Australia will significantly expand its military capability with a $450 billion program over the next decade that acknowledges the rise of China has tilted long-standing strategic balances, but Chinese officials said it could threaten the economic relationship with the second-biggest economy.
Launching his government's Defence White Paper yesterday, Prime Minister Malcolm Turnbull said the nation had to be properly equipped to deal with an environment in which half the world's submarines and combat aircraft are forecast to be operating in the Indo-Pacific in the next twenty years. 
The White Paper gives a heavy emphasis to maritime activities at the centre of a "more active defence presence" in the region, including an amphibious presence for the army, and in relative terms downplays the significance of a role in Middle East conflicts, noting the extra complexity of Russia's involvement in the Syrian conflict and emphasising the need for a political solution.
The White Paper shows a return to a more robust acknowledgement of China's military rise, in the wake of its recent aggression in the South China Sea, leaving no doubt about the disruption to the region that the growing world power poses. The paper repeatedly refers to Australia's reliance on a "stable, rules-based global order which supports the peaceful resolution of disputes, facilitates free and open trade and enables unfettered access to the global commons".
Strategic experts said the prime minister had kept open the option of challenging China over their artificial islands in the area Chinese militarisation in the South China Sea.
The announcement sparked a hostile reaction from Beijing where government-linked commentators said Australia's increased military spending would threaten its economic relationship with China.
"Australia has been encouraged, seduced and threatened [into a military build-up] by the United States," a military official in a research unit under the People's Liberation Army Navy, Li Jie, said. "Australia should try to maintain a good economic and trade relationship with China. Its military expenditure will not bring any benefit to Australia either strategically or economically."
The Indo-Pacific region's tremendous growth "affects long-standing strategic balances", Mr Turnbull said.
"Underpinning our economy, and our ability to take advantage of the enormous economic opportunities particularly in this region, is security," he said. "So what we are investing in, this can be written up as an investment in defence materiel and defence and it is. But it's an investment in our economy, it's an investment in the security without which nothing else can be obtained.
"We need to have the capacity to deter and defeat threats to Australia. We are a maritime power, we are an island nation. We operate in a region where sea lanes, freedom of access to navigation, where maritime assets in a naval sense are growing, both submarine and surface vessels.
"And this complicates the outlook for our security and strategic planning. Now, we would be concerned if the competition for influence and the growth in military capability were to lead to instability and threaten Australia's interests, whether in the South China Sea, the Korean Peninsula or further afield. We have a strong, vital, vested interest in the maintenance of peace and stability and respect for the rule of law."
The White Paper commits an additional $30 billion over a decade to defence, forecasting the government will achieve its election commitment to lift defence spending to 2 per cent of GDP in ten years in just seven.
The escalation of spending doesn't begin in earnest until 2020 - beyond the official forward projects of the budget - when spending on major projects naval and air projects starts.
While honouring former Prime Minister Tony Abbott's commitment to spending, the white paper reflects the change of leadership with a heavy emphasis on using the might of the defence dollar to drive innovation in Australian industry.
The US-China relationship is identified as the most strategically important factor confronting Australia, followed by the rules-based global order
Australia's significant contribution to operations in the Middle East and Afghanistan received relatively little attention in the renewed focus on the region, and are grouped under the heading of terrorism, which is the third of six strategic priorities in the White Paper. Other priorities include dealing with state 'fragility' in the region - particularly island states, an increase in the number of missiles entering the region and the growing cyber threats from both state based and non-state based sources.
The alliance with the United States is still given a high priority and while there is considerable discussion about cooperative defence arrangements, and a "more active international role" individual partnerships - notably that with Japan - get only a small amount of detailed mention.
The new hardware will include the commitment outlined last year to a 'continuous build strategy' for naval surface vessels - first 12 offshore patrol boats, then nine frigates which has been welcomed by industry as a long-overdue salve to the uncertainty of past stop-start industry - in addition to the eventual decision about where 12 new "regionally superior" submarines will be built.
For the first time, the new white paper outlines year-by-year spending, which reveals the annual bill will start to grow by $3.2 billion a year in 2012-22 and jump by a staggering $7.2 billion in 2025-26, representing an overall increase of $29.9 billion.
Significantly, the White Paper seeks to break the link between defence spending and GDP followed by both sides of politics, saying that while the new spending plans have been estimated on the 2 per cent base, the actual spending figures will now be a firm commitment, no matter what happens to economic growth.
It contains a $1.6 billion commitment to investment in innovation and industry skills, and to new private sector involvement in directing that investment.
There is a huge upgrading of military bases across Australia - from Sydney's Garden Island to Exmouth - to support new vessels and hardware.
There will be new spending on intelligence, surveillance and reconnaissance, space, electronic warfare and cyber capabilities which will see a rebalancing of the intelligence community after a period in which heavy investments have been made in ASIO and terror-related intelligence.
A new Centre for Defence Industry Capability - co-chaired by a private sector businessmen will receive $230 million in funding across the decade to "connect Defence needs with the innovation and expertise of Australian defence industry as well as help grow a competitive, sustainable Australian defence industry base".