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Canberra, June 2025 — In a pointed intervention this week, China’s Ambassador to Australia, Xiao Qian, cautioned Prime Minister Anthony Albanese against ramping up Australia’s defense spending, dismissing concerns about China’s own military expansion as alarmist.
Beijing’s Message to Canberra
In an opinion piece and public statements, Xiao Qian appealingly rejected the notion of China as a growing threat:
- He argued that China’s military budget—roughly 1.5% of GDP—is “standard and minimal,” serving purely defensive purposes.
- Xiao accused Western powers of fueling a “Cold War mentality,” asserting that calls for higher weapons bills would sow division and distract from economic growth .
He specifically warned that unwarrantedly increasing defense spending could “strain the economy, undermine social development, and weaken Australia’s prosperity,” urging Canberra to prioritize economic and social goals over an arms race.
Canberra’s Pushback
Prime Minister Albanese has responded firmly:
- He insists Australia will set defense priorities “based on national interest, fiscal balance, and strategic sustainability”.
- Instead of chasing headline GDP percentages, the government plans a careful increase in defense investment—about A$10 billion over the next four years, with forecasts raising defense spending from ~2% to 2.4% of GDP by 2033‑34.
Defense Minister Richard Marles has echoed calls for “greater transparency” in China’s military maneuvers—particularly after PLA warships conducted live-fire drills near Australia’s exclusive economic zone earlier this year—with Australian and New Zealand forces closely tracking the vessels.
Strategic Tensions Rise
The standoff comes amid growing international pressure:
- The United States, through Defense Secretary Pete Hegseth, and senior Trump-administration advisor Elbridge Colby, have urged Australia to lift defense spending to 3–3.5% of GDP to counter the strategic pressure posed by China.
- Former ASIO chief Duncan Lewis and other national security experts argue the current trajectory may not suffice, particularly given the government’s commitments to nuclear-powered submarines and long-range strike capabilities.
Yet Australia pushes back, citing economic strain and emphasizing capability over raw percentage targets .
Deconstructing China’s Build‑Up
China has undeniably expanded its military footprint:
- Its nuclear arsenal doubled to over 600 warheads in 2024.
- Its navy has undertaken large-scale exercises—including live-fire drills in the Tasman Sea early this year, triggering flight disruptions near Australia’s eastern seaboard—without providing advance notice.
Beijing defends these actions as lawful drills for routine maritime preparedness .
What’s at Stake
- Australia: Confronts the challenge of balancing defence readiness, economic capacity, and alliance commitments—especially as part of AUKUS and deeper integration with the U.S. military posture in the Indo-Pacific.
- China: Frames the dialogue as part of resisting a Western-led containment effort, highlighting economic interdependence and bilateral cooperation instead.
- U.S. & Allies: Push for higher Australian investment as part of a broader strategy to deter China’s rising military ambitions.
Outlook
Albanese is currently preparing for an official visit to Beijing later this year—his fourth since taking office. Diplomatic observers say Beijing may use the visit to reiterate its messaging: that blocs and an arms race harm all parties and that “strategic trust” must guide relations.
Canberra, for its part, faces a delicate balancing act: investing in defence capabilities—like nuclear subs, maritime surveillance, and strike systems—without overcommitting financially or alienating domestic and international audiences.
Bottom line: China’s top envoy in Australia has called for restraint, warning that excessive militarization could damage Australia’s economy and global stability. But Canberra has made clear it won’t yield to pressure, instead pursuing a calibrated investment path. As tensions between nations rise—especially around Taiwan—the stakes for Australia’s defense policy and its regional role will only grow more consequential.
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