Abstract
This article examines Sino–Australian economic relations, and their impact on the ties between the United States and Australia. First, drawing on power transition theory, it is argued that in a post-Cold War environment, economic ties play as great a role as strategic relations in determining the orientation of third-party states. Second, it is also argued that Australia’s deeper economic and commercial ties with China have usurped a role previously held by the United States. This has forced Australia to pursue a bifurcated foreign policy—one split between its economic and national security needs. Third, these deeper ties with China have generated a degree of alliance drift between Australia and the United States. As a result, there is now a significant debate in Australia over the future of both bilateral relations—even as its space for policy innovation remains limited.
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