate. Even agriculture, very much the orphan child of the world community’s postwar moves towards liberalised trade, was brought under WTO auspices; the requirement that barriers protecting agriculture be converted into tariffs by the end of the century promises to bring greater transparency in agricultural trade and, with it, the possibility of more effective pressure for liberalisation.

Before the events of the later 1990s, if there was one issue in Australia’s external relations on which there existed unalloyed bipartisan agreement it was East Timor. Governments of both persuasions had regarded the question of positive relations with Indonesia to be of far greater moment than the right to self-determination of the East Timorese, irrespective of the extent to which their Indonesian governors observed or denied their human rights. A Coalition government initiated the negotiation of the Timor Gap Zone of Co-operation Treaty, and a Labor government signed and ratified it. Though some thirty-two states indicated in one way or another that they accepted Indonesian sovereignty over East Timor, only the positive affirmation of that sovereignty by Australia in that treaty resulted in litigation before the International Court of Justice. Prime Minister Paul Keating had expressed the sentiment that there was no country more important than Indonesia to Australia, and later Foreign Minister Alexander Downer had repeated it. But by 2000, this constant in Australia’s regional posture had changed completely.

Following two centuries of white settlement and several ’waves’ of immigration, many Australians retain a sense of identification with European cultures and societies. This is despite understandable and fairly successful efforts to focus on cultivating a national identity and diminished support among political élites for the project of fostering cultural links with Europe. The Australian tendency to associate immigration with waves of European immigrants landing on Australian shores picks up on only part of the story. There has also been movement in the opposite direction, with many Australians migrating to Europe. This trend may well increase among those able to apply their skills in European labour markets. It reflects a degree of cosmopolitanism, and the capacity of many Australians to adapt to different cultures. For most Australians this adaptation appears to be easiest in English-speaking cultures, particularly the United Kingdom. There is also a strong resonance for Australians with aspects of North American culture, and powerful incentives to migrate to that continent among those with marketable knowledge-based skills.