Our reasonable request for an independent inquiry into the origins of the Coronavirus has unleashed a furious backlash, including selective import bans that will harm specific Australian industries such as barley, beef and education. The latter is our third biggest export earner, and recently China has been spreading disinformation about Australian racial attitudes in an attempt to dissuade its citizens from studying here.

In an address to the Strategic Institute at the Australian National University last week, Foreign Minister Marise Payne warned "Chinese disinformation is undermining democracy and creating a climate of fear". The minister had a simple message to Beijing: "Australia is not backing down".

But our country is not taking this principled stand from a position of strength. China's rapid rise over the past decade helped turbocharge the Australian economy. However, our free trade policies have now led us into an economic trap, making us highly dependent on one economy. China is by far our largest trading partner, accounting for 25 per cent of two-way trade. We are also highly reliant on their capital, and China ranks as our fifth most significant investor.

The Australian government should take the time now, and especially during the slow Coronavirus recovery phase, to completely rethink our economic policies. This should be based on the vulnerabilities exposed by the pandemic crisis. We need to consider our economic future carefully.

Reshaping our trading relationships should be an urgent priority. First we must reduce our dependence on China by diversifying our trade and investment.

One strategy would be for Australia to reinvigorate long-standing trading links with countries such as the UK, our seventh-largest trading partner. A post-Brexit world is ripe for new opportunities. Forging or expanding trade with economically powerful democracies in our Indo-Pacific region, especially Japan, South Korea, India and Indonesia is also urgently needed.

In the early years of the century, Japanese Prime Minister Abe Shinzo, and later in 2011 US Foreign Secretary Hillary Clinton talked about a 'free and independent' Indo-Pacific as a broad strategy to resist the rise of China. This is a policy idea whose time has come.

Over the past 10 years, China has developed its 'belts and roads' initiative. This began as a re-creation of the 'silk road' linking China to Europe across Asia with new roads and industries. But this has now been extended to connect the Chinese economy with other parts of the world, especially in Africa and closer to home, the South Pacific.

Port development has been a high priority. In Australia, China has a 99-year lease on the Port of Darwin and owns 50 per cent of the Port of Newcastle. How did that fly under the radar?

On the positive side, China is investing its wealth, assisting many developing countries to modernise their infrastructure and resource development.

However, most of this assistance is in the form of loans, which many will find difficult to pay back. The strategic danger is that many will become 'client states' of China.

Australia has awoken to this threat in our region. In this term of government, it has implemented a 'Pacific-step-up' policy, assisting our neighbours such as Fiji and Vanuatu with grants for capital development, instead of loans.

In his book, Contest for the Indo-Pacific: Why China won't map the future, Professor Rory Medcalf Head of the ANU Strategic Institute, believes there is trouble ahead in our pivotal region. "This is a fertile time for diplomatic initiatives led by middle players such as Australia, Indonesia, Singapore, India and Japan. It is time for government and business alike to brace and hedge, to prepare for the coming risks." he says

Widespread cyber-attacks across government and business is a sign of the scale and scope of this new 'cold war', waged by an authoritarian state against the world's democracies.

China's widespread 'wolf warrior' tactics of bully, brinkmanship and backdown are driving the Indo-Pacific closer to conflict. It is now imperative that we strengthen and expand our military alliances. A large deployment of Australian naval vessels left Sydney last Tuesday for military exercises with the US around Guam. We will then join the Rim of the Pacific naval manoeuvres off Hawaii. Australia is also likely to join India, Japan and the US in the big Bay of Bengal Malabar military exercises later this year.

As Australia and its allies now face a more assertive and ambitious China, "Indo-Pacific has acquired a role," in Professor Metcalf's words, as "a rallying call, for diluting and absorbing Chinese power".

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