We trade with Asia yet our strategic priorities do not reflect it

Australia’s economic reality is anchored in Asia, but its strategic imagination is not keeping pace, writes Mainul Haque.

AUSTRALIA IS DEEPLY INTEGRATED into Asia in every practical sense that matters. We trade there, we depend on it for growth, and increasingly our prosperity is shaped by it. Yet much of our strategic thinking continues to treat this reality as secondary.

This is the central contradiction in Australian policy today: our economic future is anchored in Asia, while elements of our strategic posture continue to assume a different centre of gravity.

That gap between economic reality and strategic imagination is no longer abstract. It is visible in trade dependence, supply chain exposure, energy vulnerability and the lived experience of recent global shocks, including COVID-19.

Few leaders understood this more clearly than Paul Keating. His push to embed Australia within Asia was not symbolic. It reflected a strategic reading of geography, economics and long-term national interest. Through initiatives such as the Asia Pacific Economic Cooperation (APEC), he sought to align Australia with the region that would define its future.

That future is now our present.

Australia is a middle power whose prosperity is structurally tied to Asia.

China is Australia’s largest export destination, and nine of our top ten export markets are in Asia, including Japan, South Korea, India and the economies of the Association of Southeast Asian Nations (ASEAN).

The United States is the only non-Asian country in that group, ranked third. These are not peripheral relationships. They sit at the core of our export economy and national income, with minerals, energy, agriculture and education deeply embedded in Asian demand and supply chains.

Around 70 per cent of Australia’s exports are directed to Asia, and the region accounts for the majority of Australia’s trade surplus. China alone typically represents close to one-third of Australia’s total exports, underscoring the depth of economic integration.

In economic terms, Australia is already part of Asia.

This economic reality is reinforced socially. Modern Australia is one of the most successful multicultural societies in the world, with around 30 per cent of the population born overseas and a significant and growing share with origins in Asia. More than one in ten Australians has Asian ancestry, and Asian languages such as Mandarin, Hindi and Vietnamese are among the fastest growing in the country.

These communities bring language, cultural understanding and direct regional connections that strengthen trade, diplomacy and economic opportunity. This is not just a social achievement. It is a strategic asset.

Yet this deep integration sits alongside a strategic posture that is often shaped elsewhere.

Since the era of John Howard, Australia has increasingly anchored its security architecture in traditional Western alliances. This trajectory has culminated in commitments such as the $500 billion dollars AUKUS agreement, including plans for significant long-term investment in nuclear-powered submarine capability sourced from the United States and the United Kingdom.

These capabilities will take decades to fully materialise. By then, the strategic and technological environment may have shifted significantly. This raises an important policy question: whether the scale and structure of long-term defence investment align with Australia’s most immediate and practical national priorities.

Australia is simultaneously facing significant domestic pressures.

Our health system is under strain, housing affordability has reached crisis levels, and the cost of living pressures continue to rise. Homelessness is increasing in major cities, and higher education debt continues to weigh on younger Australians building financial security.

Our aged care system is also under pressure, with more than 3,000 older Australians occupying hospital beds due to a lack of appropriate aged care placements. This contributes to hospital congestion and reflects broader structural strain across health and social care systems (we need an alternative age care model that I have written about earlier).

Energy security further highlights Australia’s vulnerability. Despite being a major exporter of raw energy resources, we lack sufficient domestic refining capacity and remain heavily dependent on imported refined fuel. We export raw materials and import processed energy at higher cost, leaving the economy exposed to global price volatility.

Recent reporting has highlighted that rising diesel and fuel costs are already flowing through to transport operators and tourism businesses, with surcharges and service adjustments affecting the real economy. This is not an abstract risk. It is already shaping prices, services and household costs.

This is not occurring in isolation. It reflects structural reliance on regional supply chains across Asia. Recent energy challenges have further demonstrated that Australia’s economic resilience and energy security are increasingly shaped by Asia, where key supply chains and regional partnerships play a central role.

In response, Australia’s Foreign Minister, Senator Penny Wong, has prioritised strengthening relationships with key regional economies, including China, Japan and South Korea – alongside broader engagement in Southeast Asia – recognising their central role in energy security and trade stability.

In parallel, Prime Minister Anthony Albanese has engaged directly with regional partners, including Malaysia, Singapore and Brunei, to reinforce supply chains for fuel, fertiliser and broader economic stability. These engagements reflect a practical reality: Australia’s resilience is increasingly dependent on its region.

This was made even clearer during COVID-19, when global systems were disrupted and Australia’s economy was immediately affected. International education collapsed, tourism stopped and supply chains fractured. Recovery, however, was driven largely through re-engagement with Asia as trade, education and mobility gradually resumed.

The lesson was clear. Australia’s resilience is inseparable from Asia.

This brings us to a fundamental question of national priorities: 

Why is Australia committing very substantial long-term resources to strategic defence capabilities designed for uncertain future scenarios, while simultaneously facing growing pressure in essential domestic systems such as health, housing, aged care and energy security?

This is not an argument against defence capability. It is an argument for balance and coherence in national strategy.

It also raises a deeper strategic tension highlighted in the 1993 public debate by Paul Keating. Australia’s prosperity is fundamentally dependent on its trade relationships in Asia, including the very economies that underpin national income and living standards.

In that context, it is difficult to reconcile long-term strategic planning that implicitly assumes potential confrontation with the same region that remains central to Australia’s economic security and well-being.

As a middle power deeply integrated into Asia, Australia’s strength lies not only in its defence capabilities but also in its economic resilience, regional trust, and domestic stability. Investment in health, housing, energy security and aged care is not separate from national security. It is central to it.

A more coherent approach would begin by recognising Australia’s actual position in the world. It would deepen engagement with Asia not only through trade, but through long-term institutional partnerships, supply chain resilience and people-to-people connections. It would also recognise multicultural Australia as a strategic asset rather than just a social reality.

Paul Keating understood that Australia’s future would be shaped by Asia. That is no longer a contested idea. It is our lived reality in trade, population, energy dependence and crisis response.

The question is no longer whether Australia is in Asia. Geography and economics have already settled that.

We trade with Asia. We depend on Asia. We are shaped by Asia through our economy, population and experience of global shocks.

Yet strategic priorities do not always reflect this reality.

The real question is whether Australia’s policy settings are fully aligned with the world as it is, rather than the world as it once was.

Because a country so deeply embedded in Asia cannot afford to let its strategic imagination drift away from that reality. At some point, strategy must catch up with reality.

Mainul Haque OAM is a retired Australian public servant with nearly three decades of experience in government, academia, and community leadership.

Related Articles

• APEC wars: No communique of idiocy
• Australian spies hurt Asian ties
• Stop smiling snubfin dolphins — you're going extinct
• Tim Mathieson and the 'Asian Ladies' Syndrome