Middle Power Hedging

International Relations of the Asia-Pacific Volume 23, (2023) 93–127
doi: 10.1093/irap/lcab023 Advance Access published on 19 October 2021
Downloaded from https://academic.oup.com/irap/article/23/1/93/6400646 by National Taiwan University user on 20 February 2023

Middle power hedging in the
era of security/economic
disconnect: Australia, Japan,
and the ‘Special Strategic
Partnership’
Thomas Wilkins*
Department of Government and Internal Relations, The
University of Sydney, Sydney, Australia
*Email: thomas.wilkins@sydney.edu.au
Accepted 22 September 2021
Abstract
Deeping superpower rivalry between the United States and China has
created acute strategic dilemmas for secondary powers in the Indo-
Pacific such as Australia and Japan. This predicament is exacerbated by
their divergent security and economic interests which cut across the su-
perpower divide; a condition dubbed a ‘security/economic disconnect’.
These two intimately related dynamics preclude clear-cut implementa-
tion of conventional balancing/bandwagoning alignment choices and
have led to mixed hedging strategies to cope with this situation. To ad-
dress these issues, the article presents a refinement of the hedging con-
cept in International Relations (IR) that emphasizes its multi-
dimensional nature, within a broader interpretation of alignment itself.
It applies this to the case of the Australia and Japan with reference to
their Strategic Partnership, which is both emblematic of hedging
International Relations of the Asia-Pacific Vol. 23 No. 1

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94 Thomas Wilkins
responses to systemic uncertainty, and an institutional mechanism

through which to operationalize joint hedging policies. This provides
insights into how middle power strategic partnerships are managing

strategic risks across the security, economic, and other, domains.
1 Introduction
1.1 Superpower rivalry and the security/economic disconnect

in the Indo-Pacific
The strategic landscape in the Indo-Pacific region is being transformed
by the rise of China and the attendant onset of superpower rivalry
with the United States (Friedberg, 2011; Allison, 2017). As Soeya
(2020, n/p) observes ‘the Indo-Pacific region is now defined as a theater
of strategic competition between the United States and China’. This re-
newal of superpower rivalry creates profound dilemmas for secondary
powers in the region with regard to their alignment choices as they
find themselves under increasing pressure to ‘choose sides’ in the con-
test (e.g. Gilley and O’Neil, 2014). This unenviable predicament is in-
trinsically linked to, and further exacerbated by, the conflicting security
and economic interests of such secondary regional powers, especially
US allies such as Australia and Japan, which depend upon American
security guarantees for their national defense, while their continued
economic prosperity has become heavily dependent upon China.
This divergent condition may be captured by the notion of a ‘secu-
rity/economic disconnect’. According to Feigenbaum and Manning
(2012, n/p), ‘In today’s Asia, economics and security no longer run in
parallel lines. In fact, they are almost completely in collision.’ The secu-
rity/economic disconnect is the function of two related developments.
First is the recognition that economic power now competes with military
prowess as a currency of power politics, and that the latter, lacking rela-
tive fungibility, is accordingly devalued, at least in peacetime. The advent
of ‘geo-economics’ (Luttwak, 1990) creates conditions in which states
endowed with significant economic resources may pursue their national
interests as ‘a continuation of politics by economic means’, to para-
phrase Clausewitz. Economic interdependence (or dependence) may thus
be ‘weaponized’ through the application of coercive economic measures
The Australia–Japan strategic partnership 95
by the stronger party to enforce political compliance (Scholvin and

Wigell, 2018). This dynamic also accordingly raises the importance of
‘economic security’ to a place alongside traditional military–territorial

security in government calculations (Buzan, 2008).
Second, this development is compounded in the Indo-Pacific region
by the bifurcation between comparative attraction of American mili-
tary power and Chinese economic power. This results in what Chan
has dubbed a ‘dual hierarchy’ in the region, with ‘China. . .now domi-
nating the economic hierarchy while the US. . .[takes]. . .the helm of the
security hierarchy’ (Chan, 2019, p. 2). Secondary powers are now
forced by this ‘dual economic and security logic’ (Haacke, 2019, p.
379) into acute dilemmas in order to reconcile their divergent security
and economic interests within the ‘security-economic nexus’ (Pempel,
2013). In short, such powers, according to Job (2020, n/p) are ‘con-
fronting the contradictions posed by the emergent, regional uncoupling
of economics and security, and the increasingly aggressive pressures by
Washington and Beijing to choose sides in this now dual hierarchy’.
The term ‘secondary powers’ usually groups together small and me-
dium states that are neither ‘great’ nor ‘superpowers’. Within this dis-
parate category, Australia and Japan, (arguably) may be considered as
‘middle powers’. Defining a ‘middle power’ is a fraught process, and
one thoroughly investigated in the relevant literature (de Swielande
et al., 2018), but for the purposes of this article, the following observa-
tions are sufficient. Significant material capabilities differentiate such
countries from other secondary powers that are small or weak states.
To illustrate: Australia and Japan measure 32.4 and 41.0, respectively,
on the Lowy Institute’s Power Index (2020), against ‘small’ states such
as Laos (6.0) and Cambodia (7.3), and the ‘superpower’ capabilities of
the United States (81.6) and China (76.1). Importantly, the possession
of such resources equips them to practice archetypical ‘middle power
diplomacy’: order-building, coalition formation, and multilateralism
(see Cooper et al., 1993). While the appellation is an imperfect fit for
Japan given some of its superior material capabilities, this behavioral
aspect of middlepowerdom is highly apposite to Tokyo’s foreign policy
practice according to Soeya (2016). Unlike small states, their material
and normative capabilities afford middle powers a degree of agency
within the international system (‘systemic impact’) when responding to
96 Thomas Wilkins
power shifts, and their presence and influence will be magnified when
they act in combination (Carr, 2014).

1.2 A combined hedging response: Australia–Japan and the
‘Special Strategic Partnership’
The quandary precipitated by their divided security and economic
impulses places such middle power states in an acute dilemma. As a re-
sult of the security/economic disconnect, Pempel (2020, n/p) argues
‘Clearly any binary choice between the U.S. and China must threaten
either their security or economic well-being.’ Being insufficiently power-
ful to balance on their own account, yet sufficiently strong to eschew
bandwagoning, they have opted for hedging strategies to mitigate the
security and economic risks that a definitive choice between their prin-
cipal security and economic partners would entail. Job (2020, n/p) sees
‘limited options for middle powers, other than calls for new forms of
diplomacy, persistent advancement of multilateralism, networking with
like-minded states, and pragmatic hedging between the US and China’.
This appraisal captures the Australian–Japanese posture well, as evi-
denced through their individual (parallel) policies and their bilateral
Strategic Partnership. With regard to Australia, Blaxland (2017, p. 19)
argues that ‘With so much in flux, Australia must hedge its bets.’
Meanwhile, Samuels (2011, p. 7) notes that ‘Japan has long been doing
what all states do to reduce risk and maximize gain in an uncertain
world – it has hedged.’ Though previous studies have engaged the hedg-
ing concept to account for the strategic postures of Australia and Japan
individually (noted below), and they are occasionally treated in common
as examples of ‘hedgers’, this article will additionally consider their joint
bilateral position as ‘Special Strategic Partners’ as the referent object of
study and an identifiable locus of combined hedging policies.1
The Australia–Japan relationship is considered by many to be exem-
plary of the ‘strategic partnership’ phenomenon. Less binding and for-
mal than the traditional military alliance pact, these ‘limited align-
ments’ appear ideally suited to the more uncertain and unpredictable
21st Century security landscape, and their apparent appositeness as
1 The term is for rhetorical purposes – the article will henceforth refer simply to the ‘strategic
partnership’ and ‘strategic partners’.
instruments of hedging may perhaps account for their increasing prop-

