Transition from hedging to balancing in Australia's China policy: theoretical and empirical explorations

For almost two decades, Canberra hedged its economic and security bets between China - its most significant economic partner - and the United States - its core security ally - rather successfully, with Australian policymakers announcing that the country would not have to choose between the two great powers and that there are ways to maintain a tight alliance with the US while enhancing friendship and cooperation with China. However, Australia-China relations started to deteriorate in the mid-2010s, with Canberra effectively giving up on hedging by signing in 2021 the AUKUS (Australia-UK-US) security pact and undertaking other steps that have been widely received as unequivocally joining the US's effort to contain China. This article explores Australia's foreign policy transformation by conceptualising it as a transition from hedging to balancing against China. It develops a theoretical argument about why an essential middle power might decide to give up on hedging and start balancing. It argues that the end of hedging in Australia's China policy is a result of disappearing structural uncertainty and systemic permissiveness on which hedging, as a pattern of smaller power behaviour, is premised. As such, the article contributes to the knowledge about hedging by highlighting the limitations of smaller power hedging.