The Asia-Pacific region has enjoyed generally stable and peaceful relations between the major powers for over two decades. Sino-Japanese relations have improved, there is better US-China cooperation on a range of issues, and economic interdependence among the major powers has increased greatly. There is unprecedented dialogue, both bilaterally and in ASEAN-anchored multi-lateral organizations.

Yet the regional situation is not without its troubling features. There is significant military build-up; and political and economic competition, not always of the healthy kind, could intensify in the coming years. Some observers also note a more assertive Chinese posture from the South China Sea to the Sino-Indian border and wonder if Beijing is trying to take advantage of America's economic straits and its dependence on Chinese cooperation to advance China's interests. Meanwhile, the two old potential flash points — the Korean peninsula and Taiwan — remain flashpoints, though the latter seems to be on the back-burner for now.

China's on-going build-up of military capabilities — which include a major base on Hainan island that could house strategic nuclear as well as conventional attack submarines and is uncomfortably close to the vital sea lanes of Southeast Asia — has already drawn a response from Australia. It has come up with its own defence modernization plan for the next couple of decades and plans to build a dozen long range attack submarines and buy 100 Joint Strike Fighters from the US.

The recently issued Australian Defence White Paper indicates Canberra's concerns: “It would be in our strategic interests in the decades ahead that no power in the Asia- Pacific region would be able to coerce or intimidate others in the region through employment of force, or through the implied threat of force, without being deterred, checked or, if necessary, defeated by political, economic or military responses of others in the region.”

For its part, the US has been strengthening its alliances with Japan and Australia, stepping up its military presence in Guam, and increasing strategic cooperation with India — moves that Beijing tends to see as attempts to fence it in.

Likewise, there are concerns in New Delhi that China is stepping up its apparent encirclement of India by supporting Pakistan militarily, strengthening ties with other South Asian states, and putting pressure along the disputed Sino-Indian border. So there is insecurity — and even streaks of paranoia — all round.