agation (see: Nadkarni, 2010; Envall and Hall, 2016). As Ciorciari
(2019, p. 531) reflects – ‘The appeal of these limited alignments is that

they help address security risks without incurring the problems associ-
ated with stout external balancing and tight security pacts.’ Effectively,
as this article argues, what we are seeing among hedging states in the
Indo-Pacific is a reluctance to rely exclusively on traditional military
alliances, by supplementing them with flexible and versatile alignments
well attuned to the modalities of hedging (McDougall, 2012; Tessman,
2012). This aspect, rather than a recitation of the partnership’s institu-
tional history and make up, amply covered elsewhere (Terada, 2006;
Wilkins, 2015; Satake, 2016; Heazle and Tatsumi, 2018), is the focus of
this article.
The article seeks to contribute to debates at the intersection of sev-
eral interrelated literatures and to bind them together. First, it is
broadly situated in debates on how secondary/middle powers are
responding to the shifting power balance in the Indo-Pacific region due
to rise of China and the relative decline of US primacy. Second, it con-
tributes to evolving theorizing of ‘hedging’ by reformulating the con-
cept to provide a ‘broad’ approach that explicitly recognizes the ‘multi-
dimensionality’ of hedging practices. This approach also translates into
new ways of thinking about alignment theory itself – which has hereto-
fore generally confined itself to security imperatives – by highlighting
the importance of its economic and normative (middle power) permu-
tations. Lastly, by considering the Australia–Japan bilateral partnership
as a form of alignment through which they jointly coordinate their
hedging strategies, the article adds to the growing literature on the
strategic partnership phenomenon itself.
The article is divided into two Parts. Part I lays out the author’s
specific rendition of the concept of ‘hedging’, beginning by probing its
definitions and contested theoretical nature before arriving at a concep-
tion that recognizes its multi-dimensional nature within a broader in-
terpretation of ‘alignment’. Informed by this reconceptualization, Part
II then examines how, as closely aligned states, Australia and Japan to-
gether practice multi-faceted hedging strategies, including by means of
their Strategic Partnership. For the purposes of analytical presentation,
the main text is divided into primary, secondary, and tertiary hedges,
each of a differing nature (and a different degree of priority, hence the
98 Thomas Wilkins
ordinal denominations). This ‘triple hedge’ takes the form of: (i) secu-
rity balancing alongside the United States; (ii) economic engagement
with China; and (iii) middle power alternatives (i.e. ‘Middle Power di-

plomacy’: order-building, coalition formation, and multilateral institu-
tions). Each of these dimensions is outlined and evaluated in turn,
with its drawbacks duly recorded and analyzed, to further reveal cross-
hedging and sub-hedging components.
2 Part I: Hedging in an age of security–economic

disconnect and superpower rivalry
In recent years, the term ‘hedging’ has been introduced into the theoreti-
cal lexicon to augment our understanding of alignment policies, and per-
haps shore up the continued viability of balancing/bandwagoning-centered
Realist cannon of IR theory (discussed below). Its significance ought not
to be overlooked since, as Ciorciari and Haacke (2019, p. 368) affirm:
‘Hedging is arguably one of the most influential concepts to emerge from
scholarship on the international relations of the Asia-Pacific in the 21st
century.’ This is also a reflection of its increasing adoption by policy-
makers and analysts reaching for a suitable phrase to describe more am-
biguous and nuanced state foreign policies that conspicuously fail to con-
form neatly to balancing or bandwagoning categorizations. As Jackson
(2014, p. 333) records: ‘Hedging policies – whether declared or not – have
emerged as a dominant trend in the Asia-Pacific security landscape over
the last decade.’
Since the gradual emergence of the term around the mid-2000s,
studies of hedging in IR have proliferated to form a burgeoning litera-
ture. Yet, this literature remains fragmented and sometimes incompati-
ble in both terminology and theoretical consistency, as we shall see be-
low. Most studies outline their conceptual interpretation of hedging
itself, before proceeding to apply these to various empirical cases: a
formula that is reproduced in this article. Some studies focus on indi-
vidual case studies, such as the United States (Medeiros, 2005), China
(Foot, 2006), Japan (Envall and Fujiwara, 2012; Hornung, 2014;
Heginbotham and Samuels, 2002), and Australia (Chan, 2019). Others,
such as Jackson (2014) and Lim and Cooper (2015) consider the
‘Asian’ region in general, while many examine sub-regional clusters of
states, including South East Asia (Roy, 2005; Goh, 2008; Kuik, 2008;
Murphy, 2017; Korolev, 2019), the Gulf States (Hamdi and Salman,
2020), and South Asia (Lim and Mukherjee, 2019). Driven by the ob-
servance of novel empirical trends, and in pursuit of a more finely

tuned analytical tool kit to theorize state alignment policies in the 21st
century, scholars have increasingly sought to refine and apply hedging
in new ways and explore associations between the concept and ques-
tions of structure and agency, or system polarity, for example
(Tessman, 2012; Korolev, 2016). In order to arrive at a refinement of
the hedging concept to be applied to the Australia–Japan strategic
partnership, we must adumbrate several factors. These proceed through
(i) definitional issues and (ii) theoretical underpinnings, before arriving
at (iii) a reformulated ‘multi-dimensional’ approach that also reflects a
more authentic and ‘broader’ conception of the phenomenon of align-
ment itself.
(i) Like the majority of concepts in the IR discipline hedging is es-
sentially contested and multiple definitions are available. To wit, Koga
(2018, p. 634) points out that ‘scholars have yet to reach a consensus
on the concept, including its definitions, motivations, conditions, pat-
terns, and identification’. Such ambiguities are by no means unusual,
however, and have not inhibited the employment of the term both in
the scholarly or policy-making worlds. Perhaps, the most considered
academic definition of the concept is provided by Ciorciari and Haacke
(2019, p. 368):
Hedging normally refers. . .to a national security or alignment

strategy, undertaken by one state toward another, featuring a mix of
cooperative and confrontational elements. It is often contrasted with
balancing or bandwagoning, concepts developed during the Cold War
era to depict the alternative strategies of resisting or accommodating
a mighty or menacing great power.
(ii) A major issue of contention is how hedging is theorized in rela-

tion to the axial Realist theories of alignment in IR: balancing and
bandwagoning. The familiar Realist tradition of IR theory predicts that
when confronted with a rising power (Waltz, 1979) or threatening power
(Walt, 1987), states will ‘balance’ against that power, either through mo-
bilization of internal power resources (‘self-help’) or through forming ex-
ternal alliances. Alternatively, if balancing seems futile, smaller, weaker
100 Thomas Wilkins
states will occasionally seek to accommodate or appease the opposing

power by ‘bandwagoning’ with it (Walt, 1987).
The scholarship on hedging appears divided on its relationship with

these central theories. First there are those studies that regard the con-
cept is an additive (or alternative) to the balancing/bandwagoning dyad
(i.e. ‘adding it to the menu’: Tessman, 2012). In this respect, Koga
(2018, p. 635, [My Italics]) indicates that ‘the concept of “hedging”
should be understood in the context of the “balancing-bandwagoning”
spectrum within the “balance of power” theory, in which hedging is lo-
cated between balancing and bandwagoning as the state’s third strate-
gic choice’. In this sense, Goh (2006, p. 1, [My Italics]) sees hedging as
avoiding (or planning for contingencies in) a situation in which

states cannot decide upon more straightforward alternatives such as
balancing, bandwagoning. . .Instead they cultivate a middle position
that forestalls or avoids having to choose one side at the obvious
expense of another
Because of its inclusion on the balancing/bandwagoning spectrum it

