Australia has a China problem. It’s not in Beijing. It’s not on the streets of Hong Kong. It’s in Canberra. China policy is in flux, under stress and confused.

Australia’s meek response to the pro-democracy mass demonstrations in Hong Kong contrasts with attitudes in its own security establishment that are redolent of a Cold War era.

Illustration: Jim Pavlidis

One week Prime Minister Scott Morrison is venturing into the South Pacific to “confront’’ China, according to a ridiculous headline in a national newspaper, the next his government is missing in action on an issue of fundamental rights.

Along with “stepping up’’ to China in the Pacific, Morrison needs to address China policy weakness in Canberra.

Are policymakers driving policy or is it the country’s spooks and their ideological soulmates in the so-called security establishment whose views are amplified in the conservative media?

Chaotic scenes have erupted in Hong Kong as tens of thousands of demonstrators stormed key roads next to government offices to protest against a proposed extradition bill that would allow people to be sent to mainland China for trial.

The part taxpayer-funded Australian Strategic Policy Institute has emerged as the repository of some of the more tendentious and, it seems, influential views on how to manage the China “threat’’.

I’m using the word “threat’’ advisedly, since the institute’s dystopian world view makes little room for viewing China as a potential partner in seeking to develop a new security architecture in the Asia-Pacific.

Just this past week, one of the institute’s more forward-leaning voices released a new “forward in defence paper’’ that would commit Australia to a hostile partnership in a formalised “trilateral defence alliance’’ with the United States and Japan to confront China.

The writer said he was not advocating a “cult of the offensive, in which Australia adopts a strategically aggressive posture’’.

However, I doubt Beijing would see a proposal that sought to develop a “trilateral defence chain’’ of bases from Okinawa to Darwin as anything other than militarily confrontational.

If Morrison accepts this sort of advice, defence expenditures would escalate. You could forget about the surplus.

What is at play in all of this is the national interest in a debate that is testing a new government’s ability to assert itself in dealing with the most complex set of foreign policy challenges since World War II. The imperative is to avoid being wedged between its security guarantor and its economic partner against the background of the sort of events we’ve witnessed in Hong Kong in the past week.

In an increasingly uncertain world, and one in which the current US administration has been trashing international institutions, an inconvenient truth is that Australia can no longer take American security guarantees to the bank, if it ever could.

This realisation should dictate a reassessment of national security policy led by the government of the day. Defence and foreign policy white papers of 2016 and 2017 have been overtaken by a rapidly shifting security environment in which China’s rise is both more rapid and more disconcerting than anticipated.

Demonstrators in Hong Kong disperse as the police fire tear gas. Bloomberg

This brings us to Paul Keating’s creative use of the Australian idiom on election eve when he called for a “clean-out’’ of Canberra’s security agencies to get rid of the “nutters’’ who had “gone berko’’ over China.

Keating’s remarks were dismissed at the time as gratuitously provocative, but they had a serious side. He was reflecting concerns among a mandarin class in Canberra about an ideologically driven anti-China sentiment prevalent in the country’s spy agencies.

“The security establishment has too big a hold on China policy," a former security mandarin tells me. "There is a general feeling the relationship is being mishandled.’’

You can be sure that, on election night, few individuals in the bureaucracy were more relieved about the outcome than hawkish senior figures in the security agencies whose tenure would have been imperiled if Labor had prevailed.

Over some weeks I interviewed a coterie of former senior public servants, all of whom had some connection with China. All expressed misgivings about China policy in this latest phase. All singled out the Office of National Intelligence – the newly formed co-ordinating body for intelligence – as a repository of some of the more unreconstructed anti-China elements.

Morrison would be wise to cast his net wider when it comes to seeking advice about how to deal with his government’s most pressing national security challenge.

His advisers could do worse than draw his attention to a contribution to the debate from my former Financial Times colleague Martin Wolf – under the headline, 'Prepare for the 100-year war between the US and China' – in which he warns of an American-led China-bashing mindset that has more to do with a US need for a cold war bogeyman than it does with rational policymaking.

“The disappearance of the Soviet Union left a big hole," Wolf writes. "The 'war on terror' was an inadequate replacement. But China ticks all the boxes. For the US, it can be the ideological, military and economic enemy many need. Here at last is a worthwhile opponent … Today’s attack on China is the wrong war, fought in the wrong way, on the wrong terrain. Alas, this is where we are now.’’

I couldn’t agree more.

China policy is much too important to be left to a non-accountable security establishment.

Tony Walker is a former China correspondent for The Age and The Sydney Morning Herald, and the Financial Times.