The Trump administration recently unveiled an ambitious AI Action Plan, with plans to turn the United States into an “AI export powerhouse”. As Australia prepares to release its own National AI Capability Plan later this year, it finds itself once again in the crosshairs of the US-China technology competition.
In July, OpenAI, the company behind ChatGPT, lobbied Canberra with a blueprint for Australia’s AI future, which includes hefty tax breaks for AI companies designed to boost domestic productivity. Only days later, China’s ambassador to Australia advocated for including AI into any updated free trade agreement with China.
As the AI race accelerates, Australian policymakers have struggled to navigate an increasingly fraught international landscape. But this careful balancing is no accident – instead, it is in line with a public that is strikingly pragmatic on China and AI. Even in the Trump era, most Australians want the security of a US defence alliance, but continue to see value in economic collaboration with China.
Balancing over decoupling
For all of Trump’s AI ambitions, Australians largely think America is on the losing side of the race against China for technical superiority. According to the 2025 Lowy Institute Poll, 58 per cent believe China will win out in the development and adoption of critical technologies in the coming decade, compared to only 12 per cent who bet on the United States.
This might be a case of the optics of China’s glossy array of tech-gadgets and large-scale infrastructure garnering more hype (and buy-in) from Australians than the images emerging from the United States. But such a view might undervalue the deep pools of tech talent, funding, and R&D in the United States, which is difficult to replicate – at least for now.
Australians’ public views on engaging with China are also nuanced. In 2018, when Washington had designated China a strategic competitor, 82 per cent of Australians still saw China primarily as an economic partner. This public tone shifted rapidly after a range of events, including China's economic retaliation against some $20bn of Australian exports. By 2021, 63 per cent of Australians saw China as more of a security threat. Still, a majority favoured the balanced approach of Prime Minister Albanese over the opposition’s handling of China.
This pragmatic approach is borne out of necessity. China is still by far Australia’s largest export market, accounting for 35 per cent of exports last year compared with just 5 per cent to the United States. Today, Australia has three times as many AI research collaborations with China as it does with the United States. Where Washington has moved aggressively to exclude Chinese researchers and students, a majority of Australians see opportunity in welcoming international students. International education is the nation’s third-largest export sector after iron ore and coal, and Australia is likely to benefit by positioning itself as a safe haven for scholars and scientists.
Security Trumps Politics
Australians are deeply distrustful of China on core national security issues. Beijing is widely seen as the number one defence challenge for Australia. This is why Australians overwhelmingly support the US alliance, even as trust in Washington has fluctuated. Under Trump, 64 per cent of Australians say they do not trust the United States to act responsibly. And yet, 80 per cent believe the alliance remains important for Australia – a view which has remained remarkably resilient over the past 20 years.
When it comes to critical technology applications, the United States continues to be a more reliable partner. Reports of “ghost machines” embedded in Chinese energy infrastructure components have heightened fears of cyber sabotage and intellectual property theft. Australians are more inclined to work with the United States, including through AUKUS and the Quad.
Hedging Bets?
Reliance on the United States carries its own risks. Washington has wielded extraterritorial controls such as the International Traffic in Arms Regulations to strong-arm allies into line. Australians recognise that the United States under Trump has become less reliable. There’s a looming prospect of the Trump administration now pushing Australia to join a tariff wall, and potentially sell less critical minerals to China. Australian responses to this nudge will be mixed - but the lesson is clear: Canberra must build sovereign capacity while continuing to collaborate with its allies.
Voters will judge Canberra less on ideological purity but more by how skilfully it manages to keep both its prosperity and its security intact.
Critical minerals are a case in point. Earlier this month, Australia joined fellow Quad members in announcing a Quad Critical Minerals Initiative. Australia has abundant reserves of lithium and rare earths, yet remains dependent on China for midstream and downstream processing. Diversifying supply chains will remain crucial. Partnerships with Southeast Asian countries are one way for Australia to hedge against intensifying US-China competition.
In the face of the “twin revolutions” of geopolitical and technological shifts globally, Australia needs to carefully recalibrate its economic ties, security commitments, and technological investments. Will Australia be able to find a way to continue benefiting from doing business with China without facing the ire of the United States?
Perhaps one strategy for Australia is one that remains technical, nuanced, and specific up and down the technology stack. Rather than reasoning across broad technology domains, as policymakers and journalists often like to do, a strategy of technical nuance might operate on a much more microscopic level. For example, in specific dual-use technologies sensitive to national defence, such as secure microchips, Australia should remain firmly within the American ecosystem to uphold the integrity of its important security commitments.
Meanwhile, in other less-national security sensitive domains, such as heliostat solar, collaborations with Chinese firms – as is already occurring – may be prudent to reap expanding economic benefits. Along the way, Australia must be careful to use both its leverage and unique relationships to skilfully maintain ties with both sides.
In short, as the technology race between the United States and China heats up, the data suggests that many Australian voters want to engage in a pragmatic balancing act in the emerging tech race between the United States and China. These considerations are rooted in Australia’s unique geography, economy, and alliances. Indeed, as the world slides deeper into the US–China rivalry, voters will judge Canberra less on ideological purity but more by how skilfully it manages to keep both its prosperity and its security intact.
