TVNZ (New Zealand)

AAP

Barack Obama's visit underlines the great diplomatic challenge facing Australia - how to manage crucial relationships with both the US and China.

Or as one commentator put it: how to ride two horses at once.

As China's burgeoning economic and military muscle challenges America's long-established primacy in the Pacific, some analysts believe Australia may be forced to choose between its number one military ally and the trading partner whose industrial appetite stokes the furnaces of the resources boom.

Increased military links with America in the Top End, expected to be announced by President Obama and Prime Minister Julia Gillard this week, could aggravate China, they say.

But others believe Australia can steer a course between the two giants, even it does require the skill and nerve of a circus act.

"I don't think Australia is faced with a stark, hard choice between the US and China, but it is in a difficult diplomatic game of riding two horses simultaneously," said Tom Switzer, research associate at the US Studies Centre.

"This will be an increasingly difficult dilemma for Australian policy makers as China asserts itself (in the region) and America maintains its presence," he told a US Studies Centre briefing at Sydney University.

Switzer recalled the unprecedented double act of 2003, when President George W Bush addressed federal parliament in Canberra one day, and Chinese Premier Hu Jintao appeared the next.

"I think that is the way for Australia's foreign policy in the future," he said, adding that much would depend on how peaceful China's rise would be.

Dr James Curran, the centre's expert on the history of the US-Australia alliance, said there were two key questions. Will the US exert more pressure on Australia to allow permanent bases, as in other Asia-Pacific countries? And what will China's response be?

Professor Geoffrey Garrett, chief executive of the centre, summed up America's policy: "China's rise is benign and good for us all, but it's prudent to insure against the very small possibility that it might become more malign."

He said US moves to bolster free trade in the Pacific were aimed at creating an institution China would want to join, but for which it would have to make significant concessions.

Barack Obama, whose visit marks the 60th anniversary of the ANZUS alliance, has positioned himself as America's "first Pacific president", and Secretary of State Hillary Clinton has made it clear the 21st century will be America's "Pacific century".

Clinton told the APEC meeting in Hawaii last week her nation had reached a "pivot point" where it could redirect its troops and resources away from the Middle East and Afghanistan to meet obligations and opportunities elsewhere.

"Asia stands out as the region where opportunities abound," she said.

Professor Hugh White, defence strategist at the Australian National University, has described the reported new US-Australian initiate to rotate marines through Darwin's Robertson Barracks as potentially very risky for Australia.

"In the view from Beijing, everything the US is doing in the western Pacific is designed to bolster resistance to the Chinese challenge to US primacy," he said.

"In Washington and in Beijing, this will be seen as Australia aligning itself with an American strategy to contain China."

White says America's primacy in Asia has not been tested for 40 years. But what if it is?

"Being a close ally of an uncontested power (the US) is the best deal going for Australia," he has said.

"But if there is an orderly alternative, forget primacy."

The US had three choices as China marched towards supplanting it as the world's biggest economy - concede to Chinese leadership in Asia, treat China as an equal or challenge China for primacy, he said.

The last option carried "fantastically dangerous" potential, he said, with the risk of conflict "high and growing" and the risk of nuclear conflict also "high and growing".

International security expert expert Professor Alan Dupont, of Sydney University, says there is no doubt the Chinese will have "serious reservations" about the latest development.

"This is all about the rise of China, the modernisation of the People's Liberation Army and, particularly, it's about the increased vulnerability of US forces in Japan and Guam to the new generation of Chinese missiles," Dupont said.

He has warned previously of the "nightmare scenario" - a serious military confrontation between China and the US over sovereignty or resource issues that forces Australia to choose.

If Australia decided to do what Japan and South Korea have already done - host US combat troops on their soil - he warned that China could target Australian facilities in the event of a wider conflict.

"Getting China wrong will have seriously detrimental consequences for our future security and growth," Dupont said.

Other experts contend that Australia is already a potential target because it hosts vital joint intelligence gathering facilities.

Either we are in the ANZUS alliance or we aren't, they argue. We shouldn't expect benefits without risks.

Most experts don't expect any serious problems to arise for a couple of decades.

But America's preoccupation with terrorism and global financial crises, they say, has caused it to take its eye off China's stupendous recent growth.

Assurances

Australian Prime Minister Julia Gillard says it is possible for Australia to be a close ally of the United States and also be friends with China.

Gillard was responding to recent foreign policy commentary that suggested Australia needed to choose between the US and China.

"I dismiss that. I do not agree with it," she told reporters in Canberra today.

"It is well and truly possible for us in this growing region of the world to have an ally in the United States and to have deep friendships in our region including with China."

Australians felt a sense of connection and affection for Americans, and that would be on display for the visit of US President Barack Obama this week, Gillard said.

The relationship was "deep and long lasting".

"We have stood shoulder to shoulder with them in the most difficult of circumstances this nation has ever faced.

"We have stood shoulder to shoulder with them in the days since 9/11."

Australia was doing the same in Afghanistan, Gillard said.

"I think all of that drives a depth in our relationship."