All this took place over what are now contested waters — where today the PLAN has forged unsinkable aircraft carriers, out of reefs and atolls. The Hainan Island incident laid down the contours for the present challenge facing Australia. It portended the agonising security and economic balancing act we must now perform. That clash, almost 20 years ago, has now grown into overt geopolitical rivalry across the Indo-Pacific. The US seeks to remain the dominant power in the region and the People's Republic of China works to supplant it. A US navy EP-3E surveillance plane similar to the one that collided with a Chinese fighter jet on April 1, 2001. Credit:AP/US Navy Australia must now, somehow, hold on to our sovereignty and prosperity. We must balance security and trade. But most importantly, we must remain true to our democratic convictions while also seeing the world as it is, not as we wish it to be. This will be immensely difficult. It is impossible to forsake the US, our closest security and investment partner. It is also impossible to disengage from China, our largest trading partner. This is the central point: almost every strategic and economic question facing Australia in the coming decades will be refracted through the geopolitical competition of the US and the PRC.

Loading The US Secretary of State, Mike Pompeo, made that much abundantly clear when he said "the world has been asleep at the switch". We must be clear-eyed about our position in the world. We are resetting the terms of engagement with China to preserve our sovereignty, security and democratic convictions, as we also reap the benefits of prosperity that come with our mutually beneficial trade relationship. Last year, the Coalition government secured bipartisan passage of laws countering espionage, foreign interference and influence. Tough decisions were made on our future 5G network to safeguard our digital sovereignty for the generations to come. Critical assets, such as ports and gas pipelines, are now monitored much more closely, in recognition of their importance to our national life together. But there is more to be done. Right now our greatest vulnerability lies not in our infrastructure, but in our thinking. That intellectual failure makes us institutionally weak. If we don’t understand the challenge ahead for our civil society, in our parliaments, in our universities, in our private enterprises, in our charities — our little platoons — then choices will be made for us. Our sovereignty, our freedoms, will be diminished.

A man-made Chinese airstrip in the heavily contested South China Sea. Credit:AP The West once believed that economic liberalisation would naturally lead to democratisation in China. This was our Maginot Line. It would keep us safe, just as the French believed their series of steel and concrete forts would guard them against the German advance in 1940. But their thinking failed catastrophically. The French had failed to appreciate the evolution of mobile warfare. Like the French, Australia has failed to see how mobile our authoritarian neighbour has become. Loading Even worse, we ignore the role that ideology plays in China's actions across the Indo-Pacific region. We keep using our own categories to understand its actions, such as its motivations for building ports and roads, rather than those used by the Chinese Communist Party. The West has made this mistake before. Commentators once believed Stalin’s decisions were the rational actions of a realist great power. But the Princeton Professor of History, Stephen Kotkin, found otherwise, after years of sifting through the archives of top Soviet meetings. He discovered that Stalin and his advisers “said the same things as they said in their propaganda … [using] all the Marxian categories, because it turns out the Communists were Communists! They believed in the ideas and it’s only by taking the ideas and politics seriously, can you understand the phenomenon.”

We must be intellectually honest and take the Chinese leadership at its word. We are dealing with a fundamentally different vision for the world. Xi Jinping has made his vision of the future abundantly clear since becoming President in 2013. His speeches show that the tough choices ahead will be shaped, at least on the PRC side, by ideology – communist ideology, or in his words, by "Marxist-Leninism and Mao Zedong Thought". Loading Xi’s view of the future is one where capitalism will be eclipsed and "the consolidation of and development of the socialist system will require its own long period of history … it will require the tireless struggle of generations, up to 10 generations". With history as our guide, we have no reason to doubt President Xi Jinping. Our next step in safeguarding Australia’s future is accepting and adapting to the reality of the geopolitical struggle before us – its origins, its ideas and its implications for the Indo-Pacific region. The next decade will test our democratic values, our economy, our alliances and our security like no other time in Australian history.