Prime Minister Tony Abbott, pictured with Chinese President Xi Jinping during the G20 summit in Brisbane in November 2014, needs to recognise China is serious about its regional leadership aspirations. Credit:Rob Griffith When we recognise that this is wrong, we can see that relatively minor differences over who funds infrastructure or the ownership of coral reefs are only symptoms of a much bigger and graver struggle over who will lead in Asia in future, and what kind of leadership they will exercise over the rest of us. This is power politics, pure and simple, of a kind we have not seen in Asia for decades. Second, we should be clear about what China is after. The answer is obvious, but disquieting: China wants to take the United States' place as the uncontested leading power in Asia. China's leaders might not say so in quite those words, although they come pretty close at times, and they certainly act this way. Indeed, it would be surprising if China didn't aim this high. It is already Asia's richest and most powerful state. Its people are immensely proud of their imperial past, deeply resentful of their humiliation at the hands of the West, and quietly confident they will match and overtake the US on every measure of power within a few decades. Why wouldn't they expect and intend to lead Asia? Wouldn't we, in their position? Indeed, isn't that just what we in the West have done while we have been in that position, starting 150 years ago? Third, though, we should recognise that Beijing is not reckless. It will not pursue regional leadership regardless of cost. Instead, like all rational players – and Beijing's leaders do seem pretty rational – they will judge the balance between costs and benefits at each step along the way, and pause when the costs seem too high.

That gives other countries in Asia an important opportunity, but also a big challenge. It means that how far China succeeds in dominating Asia will depend on how the rest of us respond. It depends ultimately on the costs we are willing and able to impose on China. China's regional ambitions will only stop at the point at which the costs of pushing its authority further exceed the benefits it might hope to gain by doing so. But there is no cheap and easy way to do this. China is very serious about regional leadership, so we cannot limit its ambitions without big costs to ourselves. That is the lesson of the past few months: China won't back off in the face of low-risk, low-cost diplomatic declarations or symbolic displays of displeasure, which is all Washington's much-hyped "pivot" has delivered so far. On the contrary, China's ambition to lead Asia will ultimately be limited only at the point where other major powers can credibly threaten to use force to stop it. This seems melodramatic, but it is the very essence of how power politics works. The basic framework of any international order is defined by the issues over which its strongest states are willing and able to go to war with one another. That is why armed force is still so important in international affairs, even though wars between major powers are so rare. Between nuclear powers, the costs and risks of any conflict can be very high indeed, because no one can be sure if or when the nuclear threshold might be crossed. This means the US can impose huge risks on China by threatening war, but only by accepting huge risks itself, and for everyone else. And that means everyone must be very careful about where they try to draw the red lines beyond which such force would be used. We should start taking China's growing power and ambition seriously for what it is: the biggest strategic shift in Asia in decades, or even centuries.

It might make sense to threaten war, despite the costs and risk, if China violated the basic principles of the United Nations charter by invading another sovereign country. It would not be wise to make the same kind of threat over the US right to fly surveillance aircraft through China's exclusive economic zone, or even to try to prevent China from vigorously asserting its claims to genuinely disputed atolls. I think this makes the choice we face today over what to do about China a little clearer. It is foolish and dangerous to refuse to accommodate anything of China's ambition for more regional power, but that does not mean we have to live under China's shadow. That is because we do not face a binary choice between preserving complete US primacy on one hand and conceding unfettered regional predominance to Beijing on the other. We should be able to concede some leadership space to China, while still protecting the things that matter enough to us to fight a major war over – once we have decided what those things are. And, of course, it should be possible to settle these issues without actual fighting. Often in the past it has taken a major war for a new regional order to emerge. The challenge to Asia today is to avoid that disaster, by peacefully negotiating a new regional order that accommodates enough of China's ambitions to satisfy it, and sets clear boundaries beyond which it cannot move without meeting the sternest opposition. That would not be easy, and it might in the end prove impossible. But the only way to find out is to start the process with some quiet but very serious diplomacy. This is what real statecraft is all about, and it is a long way from the empty speech making that passes for foreign policy in either Washington or Canberra today.

Hugh White is an Age columnist and professor of strategic studies at the Strategic and Defence Studies Centre, ANU.