is also (implicitly) assumed to function at the system-level and remains
subject to structural explanatory tools. Hedging is therefore an ‘auto-
matic’ state response to system pressures, and uncertainly about the fu-
ture distribution of power, and where there is ‘no evidence of leader-
ship decisions to hedge’ (Tessman, p. 230).
On the other hand, scholars have increasingly posited that it should
be considered as ‘a phenomenon of a different order’ (Korolev, 2016,
p. 375) or ‘umbrella concept’ (Korolev, 2016, p. 377). This conception
regards hedging as ‘essentially the combination of “balancing” and
“bandwagoning”, and this counteraction cancels out the risks of each
action’, according to Koga (2018, p. 637 [My Italics]). Thus, Hornung
(2014, p. 99 [My Italics]) observes ‘Hedging consists of policies that
stress both engagement [i.e. limited bandwagoning] and balancing. As
such, it involves a mix of cooperative and competitive policies’. In this
sense, hedging is a broader phenomenon that subsumes elements of
balancing and bandwagoning, as well as other offset strategies, in a
complex compound matrix of multi-directional hedges. This approach
therefore breaks down the walls between balancing and bandwagoning
as binary strategic options.
This interpretation fits better with the assumption that hedging is a

unit-level variable manifested in (agential) state foreign policy rather
than a structural force at the system level. This ‘manual’ hedging can

therefore be ascertained in foreign policies when state leaders ‘behave
with explicit intent to hedge’ (Tessman, p. 230). As Korolev (2019, p.
423) contends ‘system-level variables are better at explaining balancing,
whereas hedging is more directly affected by other, non-systemic causal
forces’. What further dislodges hedging from explicit placement on the
structural Realist balancing/bandwagoning spectrum is the notion,
according to Haacke (2019, p. 377 [Italics added]) that ‘hedging is a re-
sponse to a security risk, rather than a clear and acknowledged secu-
rity threat, and that hedging thus is conceptually and theoretically dis-
tinct from the conventional security strategies of balancing and
bandwagoning.’ This modification will have a significant bearing also
upon the empirical analysis that follows in Part II.
Since Lim and Mukherjee (2019, p. 494) identify that ‘Hedging be-
havior is defined as an alignment choice’, whether one adopts the addi-
tive, or the combination, approaches above will also determine if resul-
tant alignment strategies are viewed as either ‘narrow’ or ‘broad’ in
scope. In the ‘narrow’ interpretation espoused by Lim and Cooper
(2015, p. 708), hedging is valid only if it represents a costly signal in
the security sphere, otherwise it does not count as genuine hedging.
Many studies also assume this implicitly. In contradistinction, a
broader conception of alignment may be adopted in line with the com-
bination approach above. Lim and Mukherjee (2019, p. 494) note that
‘The broader concept sees hedging behavior as a mix of often contra-
dictory or counteracting policy choices pursued in response to compet-
ing national interests given [i.e. not just “security”], like in the nar-
rower version, an environment of uncertainty and risk.’ In this view,
hedging remains ‘strategic’ but incorporates the full panoply of secu-
rity, economic (including ‘economic security’), and other risks, as moti-
vating factors and policy options.
(iii) Through these distinctions we arrive at the author’s contention
that hedging should be viewed as multidimensional and part of a more
multi-vectored alignment posture. Kuik (2016, p. 501) attests that ‘much
of the existing alignment literature has focused primarily on the military
options (e.g. joining an alliance, establishing defense partnership with a
big power), but relatively overlooked the non-military options such as
102 Thomas Wilkins
economic and diplomatic tools of statecraft’. Considering the salience of

geo-economics signaled above, hedging strategies and alignment theory
in general should no longer be considered confined to the military/secu-

rity sphere. Importantly, Wesley (2016, p. 4) remarks that ‘the geoeco-
nomic age heralds the simultaneous securitization of economic policy
and economization of strategic policy, with both dynamics being played
out across a chessboard of geographic advantage and vulnerability’. This
statement further reinforces the causality of the security/economic
disconnect as a context and driver for hedging policies, and concomi-
tantly assists us in an effort to broaden the actual phenomenon of
‘alignment’ itself beyond security confines. As Kuik (2016, p. 501) argues
‘Neglecting them might obscure the key features and factors underlying
a state’s alignment decision.’
Thus, unlike pure balancing/bandwagoning, hedging strategies occur
(concurrently) in different policy sectors, all of which could plausibly
be considered to have a ‘strategic’ quality. These are chiefly ‘security’
(military/defense) and ‘economic’ (trade and investment) – including
economic security – but may also be ‘institutional’ (involving multilat-
eralism or other coalition-building). As Jackson (2014, p. 346) attests –
‘As foreign policy issues are increasingly multi-dimensional, states are
incentivized to conform to multiple, sometimes contradictory or com-
peting hierarchies, which equates to a hedge.’ Indeed, this leads Koga
(2018, p. 638) to ‘emphasize the use of mixed strategies as the defining
characteristic of hedging’. Thus, he (Koga, 2018) has attempted to in-
troduce an extensive categorization of no less than six varieties of
hedging to capture this, though this creates correspondent difficulties
in positively determining which one should apply, since in fact several
forms may be detected simultaneously. It also alerts us to the possibil-
ity of ‘hedges within hedges’, or perhaps ‘sub-hedging’ or ‘cross-hedg-
ing’ elements across dimensions. Acknowledgement that hedging may
occur beyond the security dimension, and that non-military hedges
may have strategic qualities, or at least strategic effects, is in important
step forward, at least in terms of the broadening concept.
Given the complex problematique faced by those seeking to apply
hedging as a coherent concept, it has attracted a degree of critique.
First, the definitive presence of manual hedging strategies is difficult to
prove since such policies are seldom advertised explicitly as such, espe-
cially in official documentation. This drawback has led some analysts
to dismiss the concept itself as ‘a purely descriptive term with marginal

analytical value’ (Lim and Cooper, 2015, p. 724). This drawback is fur-
ther compounded by its apparent omnipresence in foreign policy strate-

gies. Additionally, as one of the manuscript reviewers pointed out, this
may be a relatively default position for secondary/middle powers.
Jerdén and Hagström (2012, p. 241) therefore remark that ‘the con-
cept’s analytical value seems quite limited – in short, what state with
options does not hedge?’ This empirical ubiquity also raises concerns
of ‘conceptual overstretch’ (Korolev, 2019, p. 428) that carries over to
its theoretical application in IR. In terms of theoretical robustness, the
unresolved debates within the concept certainly lead to confusion and
conflation, with Haacke (2019, p. 380) cautioning us that ‘Perhaps not
surprisingly, several authors actually invoke more than one single con-
ceptualization of hedging in their work.’ Such potential pitfalls duly
noted, the article seeks to show how such a multidimensional approach
can be applied to an empirical case study to reveal the complexity of
multi-vectored alignment policies.
3 The ‘triple hedge’: security balancing, economic

engagement, and middle power alternatives
3.1 The primary hedge: security balancing alongside the

