John Garnaut, writing for Fairfax yesterday, says I'm wrong to argue that Prime Minister Abbott and Foreign Minister Bishop do not understand the nature of China's challenge to the Asian regional order. He says Bishop's remarks, in the fine interview John did with her last week*, show that she understands perfectly well that China is a threat to the status quo.

But that is not my point. I agree that Bishop (and Abbott) can see that China is posing a challenge. What they do not understand, I think, is how determined China is to pursue that challenge in the face of opposition. If they did understand that, they would realise that simply pushing back, as Abe wants us to do, will not persuade China to back off.

Instead it simply leads China to push back again even harder, which escalates strategic rivalry and increases the risk of war. I do not believe Abbott and Bishop want that, so I infer that they do not see that this is the where their policy leads, because they do not understand how determined China really is.

Of course this is not good news. Like almost everyone else, I would be much happier if China was willing to live with the old order which has served us all so well. But that is not the world we live in, because China is now too ambitious to accept the status quo, and too strong to ignore. We do not have to give it everything it wants, but we do need to try to do some kind of deal if we possibly can. We should all be exploring how such a deal could work.

Instead we are worrying about what the Global Times says. I don't think that this matters much. It would be quite wrong to say that Bishop's remarks were unwise just because they were criticised in Beijing, and it would equally be wrong to judge they were sensible and helpful just because Beijing doesn't like them.

In fact the tone of Australia's bilateral relations with any of the great powers of Northeast Asia is not really the key issue here. What matters most to us is the quality of their relationships with one another. If America, China and Japan can all get on well, then we in Australia can easily manage our relations with all of them. If they get on badly, then we are in deep trouble.

That means the key test of Australian policy is not whether they like it in Washington, Tokyo or Beijing. It is whether we contribute to stoking animosity between them, or help to damp it down.

That's why last week's diplomacy with Japan was bad policy. Not because it irritated Beijing, but because it helped escalate strategic rivalry between China and Japan, and pushed Asia closer to a Cold-War style division into hostile blocs. Abbott and Bishop should understand that, but I do not think they do.

* China's Foreign Ministry now claims this interview never happened. In response, Fairfax has posted a recording and transcript.

Photo by Flickr user Steve Webel.