Australia’s preparations for a possible conflict with China reflect “a relatively superficial understanding”, argues prominent economist John Edwards. Europe, Canada, Indonesia, Malaysia and India, he notes, are not preparing for such a conflict. Why should Australia?

Edwards, a former senior economic adviser to former Labor prime minister Paul Keating, makes the observation in a Lowy Institute paper released in October and in a newspaper interview.

Instead, he sees US-China rivalry as a potential advantage. Sitting between a security partner in Washington and a major economic partner in Beijing can underpin Australian prosperity for 25 years – provided Canberra does not pick sides.

In “Overhaul: How Australia can adapt to a changing world economy, he writes that the powers’ “vigorous competition and intermittent antagonism” have been “mostly a source of anxiety” for Australians. Yet for Australia, US-China competition is “a gift”: two superpowers in balance beat one dominant power. Australia would not do well if relations became antagonistic, and its economic statecraft should aim to help prevent that.

In a Guardian interview, Edwards said both would remain the largest economies in 25 years, in a race neither can win. Smaller countries benefit from having two large partners. “The worst thing we could do is pick one over the other,” he said.

Australia should not “meekly accept” Chinese economic sanctions, he added, nor go “out of our way to provoke” Beijing. Canberra has favoured national security over economic statecraft, and should be more open to foreign investment.

Edwards unsurprisingly shares his former boss’ preference for a foreign policy free of US domination. Keating loudly criticises the increasingly militarised alliance. Critics such as Keating argue Aukus binds Australia’s defence capabilities and technology so tightly to the US that it effectively forfeits independent operational decision-making.

The Australian Defence Force relies heavily on American hardware, intelligence and technology – a structural dependency, some analysts say, that leaves it unable to realistically operate independently of US systems.

Independent commentators also fault think tanks like the Australian Strategic Policy Institute – funded by the Australian government and foreign defence contractors, including US entities – for a security narrative closely mirroring Washington’s priorities, particularly on China.

Keating is especially critical of Aukus and its excessively priced nuclear-powered submarines, to be paid for by Australian taxpayers. He argues the subs will be more suited to offensive operations in the South China Sea – read, against China – than for defence of the Australian continent.

Similarly, Bob Carr, foreign minister in Julia Gillard’s Labor government, said in an online interview in 2023 that Taiwan should never be a cause for war for Australia. “If the worst thing that faces the people of Taiwan would be what prevails in Hong Kong today, then we haven’t got a cause for war,” he said. He would like the national security law lifted in Hong Kong, but the city “still has substantially its own system”, an outcome he could accept for Taiwan.

The one-China policy, Carr said, preserved regional peace and Taiwan’s autonomy: “Under the architecture of this little diplomatic formula negotiated by wise men in 1972, we recognise the Chinese claim on Taiwan as a province. That’s a diplomatic formula that has kept the peace.”Yet too many vested interests peddle a mythical “China threat” – to neighbours, the region and the world; to democracy, the rules-based order, the West, civilisation itself. A kindred narrative insists Taiwan must be defended for democracy’s sake, as if its fall would imperil every democracy.

Keating and Carr state the obvious: China would only threaten Australia’s security if Canberra helps ignite Asia-Pacific flashpoints by joining the Americans, as under Aukus. By that logic, how many other countries are threatened by China?

Herein lies the conjuring trick. In the West, but especially in the US, China is a convenient diversion from the tangible hardships of everyday life, from the soaring cost of living to the yawning inequalities within Western societies. It takes a disinformation campaign of remarkable scale to turn an abstract threat into an imminent one.

The true agendas remain out of sight. Some in Taiwan seek independence; Washington wants to preserve hegemony. Their aims align, yet neither can be declared plainly, so both are repackaged as a struggle for democracy – the loftier it sounds, the better. Few outsiders would lay down their lives for American primacy or an independent Taiwan, any more than for a Palestinian state, whatever their sympathies.

But tell people their own national security, however defined, hangs in the balance, and the picture shifts entirely. Whenever the “China threat” is raised, ask: what is truly at stake – and for whom?