United States
In terms of the ‘security hierarchy’ with its emphasis on military align-
ment as the most important, if not the only dimension of alignment
strategy, we can observe that the Australia and Japan primarily seek to
hedge against ‘risk’ and uncertainty associated with the rise of China
by joining US balancing efforts (with some circumspection, hence its
overall characterization as ‘hedging’). With both partners benefiting
from formal alliance treaties with Washington, this form of hedging
through balancing has much to recommend it, though it does entail in-
creasing drawbacks.
Both Australia and Japan are motivated by fears that rising Chinese
power could endanger regional security. Beijing’s increasingly assertive
actions in the maritime space, especially the South China Sea (SCS) and
East China Sea (ECS), backed by a program of military modernization
104 Thomas Wilkins
including improved force projection capabilities, present a clear ‘risk’ to

the mutual security interests of Australia and Japan (Yoshimatsu, 2017).
The Strategic Partnership is used as a platform through which such con-

cerns jointly articulated, including their annualized foreign and security
ministerial (‘2 þ 2’) meetings. In 2018 (Australian DOD, 2018), they
went on record as being ‘seriously concerned about the situation in the
South China Sea’. Additionally, during the annual leadership summits,
which are another institutional feature of the Strategic Partnership,
Australian and Japanese leaders (Media Statement, 2020) have repeat-
edly underlined ‘their strong opposition to any coercive or unilateral
actions that could alter the status quo in the East China Sea their oppo-
sition to such actions’. As Wei (2015, p. 104) records, ‘Concerns and
scepticism about China fuel Australia’s preference for joint efforts with
the US to balance the impact of China.’ The same applies to Japan.
Both countries see their alliances with the United States as an insur-
ance policy to deter a ‘revisionist’ China in the event that it becomes a
clear and immanent ‘threat’ to their security. This form of hedging is
only prudent since the ‘founding document’ of the Strategic
Partnership (MOFA, 2007), the Joint Declaration on Security
Cooperation affirmed ‘the common strategic interests and security ben-
efits embodied in their respective alliance relationships with the United
States’. Both partners recognize the indispensable security guarantee
that their respective alliances with the United States represent in pro-
viding for their security (including the persistent nuclear danger from
North Korea) and the need to contribute to the American-led strategic
front as key allies. According to Matsuda (2012, p. 113), ‘In this case,
hedging strategy anticipates the possibility that China could pursue
hegemony.’
There is ample evidence to support this assessment as both partners
have tightened their security ties with the United States in recent years
to hedge against such an eventuality. Yet, their unequivocal commit-
ment to joining a pure balancing strategy along with the United States
is circumscribed by a number of factors. Despite the joint proclama-
tions of the Strategic Partnership regarding China noted above, neither
partner explicitly identifies China as an overt ‘threat’ to regional secu-
rity or to their national security. As a consequence, their posture, at
least formally, conforms more to ‘indirect-balancing, which functions as
a military hedge to reduce security dangers, without directly or
explicitly targeting at any actor’ (Kuik, 2016, p. 509). Their balancing

posture thus remains relatively ‘limited’ as a result. Consequently, de-
spite their allegiance to the United States as a security ally, they have

therefore not undertaken pure balancing strategies that would entail un-
equivocal support for the United States combined with sufficient internal
balancing to improve their indigenous defense capabilities. As long as
China remains a strategic ‘risk’ rather than a strategic ‘threat’, a more
circumscribed or ‘low intensity’ (Roy, 2005) balancing policy with the
United States remains part of a multidimensional hedging posture.
An extension of their balancing support for the United States is
their recognition at the 2018 2 þ 2 meetings that continued American
primacy ‘underpin[s] broader regional stability and prosperity’
(Australian DOD, 2018). The policies of the partners are directly
linked with America’s 2019 Indo-Pacific Strategy (DOD), charged with
maintaining US regional primacy, and resisting the disruptive actions
of what it called ‘revisionist powers’ (China and Russia). Both
Australia and Japan have de facto iterations of what might be dubbed
an ‘Indo-Pacific strategy’ which closely comports with many of the US
objectives and is in part operationalized through their alliance relation-
ships (Green, 2018; Wilkins, 2019a). This includes convergence with
the American version of the Free and Open Indo Pacific (FOIP) initia-
tive (US State Department, 2019). The Strategic Partners state ‘their
determination to work proactively together, and together with the
United States and other partners in order to maintain and promote a
free, open, stable and prosperous Indo-Pacific region founded on the
rules-based international order’ (Australian DOD, 2018). Both partners
are in complete accord with American ‘principles’ of respect for sover-
eignty, peaceful dispute resolution, free, fair and reciprocal trade based
upon open and transparent arrangements, and the adhesion to interna-
tional law, rules and norms (including freedom of navigation and over-
flight). Likewise, Japan – the originator of the FOIP – has a highly
similar ‘vision’, though it places slightly greater emphasis on economic
aspects (MOFA, 2020a). The convergence of the three countries’ Indo-
Pacific strategies indicates a shared desire to counter Chinese expan-
sion, and also provide alternatives to the Belt and Road Initiative
(BRI) under the FOIP banner (see below). Nevertheless, the introduc-
tion of the ‘Indo-Pacific’ concept itself (to replace the less controversial
‘Asia-Pacific’), is, as pointed out in the introduction, a further
106 Thomas Wilkins
symptom of superpower rivalry and contention toward China (Wilkins

and Kim, 2020).
Underpinning, America’s Indo-Pacific Strategy are joint efforts by

the strategic partners to reinforce and extend the reach of the US alli-
ance system through their support for Washington’s objective of creat-
ing a ‘networked security architecture’ (DOD, 2019). To this purpose,
the partnership itself strengthens the ‘hub-and spoke’ system by ‘con-
necting the spokes’, a process further enhanced through the Trilateral
Strategic Dialog (TSD). Yeo (2019, p. 138) also argues that ‘the TSD
functions as a bridge between bilateral and multilateral cooperation’.
The TSD should thus be viewed as a means of transcending their sta-
tus as ‘separate’ spokes – or ‘quasi-allies’ (Cha, 1999) – to become de
facto or ‘virtual’ allies, alongside the United States. Efforts to bring
India into closer alignment through the ‘Quad’ and other regional/
extra-regional powers through the ‘Quad plus’ process, further illus-
trate how the partners work to buttress the role of the United States in
collaboration with other like-minded powers in upholding regional or-
der and countering Chinese expansionism (Lee, 2020).
Despite the circumspect way in which the strategic partners have en-
gaged in balancing alongside the United States to hedge against secu-
rity risks, there are a number of drawbacks to this approach that pre-
cipitate additional sub-hedging policies. First, as the regional power
balance continues to shift away from US primacy, commentators have
begun to query the continuing value for the US alliance system as the
ultimate guarantor of allied security into the future. As White (2019, p.
16) argues ‘the further America steps back from regional leadership,
the less valuable the [ANZUS] alliance will be’. Likewise, Hughes
(2012, p. 139) concludes that ‘Japan’s dependence on the United States
is likely to be unsustainable. . .as US power progressively wanes in the
Asia-Pacific region’. The relative structural decline in US power as an
undercurrent of uncertainty among allies was severely exacerbated by
the actions and policies initiated by the recent Trump Administration
(Beeson and Bloomfield, 2019). The President previously caused disar-
ray in allied capitals in Asia by casting doubts about the validity of US
security guarantees, thus dangerously undermining confidence in US
commitment and resolve. The abandonment of the Obama-era Pivot/
Rebalance strategic blueprint and the jettisoning of its economic cen-
terpiece – the Trans-Pacific Partnership (TPP) – by Trump have
weakened US geo-economic leverage, leaving a vacuum open that

China has deftly expanded into (hence encouraging economic and mid-
dle power sub-hedges, as detailed below). The result, Bisley (2017, p.

