Geopolitical competition between major powers the United States and China continues to intensify in the Indo-Pacific region. Beyond economic rivalry, both nations use gray zone tactics – coercive strategies that remain below the threshold of war – to project power in each other’s sphere of influence.
Australia, a key U.S. ally, is seeing these tactics firsthand.
A recent example is China’s naval activity near Australian shores. Last February, three Chinese naval vessels carried out live-fire exercises in international waters in the Tasman Sea before continuing their navigation around the Australian continent. Later, the dual-purpose vessel Tan Suo Yi Hao traveled west along Australia’s southern coastline after a joint research mission with New Zealand.
China is testing Australia’s response through gradual, incremental power projection, a classic gray zone tactic.
The shifting U.S. foreign policy under the Trump administration has encouraged allies to take greater responsibility for their own security. In this, China sees an opportunity as it expands its presence without provoking a strong reaction.
China’s Gray Zone Tactics
The gray zone refers to the space between war and peace, where states engage in competition through coercion, interference, and power projection without direct military confrontation. Some well-documented gray zone tactics include economic coercion, cyber operations, disinformation campaigns, and strategic military maneuvers in contested or sensitive areas. Gray zone tactics can be delivered by state as well as non-state actors (which may represent a particular state) in another state’s territory or sphere of influence to intimidate rivals or create uncertainty.
Recent Chinese naval activities near Australia fit this pattern. While framed as a scientific expedition, such activities allow China to gather intelligence, map strategic maritime infrastructure, and assess Australia’s willingness – or reluctance – to respond. This gradual normalization of Chinese naval presence mirrors tactics used elsewhere, such as in the South China Sea and East China Sea. By acting under such gray zone tactics, China not only projects power in the region but also tests how prepared Australia is to deal with what is framed as a “natural extension of national power” by China.
The Impact of U.S. Foreign Policy Shifts
The Trump administration’s approach to alliances has reinforced these vulnerabilities. By urging U.S. allies to take on more responsibility for their own security, the United States has introduced uncertainty in European and Indo-Pacific security frameworks. While European states scramble to reassess their security arrangements, Australia faces similar concerns.
Australian Professor Hugh White has argued that an escalation of the rivalry between the U.S. and China could just be a matter of time. China likely sees the present shift in U.S. foreign policy as an opportunity to expand its strategic footprint in Australia’s maritime domain without provoking a direct military response.
In view of the growing Chinese economic and military capacity, for years there have been strong analysis as to why the U.S. might consider stepping back from being “leader” in Asia. Under Trump’s “Make America Great Again” agenda, U.S. foreign policy has become more isolationist, making this argument even more relevant. Unlike in previous decades, where Washington might have reacted swiftly to increased Chinese naval activity near Australia, today’s more cautious U.S. stance may embolden Beijing to push further.
Power Projection and the Need for a Strategic Response
Australian media has highlighted divided opinions on how and whether to respond to recent Chinese naval activity. Some argue for not escalating the situation, while others, such as Opposition Leader Peter Dutton, call for a stronger response while criticizing the prime minister for being “weak” on the matter.
China’s maritime presence in Australia’s waters is not just about intelligence gathering or measuring Australian submarine cables – it is also about power projection. These gray zone tactics test Australia’s limits, influence regional narratives, and establish new operational norms without crossing the line into direct conflict. The critical question is not just whether Australia should respond, but how it should do so.
Overreacting risks unnecessary escalation, while ignoring such tactics could set a dangerous precedent. Australia must navigate this challenge with a strategic, emotionally intelligent approach – one that asserts sovereignty and deterrence without falling into reactionary responses that could be exploited by Beijing. This is especially crucial as the United States remains silent on Chinese gray zone actions, allowing Indo-Pacific states to feel increasingly vulnerable.
This situation is a classic example of how great powers behave in their self-claimed spheres of influence. As such, Australia’s policymakers should not be surprised, but prepared.
Conclusion
China’s gradual incremental power projection in Australian waters is a calculated gray zone strategy to make the Australian state and public anxious about the Chinese strategic objectives. While these naval activities remain legal under international law, they test Australia’s ability to defend its sovereignty amid shifting global power dynamics.
With the U.S. taking a reduced role in regional security, Australia must craft a nuanced and strategic response – one that balances deterrence, diplomatic engagement, and resilience against ongoing gray zone pressures. This response should not be about scoring political points in domestic debates over Australia’s stance on China. Instead, it must focus on managing ongoing gray zone pressures effectively.