By various accounts, policy is firming up in Australia on what to do about the South China Sea – specifically, whether Canberra should take an unambiguous stand on the destabilising impact of China’s island-building activities.

Australian policymakers are not fooled by the surface calm with which discussions concluded at the recent Shangri-La Dialogue in Singapore.

Although most international attention was rightly focused on the more uncompromising elements of the speeches by US Defense Secretary Carter and Chinese Admiral Sun, the words of Australian Defence Minister Kevin Andrews in Singapore were also unusually forthright.

He emphasised that his country had a legitimate interest in the South China Sea, notably in terms of maintenance of peace and stability, respect for international law, and freedom of navigation. The wording of a statement he agreed trilaterally with the United States and Japan was stronger still:

“They underscored their shared interest in the maintenance of peace and stability; respect for international law; commitment to upholding freedom of navigation and overflight; [and] unimpeded commerce in the East China and South China Seas. They expressed strong opposition to the use of coercion or force to alter the status quo in the East China and South China Seas unilaterally and their serious concern over Chinese land reclamation activities in the South China Sea.”

Australia cannot pretend that what happens in the South China Sea is none of its business, and nor does it intend to.

Even one of Australia’s most prominent advocates of a more accommodating approach to the rise of China, Professor Hugh White, recognizes in his book The China Choice that to concede control of the South China Sea to Beijing “would be to concede more than is compatible with the vital interests of other great powers”.

The longer those other powers – including the United States, Japan, and India – hesitate in making their views known, the higher the stakes of confrontation the will rise, or the greater the regional precedent of change being wrought through coercion rather than consultation.

As a middle power, Australian security ultimately depends on a rules-based regional order and one in which the interests of multiple powers are respected. Damage to that order through coercion or unilateral assertiveness as we have seen in these contested waters in recent years, equates with damage to Australian interests.

Australia’s lifelines, its trade routes to and from some of its top trading partners, including China but also Japan and South Korea, run through or close to those waters – as do the sea lanes on which the commerce of much of the world depends.

The tensions in the South China Sea are testing American resolve, credibility and diplomatic dexterity. The United States is the ally on which Australian security deeply depends, and therefore these are tests for Australia too.

As the Indo-Pacific region comes to terms with how to incorporate a powerful China’s legitimate interests, the way China behaves when its interests brush up against those of small powers provides a test-case for all to watch closely.

The looming question remains what will Australia do. Doing nothing is not an option, unless smaller powers are prepared to enable a might-is-right precedent in their region.

So can we expect Royal Australian Navy ships or RAAF aircraft at some point to pass close by the artificial islands as part of their normal activity in the region, as is their right under international law? Will Australia do this alone or in company with others?

Significantly, Australian Defence Minister Andrews has given public indications that Australia reserved the right to continue to exercise the freedom of navigation and overflight its navy vessels and surveillance planes have made use of for decades in international waterways in Southeast Asia. To portray this as continued, not fundamentally new, behaviour is both accurate and smart.

There are media reports that Canberra is considering is weighing up both the immediate risks and long-term strategic signal of resolve that could arise from a deliberate freedom of navigation operation in the near future.

A second option could be for Australia to explore creative, oblique ways to show China that the island-building is harmful to its interests, without raising the risk of an encounter or challenge at sea or in the air. For instance, Australia could step up its activism in convening new bilateral security partnerships or even ‘minilateral’ security dialogues of three or more countries, involving other powers concerned about the way China is using its power, such as India or Japan or Southeast Asian partners. This could be projected as a clear sign to China that its behaviour is bringing about the very outcome it does not want – a firmer balancing alignment of other regional powers.

A third option could be for Australia to focus on bilateral diplomacy and the impact of words. After all, there is the precedent of Australian Foreign Minister Julie Bishop’s firm opposition to China’s destabilising declaration of an ‘air defence identification zone’ over waters contested with Japan in 2013.  In that instance Australia weathered China’s diplomatic displeasure, an experience that has arguably strengthened Australia resolve and self-respect in handling differences with its largest trading partner.

Now China has refocused its assertiveness from a defiant Japan towards smaller countries in the South China Sea, and has to some extent modified its game from initiating risky close-range sea and air encounters to the more passive aggressive tactic of island-building.

That unfortunately places the burden of risk on other powers, as symbolised recently by the flight of a US surveillance plane, complete with TV camera crew, close to the artificial islands. This was challenged by Chinese forces who ordered the plane to leave an alleged ‘military zone’ lest there be ‘miscalculation’ – as if any subsequent deliberate use of force by China could be construed as an accident.

All this goes to the balance of risks and uncertainties about where the United States and other like-minded countries, including Australia, proceed from here.

In Singapore, US Secretary of Defense Carter wisely linked US forces’ right to exercise freedom of navigation and overflight to the rights and interests of others in the region, including small and medium powers.

This means, however, that such operations will be more effective if they are not conducted solely by the United States – and if they are accompanied by wider diplomatic initiatives, supported by diverse regional and global partners, to categorically disprove the Chinese propaganda line that this is all about ‘meddling’ and ‘hegemony’. Australia can be an important partner in such efforts, although it should not be the only one.

About Rory Medcalf

Rory Medcalf is Professor and Head of College, National Security College, at Australian National University and a Nonresident Fellow at the Lowy Institute for International Policy.