45) records, is that ‘the credibility of US primacy has been visibly di-
minished’. This casts faint doubts on the viability of hedging through
supporting US balancing strategies in the longer term.
Second, even as the value of the US alliance to Canberra and Tokyo
potentially diminishes, the costs of maintaining it have increased
(Wilkins, 2019). As its regional primacy declines, the United States has
raised its expectations of allied support and material contributions to
the alliance front, with the Trump Administration taking a highly criti-
cal stance on perceived ‘free riding’ on American security guarantees.
The costs of supporting balancing policies alongside the United States
will likely require further expenditures and still greater commitments
(burden-sharing). Combined with this, the configuration of their national
forces, designed to operate alongside those of the United States, binds
them into an ever-deepening security dependency upon the United
States that forecloses their strategic alternatives. This is partly a function
of the politically and institutionally embedded nature of the US alliance
in both capitals – what Yeo (2019, p. 31) dubs an entrenched ‘alliance
consensus’. The possibilities for hedging away from the alliance are
therefore inhibited and the contingency of full-scale ‘defection’ unthink-
able. Due to this path-dependency, Australia and Japan remain tethered
to an alliance with a declining and increasingly unreliable power, which
in turn actuates sub-hedging (below). Interestingly, the Strategic
Partnership provides a venue through which such concerns, and a puta-
tive ‘Plan B’, can be discussed (Jennings, 2018).
Third, too much overt investment in balancing alongside the United
States may impair economic alignment with China, according to Kuik
(2016, p. 512), as ‘Pure-balancing would be akin to burning-the-
strategic-bridge, which leaves lesser room for returns-maximizing acts.’
Worse than peacetime retaliation through economic coercion or lost
opportunities (see below), it could risk entrapment in a shooting war.
US brinksmanship with China in the Taiwan Strait or the SCS, for ex-
ample, would quickly draw American allies into a serious conflict with
the PRC, and attract economic if not military retaliation in response
(Fraser and Roberts, 2016). Fear of provoking Beijing has ensured that
Australia and Japan have also been reluctant to support occasional
108 Thomas Wilkins
American calls that they conduct overt Freedom of Navigation

Operations within Chinese maritime exclusion zones in the SCS. Ill-
advised US trade wars or other economic conflicts with the PRC also

risk leaving allies as economic collateral damage. Thus, politicians in
Canberra (and Tokyo too), ‘are struggling to find the right balance be-
tween their commitment to the status quo, and their fear of damaging
relations with [their] biggest trade partner’ (Heazle and Tatsumi, 2018,
p. 44). This predicament is treated in detail in the section that now
follows.
3.2 Secondary hedge: economic engagement with China

Through alignment by means of their defense pacts with the United
States, and braced by enhanced trilateral alliance co-operation,
Australia and Japan have primarily hedged against the risks posed by
China in the security domain by balancing behavior. But the signifi-
cance of their economic alignment – as a separate ‘hierarchy’ (see
Chan, 2019) – with China also compels them to seek nuanced means
of engagement to preserve their vital trading relationships, and perhaps
surreptitiously accommodate the future hegemonic power (limited
bandwagoning). This ostensibly comports with the theory above in the
context of security–economic disconnect, reinforced by the common
liberalist proposition (debatable) that economic interdependence
reduces politico-security tensions (Barbieri, 2002). Yet, as the draw-
backs of engagement have begun to materialize, the partners have initi-
ated ‘hedge within the hedge’ to offset the increasing security risks that
economic alignment now entails. While much of this activity occurs in
parallel, the Strategic Partnership itself also plays a notable role, espe-
cially with regard to this latter point.
As China has amassed greater power, especially in the economic
sphere, both Australia and Japan have sought to profit from the oppor-
tunities to increase their prosperity by closer economic engagement with
its powerhouse economy. As American (and Japanese) economic central-
ity has waned, the security and economic imperatives of Australia and
Japan have become disconnected. For example, as Dobell (2015)
observes ‘In the 21st century, Australia’s economy has decoupled from
the US economy. America gets pneumonia but Australia doesn’t sneeze.’
Likewise, Armstrong (2014, p. 2) writes ‘Japan and China today share
the third largest trading relationship globally. . .they are economically

interdependent to a large degree’. The extent of economic interdepend-
ence between the middle power economies and that of China therefore

dictates ‘economic-pragmatism’ (Kuik, 2016). According to López i
Vidal and Pelegrı́n (2018, p. 197), ‘The middle power, without accepting
or denying the political authority of the rising power, regards the latter
as an economic power that provides it with economic opportunities.’
This disposition typically led both countries to seek to compartmentalize
security and economic policies, by confining them to different ‘hierar-
chies’, to avoid having to ‘choose’ between their security ally and their
economic benefactor.
And yet, as China has translated its economic power into institu-
tionalized levers of regional governance, both Australia and Japan have
had to contemplate the degree to which they are comfortable moving
into China’s geo-economic orbit (bandwagoning). When Beijing
launched the Asian Infrastructure Investment Bank (AIIB) in 2015,
Australia was ‘willing to participate in China’s new ventures for fear of
being left behind’ (Friend and Thayer, 2020, p. 274). Under pressure
from the United States, Tokyo refrained, preferring the Asian
Development Bank (ADB), in which it has a large stake. But both
countries have refrained from signing up to the BRI, a monumental
Eurasian infrastructure plan, which both regard as having strong geo-
political overtones.2 China also heads another regional security–eco-
nomic ‘hybrid’ institution, the Shanghai Cooperation Organization
(SCO), which also further allows Beijing to advance its influence. In a
sense, Beijing’s reshaping of the regional architecture is transcending
the security/economic disconnect, by collapsing the distinctions be-
tween these supposedly separate hierarchies. This means that ‘separat-
ing’ these hierarchies, as was attempted previously, no longer remains
tenable. In recognition of this, and motivated by a continued desire to
profit from economic engagement, an argument could be made that
Australia and Japan should recognize the inevitability of China displac-
ing American power in the Indo-Pacific and accommodate it accord-
ingly before it is too late. White (2019, p. 10) points out that ‘The only
prudent course is to plan on the basis that China’s new and increasing
wealth and power are here to stay.’ An impulse to accommodate this
2 The Australian Federal government reversed the State of Victoria’s participation in 2021.
110 Thomas Wilkins
hegemon-in-waiting, or at least not provoke it unnecessarily, would

therefore seem a prudent course of action (even if this contradicts their
primary hedge).

To this purpose, Australia and Japan have sought to define their po-
litical relationship with Beijing positively as a penumbra for smooth
economic interactions, using the terms ‘Comprehensive Strategic
Partnership’ and ‘Mutually Beneficial Relationship Based on Common
Interests’, respectively. Australia has an FTA with China, while Japan
has a trilateral (including South Korea) Economic Partnership
Agreement (EPA). In this context, McDougall (2012, p. 16) argues that
Accommodation with China is mainly important in terms of a

desire to continue the mutually beneficial economic relationship.
From Australia’s perspective this means avoiding situations where
differences or conflicts over security issues might escalate to the
point of damaging the economic relationship.
In order to expedite economic engagement, the countries have some-

times ‘accommodated’ China even at the expense of their security ally.
Australia’s participation in the AIIB, cited above, is a key example, as
was its decision to award a 99-year lease on the strategic port of
Darwin to a Chinese managed company, adjacent to military facilities
used by US forces (much criticized in Washington). As former Foreign
Minister Bob Carr has argued, Canberra ‘should also let the
Americans know that our alliance commitment with them does not
preclude us from a positive and pragmatic policy toward China’
(Bramston, 2018). Another select example is the refusal of Australian
and Japanese leaders to endorse a harsh joint statement against China
by Secretary of State Mike Pompeo at the 2020 Quad meeting
(McCarthy). Such departures from a united allied front have raised
‘US anxieties about how far Australia’s value as a US ally had been
eroded by its economic dependence on China’ according to White
(2017a, p. 99).
Yet, as the inherent drawbacks in this line of reasoning have become
more salient, the partners have initiated a ‘sub-hedge’ to mitigate
emerging risks. First, their 2020 Leaders’ Summit (MOFA, 2020b)
‘confirmed that a key element of bilateral security cooperation is to
promote coordination in the area of economic security’. Rather than
view ‘economic security’ purely in terms of trade benefits from China

(i.e. prosperity), the partners have individually and jointly sought to
offset the security risks or costs that (asymmetric) economic interde-

pendence has begun to entail. As Job (2020, n/p) identifies, Beijing in-
creasingly ‘employs economic coercive tactics to threaten or punish
middle powers and small states for diplomatic transgressions’. In 2010
during a tense stand-off over the Senkaku Islands, China restricted the
supply of rare earth metals to Japan (Yoshimatsu, 2012). While
Australia is currently embroiled in a spiraling diplomatic dispute as
China has interrupted imports of Australian raw materials and placed
punitive tariffs on other Australian goods, in response to Canberra’s
earlier call for an international inquiry into the origins of COVID-19
(Wilkins, 2020). In response, they jointly affirm (MOFA, 2020b) that
‘trade should never be used as a tool to apply political pressure. To do
so undermines trust and prosperity’. To this purpose, Ambassador
Shingo Yamagami in Canberra signaled that ‘Tokyo was willing to
help Australia reduce its trade dependence on China after Japan also
endured rough treatment at the hands of Beijing’ (Tillet, 2021).
Part of their sub-hedging strategy toward reducing economic depen-
dence, and thus vulnerability to Chinese political pressure, has been to
diversify their markets and supply chains (while Japan has also pro-
vided subsidies to ‘onshore’ companies back from the Chinese main-
land). As Bremmer (2013, n/p) observes, ‘Japanese policymakers want
to diversify, to hedge bets on China by strengthening trade and invest-
ment ties elsewhere in Asia’; a stance proving increasingly popular in
Australia also. Both countries have independently sought out greater
opportunities for trade and investment, especially in Southeast Asia
(SEA) and South Asia under the FOIP banner. Japan has sought to le-
verage its reputation for FDI ‘superiority’ and tap into the ADB for fi-
nancing (Insisa and Pugliese, 2020) to compete against China’s ambi-
tious infrastructure support programs, under its (Expanded)
Partnership for Quality Infrastructure (the economic pillar of its own
FOIP) (Yoshimatsu, 2018, pp. 722–23). Moreover, these have often
been combined with more strategic use of Official Development
Assistance to build recipient–partner capacity in the maritime sphere in
clear recognition of the ‘security–economic nexus’ (Yoshimatsu, 2017;
Insisa and Pugliese, 2020). In 2016, the Vientiane Declaration of the
East Asia Summit (EAS) endorsed Japan’s approach. As well as
112 Thomas Wilkins
enhanced economic engagement with Sri Lanka, Tokyo has sought to

build economic connectivity and infrastructure provision through a
coupling of India’s ‘Act East’ policy and its FOIP (Insisa and Pugliese,

2020, p. 16). Such efforts, if not always successfully concluded, indicate
Japan seeks to compete with, as well as accommodate, China’s eco-
nomic presence.
Likewise, worried about Chinese efforts to build ‘spheres of influ-
ence’ in SEA and South Asia, Australia has sought to increase its eco-
nomic focus on these regions, through capacity-building in SEA, and
especially through its Strategic Partnership with India, with DFAT pro-
ducing a dedicated report highlighting how bilateral economic ties
could be better exploited (Varghese, 2018). In addition, Canberra
launched its ‘Pacific Step-up’ in the South Pacific region in order to
counter Chinese economic and political inroads (Wallis and Batley,
2020). It also cooperates directly through the partnership with Japan in
this region under their 2016 ‘Strategy for Cooperation in the Pacific’
(MOFA, 2016). Notwithstanding such efforts to diversify and compete,
however, the need for engagement with China due to economic interde-
pendence remains a fact of economic life for both countries, and thus
‘hedging away’ from alignment with China has its inherent limitations.
Moreover, the Strategic Partners themselves enjoy a ‘mutually comple-
mentary economic relationship’ (MOFA, 2020a, p. 76). Based upon their
2014 Japan–Australia Economic Partnership Agreement (JAEPA), they
have sought to further boost their trade and investment ties. This further
extends to diversification in supply chains of critical materials. In 2020,
Australia and Japan committed to ‘strengthen cooperation on economic
security in areas such as telecommunications and critical minerals’
(Japan–Australia Summit Meeting). Australian supply of Liquid
National Gas (LNG) through the Japanese-funded Ichthys project in
Darwin, Cooperation on Hydrogen and Fuel Cells, as well as the devel-
opment of rare earths processing in Australia are indicative of this joint
commitment (with the latter a direct counter to Chinese economic coer-
cion). In response to the BRI, Australia and Japan also joined with the
United States to found the Trilateral Partnership for Infrastructure
Investment in the Indo-Pacific in order to promote sustainable infra-
structure development and regional connectivity (Media Release, 2018),
and are now developing an undersea telecommunications cable for
Papua New Guinea to foreclose Chinese control of digital ecosystems in

this strategic area.
Second, the partners have also become alert to the undesirable polit-

ical and economic influence that has accompanied closer engagement,
much of it aimed by Beijing at undermining their primary hedge.
Under the broad label of ‘influence operations’, Beijing has sought to
acquire critical national infrastructure, engaged in repeated cyber-
attacks and attempted to purchase influence in the political, economic,
and institutional apparatus of the target countries. Indeed, Beijing
never bought into the ‘separation’ of economics and politics, according
to Hartcher (2019). Compounding this predicament is the realization
that Australian resources and Japanese investment in China have
fuelled the acquisition of the very economic power China is now turn-
ing against them. Now, both countries have sought to unpick emerging
security risks that have accompanied their earlier economic engage-
ment. Chinese tech companies, such as ZTE and Huawei, have been ef-
fectively banned from providing critical national infrastructure
(Garnaut, 2018). And Australia has placed stringent conditions on in-
bound (Chinese) investment under the Foreign Investment Review
Board (FIRB), while subjecting the existing Port Darwin lease to a se-
curity review. While limited detail is available due to its sensitivity,
there are indicators that they are coordinating their approaches
through their bilateral partnership, with Australia itself providing
something of a ‘model’ of how to mitigate security risks through im-
proved national resilience.
Third, as Chinese economic influence has grown, its desire to seek
compliance with its own values and vision of regional order has also
increased. Yet both partners have shown marked reluctance to ‘trade
away’ their fundamental values and interests to achieve such accommo-
dation. As Paul (2020, p. 73) argues ‘Money can buy some loyalty, but
this need not last too long, especially if China demands too much alle-
giance and dependency in return’. In a typical joint statement
(Turnbull, 2015), the Strategic Partners have highlighted their concerns
on this score, outlining their ‘common values and strategic interests in-
cluding democracy, human rights, the rule of law, open markets and
free trade’. On this basis they are overtly critical of Chinese behavior
perceived to undermine regional stability such as activities in Hong
Kong, the treatment of Uighurs in Xinjiang, and the failure to adhere
114 Thomas Wilkins
to the UNCLOS and the Hague Arbitral Tribunal’s ruling on territo-

rial claims in favor on the Philippines. Further undercutting any notion
of accommodating China to pursue economic engagement is the drasti-

cally negative effect that Chinese actions, including economic coercion,
have had on domestic politics in Australia (The Lowy Institute Poll,
2020) and Japan (Japan Times, 2019). Thus, neither partner can recon-
cile itself to a future of Chinese hegemony, regardless of their signifi-
cant economic engagement with Beijing. Liff (2019, p. 459) therefore
concludes ‘strategic realignment toward China [is] unlikely for the fore-
seeable future’.
Finally, it should be noted that excessive accommodation with
China may prove precipitous. Reilly and Yuan (2012, p. 8) ask: ‘what if
China stops growing? The possibilities range from a minor slowdown
to a full-blown economic collapse.’ (Western) commentators have assid-
uously pointed to structural weaknesses in China’s hybrid economy,
and even if these do not result in a collapse (a ‘hard landing’), they
would certainly harm Australia and Japan economically, and may re-
sult in China’s place in the international hierarchy leveling-off (‘a soft
landing’) rather than equaling or surpassing the United States and
thus attenuating its ability to dominate its neighbors (McMahon,
2018). Campbell (2016, p. 155) concludes that ‘Too much is made of
the present hand-wringing about American decline and the inevitability
of Chinese hegemony in Asia.’ Moreover, one should not overlook the
significance of the more stable US market and the enormous long-term
investment it represents in both countries, which allows them to with-
stand the temptations of bandwagoning with China.
3.3 Tertiary hedge: middle power alternatives

The tertiary hedge is in some ways a compound of other hedging strat-
egies that seek to sub-hedge against some of the challenges posed by
the security/economic disconnect, as reflected in the primary and sec-
ondary hedges (though there are clear elements of cross-hedging as
well). As such, this ‘third way’ (Chan, 2019) groups together what
might loosely (and imperfectly) be dubbed middle power approaches
that allow them to circumvent binary choices (Soeya, 2016). In these
approaches the Strategic Partnership assumes more direct salience,
even as it seeks to combine its resources with additional (secondary

power) parties.
The first element of this approach is leveraging their credentials as

responsible middle powers to uphold the rules-based order and its un-
derlying operating system, ideally in support of the United States, but
if necessary (partially) independent of it. In response to fears that
American might abrogate its role as leader of the international liberal
order in 2016 Tokyo introduced its FOIP vision in which the ‘goal is
to establish an international order, based on the rule of law through
comprehensive efforts for promotion and consolidation of fundamental
principles, economic prosperity with connectivity and commitment for
peace and stability’. Australia has effectively endorsed the FOIP
through joint Strategic Partnership statements (MOFA, 2020b). This
illustrates that ‘the Japanese government sees closer security coopera-
tion with Australia as integral to maintaining the existing US-led re-
gional order’ (King, 2016, p. 179), even if the US defaults in its respon-
sibility (as witnessed under Trump). Wallace (2018, p. 903) argues that
this will ‘allow a more flexible hedge for mid-range outcomes in be-
tween outright abandonment and entrapment by the United States,
and may increase the likelihood of Washington’s remaining committed
to the region’.
Moreover, the diminution of American international leadership and
Trump’s disinterest in regional affairs has necessitated a more indepen-
dent role by the strategic partners to maintain the regional operating
system, including in the economic sphere. In particular, Trump’s with-
drawal from the TPP caused Canberra and Tokyo to act to preserve it
in the form of the Comprehensive and Progressive Agreement for
Trans-Pacific Partnership (CPATPP) (while hoping the United States
would re-join at a later date). This further amplifies their economic
sub-hedging against China. Subsequent American adoption of the
FOIP, and replacement of the discarded ‘Rebalance’ with the Indo-
Pacific Strategy, came as welcome relief to the strategic partners, and
the Biden Administration appears committed to restoring America’s
leadership roles in the region, though from a greatly diminished start-
ing point. Nevertheless, valuable lessons have been learnt in Canberra
and Tokyo that they must be prepared to work together in a typical
middle power ‘system supporter’ role to preserve the regional operating
system independently of the United States, if necessary.
116 Thomas Wilkins
Following from this, as middle powers they have concentrated upon

coalition formation to multiply their influence. Not only do Australia
and Japan enjoy a wide array of bilateral strategic partnerships individu-

ally (some including EPA/FTAs), but Satake and Hemmings (2018, p.
815) have pointed out ‘the way in which the Australia–Japan bilateral re-
lationship has functioned as a building block to partner well in other
groupings’. Together, they have sought to employ their bilateral Strategic
Partnership to form a core of a wider network of other secondary pow-
ers, especially India, Vietnam, the Philippines, Malaysia, Indonesia and
Singapore, that are also impacted by superpower rivalry and the secu-
rity/economic disconnect. The Trilateral Dialogue between Australia,
Japan, and India is also significant here, indicative of ‘independent yet
interlocking schemes to hedge between Chinese power and American
unpredictability’ (Medcalf, 2020, p. 112). Indeed, such coalition-building
efforts have now extended to extra-regional powers, as can be seen by
the enthusiasm that has greeted French and British participation in the
FOIP (and Quad-plus). Furthermore, Medcalf and Mohan (2014) have
advocated that these arrangements be more closely pursued to form a
‘Middle Power Concert’. In this way secondary powers can uphold their
interests in a competitive regional environment collectively as ‘third
force’. Michishita and Samuels (2012, p. 26) have thus suggested that
Tokyo and Canberra ‘help design, build, and board a “G-3 bus” in or-
der to avoid either dominance by a Washington-Beijing G-2 condomin-
ium or subordination to a new Chinese regional hegemon’.
The partnership’s support for regional multilateralism is another
means to prevent such an outcome through ‘institutional hedging’
(Oba, 2020). A joint statement (Turnbull, 2015) affirms ‘The Prime
Ministers will work together to continue strengthening cooperation in
regional fora to support security, stability, economic growth and re-
gional integration.’ As middle powers, neither Australia nor Japan can
afford to be subject to a purely realpolitik regional order in which
‘might makes right’. Essentially, multilateral fora serve as sites to tame
or socialize the stronger powers though adherence to rules and norms
agreed by all. As early as 2001 at an Australia–Japan conference
(MOFA, 2001), officials pointed to the need for ‘integration of the
People’s Republic of China as a constructive partner in the region’.
The partnership states a preference for the EAS and Asia Pacific
Economic Cooperation (APEC), in which they seek to multiply their
influence alongside other secondary powers, keep the United States en-
gaged, and ideally dilute the regional dominance influence of China.
They have shown little interest in Chinese-led institutions such as the

BRI or SCO, or affinity for Beijing’s preference for the ASEAN þ 3,
which excludes Australia, India, and the United States. Support for the
ASEAN-driven Regional Comprehensive Economic Partnership
(RCEP), meanwhile shifts attention from the BRI and connects the
partnership with ASEAN ‘centrality’, while further underwriting their
joint economic diversification strategies to escape the compromising
effects of being subsumed into China’s institutional/economic orbit.
The alternative policies covered by this tertiary hedge, however, reveal
a number of drawbacks. Firstly, the middle power resources and capabil-
ities of Australia–Japan strategic partnership are clearly not on the scale
of the United States or China, limiting their room for maneuver absent
superpower support or in the face of firm opposition (see Taylor, 2020).
Notwithstanding its notable middle power credentials in shaping re-
gional architecture, and its capabilities in addressing Non-Traditional
Security (NTS) issues, such as Humanitarian Assistance/Disaster Relief
(HD/AR), it lacks strategic gravitas in a realpolitik context. This is
partly explained by Japan’s domestic constitutional constraints and com-
paratively low defense spending. Even if the partners expand their power
base in some form of middle power concert as suggested, this would still
fall far short of the critical mass necessary to replace the security hedge
provided through their US alliances (unless India fulfilled its great power
potential in short order). On the economic front, notwithstanding the
JAEPA and efforts to collaborate on energy and rare earths, their bilat-
eral exchange pales in comparison to their respective trading links with
China. Nor, again, can economic engagement between these secondary
powers (within the CPATPP, for example) compete with the far more lu-
crative gains to be made by engaging with the Chinese market. As
Beeson and Hameiri (2017, p. 113) observe ‘that there are limits to the
influence so-called middle powers. . .can exert, even if they are acting in
concert’. As such, the hedge will remain limited by definition.
Secondly, there are some internal limitations and weaknesses within
the partnership itself. Though the strategic partnership is well-
developed institutionally, sometimes referred to as a ‘quasi-alliance’, it
falls short of a traditional military alliance compact, thus undermining
its strategic impact. Though Australia has encouraged Japan to play a
118 Thomas Wilkins
greater security role, as reflected in the 2015 Peace and Security

Legislation, allowing for ‘collective self defense’, significant barriers to
operating militarily in a bilateral context remain (as shown by the diffi-

culties in achieving a Reciprocal Access Agreement to allow Australian
troops to operate on Japanese soil). Heazle and Tatsumi (2018, p. 39)
argue that ‘the “capability gap” between what the (Japanese) govern-
ment aspires to do and what it can actually deliver is potentially an
even greater obstacle to closer security ties, underlining the need for
prudent management of security cooperation expectations within the
relationship’. This factor stymied defense procurement cooperation on
submarine technology between Australia and Japan in 2016, underscor-
ing how much remained to be done. Moreover, ‘both Japanese and
Australian policy-makers have carefully avoided provoking China by
abstaining from concluding a formal alliance treaty while still gradually
enhancing their defense and security cooperation’ (Satake and
Hemmings, 2018, p. 817). This may naturally be viewed as a degree of
‘accommodation’ toward Beijing. Also, a degree of disagreement about
whether China will emerge as a direct military ‘threat’, and not just a
joint security ‘risk’, exists within the partnership itself. With close prox-
imity and territorial disputes with China, filtered through a prism of
historical animosity, Ishihara (2014) claims that Japan is more acutely
sensitive to this possibility, even as a ‘distant’ Australia reels from eco-
nomic and diplomatic disputes with Beijing. So far Canberra has not
been willing or able to offer more than diplomatic support for Japan’s
security in the ECS (though issue has been mooted recently by
Ambassador Yamagami [Tillet, 2021]). The ultimate degree of bilateral
solidarity in the partnership thus remains untested.
Third, over recent years, expectations of what multilateral security
architecture can achieve in terms of protecting national security inter-
ests in the region has diminished in both capitals. As Feigenbaum and
Manning (2012) warn that ‘Asia’s major multilateral institutions have
proved to be almost irrelevant to practical problem-solving’. In particu-
lar, such inclusive organizations have not ‘socialized’ China as a ‘re-
sponsible stakeholder’ or tamed its assertiveness as earlier anticipated
(Ba, 2006) (and China has overwhelmed the region with its own insti-
tutions more recently, as noted above). Additionally, Taylor (2020, p.
78) sees ‘the tendency for larger multilateral groupings [to] to increas-
ingly reflect rather than to shape Asia’s deepening strategic rivalries’.
In many respects, exclusive bilaterals and minilaterals have thus sup-

planted multilateral fora in state’s security policies, as shown above.
Moreover, despite their middle power credentials, previous independent

efforts at regional community-building by former PM Kevin Rudd,
through his Asia-Pacific community and PM Yukio Hatoyama,
through his East Asian Community proposal, were unsuccessful. More
troubling for the integrity of the partnership was their stunning lack of
coordination in these efforts, marking a real missed opportunity for
middle power-style regionalism.
4 Conclusions
This article has characterized the overall Australia–Japan hedging
strategy and practiced by means of the Strategic Partnership as a ‘tri-
ple hedge’, necessitated by the acute uncertainty and security/economic
disconnect that is accompanying superpower rivalry in the Indo-
Pacific. The empirical analysis above has demonstrated how Australia
and Japan seek to mitigate the respective security and economic risks
integral to the security/economic disconnect by multidimensional and
cross-cutting hedging strategies. It is not to be inferred that each of
these has equal weighting, nor that the strategic partnership itself is
the sole means employed by Australia and Japan to hedge. Rather, as
the Strategic Partnership has deepened and expanded, this has created
incentives and capacities to explore joint strategies through this mecha-
nism, anchored in their respective national approaches.
In terms of findings, it is clear that the primary hedge of mitigating
risk from a rising China remains their respective alliance relationships
with the United States. This is further strengthened by the consolidation
of the Strategic Partnership into a distinct security actor that further rein-
forces trilateral alliance capability through the TSD. Since there is no firm
consensus among the partners that China poses an immanent and direct
‘threat’, this option is better depicted as hedging, but through (limited)
balancing. Nevertheless, spurred by desires to profit from economic align-
ment with China, and with the (debatable) shadow of future Sinic order
looming over the horizon, an additional secondary hedge to accommo-
date Beijing is evident. This secondary hedge will remain in place due to
their inescapable dependence on Chinese markets. Notwithstanding, the
secondary hedge has increasingly evinced a ‘sub-hedge’ designed to guard
120 Thomas Wilkins
against the risks now associated with Chinese economic statecraft and
more assertive demands for conformity with its political and security
interests, which alters the initial picture. That is, as the security and eco-

nomic hierarchies begin to dissolve, the calculations of the security/eco-
nomic disconnect have partially shifted, perhaps slowly transforming what
was previous a ‘cooperative’ economic hedge toward China towards na-
scent ‘resistance’ against it.
Partly in order to hedge against the drawbacks entailed in these se-
curity and economic hedges, they also engage in a tertiary hedge in
which the role of the Strategic Partnership becomes even more salient.
This third hedge largely involves aspects of middle power diplomacy
actuated in tandem through their partnership, such as order-building,
coalition formation, and multilateralism. In this respect, Soeya (2020,
n/p) casts ‘middle-power cooperation as an alternative, new approach
in the Indo-Pacific era’. The role played by the Strategic Partnership is
manifest in each of these three hedging dimensions, though the pri-
mary hedge especially, where it can also serve to buttress US balancing
efforts, and the tertiary hedge, where it exhibits a more independent
leadership role in creating alternative options to the former, and in-
creasingly represents a fallback option against either of the primary or
secondary hedges unraveling. As such, the bilateral partnership itself
could be conceived of as a vehicle for combining and jointly prosecut-
ing the national hedging strategies of Australia and Japan, though of
course this is not its only function.
Acknowledgements
T.W. wishes to extend their gratitude to the three anonymous reviewers,
and to Dr Gabriele Abbondanza and Dr Jiye Kim, who read previous
drafts.
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International Relations of the Asia-Pacific Volume 23, (2023) 93–127

doi: 10.1093/irap/lcab023 Advance Access published on 19 October 2021

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Accepted 22 September 2021

International Relations of the Asia-Pacific Vol. 23 No. 1

responses to systemic uncertainty, and an institutional mechanism

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1.1 Superpower rivalry and the security/economic disconnect

by the stronger party to enforce political compliance (Scholvin and

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instruments of hedging may perhaps account for their increasing prop-

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2 Part I: Hedging in an age of security–economic

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Hedging normally refers. . .to a national security or alignment

(ii) A major issue of contention is how hedging is theorized in rela-

states will occasionally seek to accommodate or appease the opposing

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avoiding (or planning for contingencies in) a situation in which

Because of its inclusion on the balancing/bandwagoning spectrum it

This interpretation ﬁts better with the assumption that hedging is a

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economic and diplomatic tools of statecraft’. Considering the salience of

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to dismiss the concept itself as ‘a purely descriptive term with marginal

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3 The ‘triple hedge’: security balancing, economic

3.1 The primary hedge: security balancing alongside the

including improved force projection capabilities, present a clear ‘risk’ to

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explicitly targeting at any actor’ (Kuik, 2016, p. 509). Their balancing

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symptom of superpower rivalry and contention toward China (Wilkins

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weakened US geo-economic leverage, leaving a vacuum open that

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American calls that they conduct overt Freedom of Navigation

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3.2 Secondary hedge: economic engagement with China

the third largest trading relationship globally. . .they are economically

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hegemon-in-waiting, or at least not provoke it unnecessarily, would

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Accommodation with China is mainly important in terms of a

In order to expedite economic engagement, the countries have some-

view ‘economic security’ purely in terms of trade beneﬁts from China

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enhanced economic engagement with Sri Lanka, Tokyo has sought to

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Papua New Guinea to foreclose Chinese control of digital ecosystems in

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to the UNCLOS and the Hague Arbitral Tribunal’s ruling on territo-

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3.3 Tertiary hedge: middle power alternatives

even as it seeks to combine its resources with additional (secondary

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Following from this, as middle powers they have concentrated upon