CANBERRA // As the United States recalibrates its defence strategy to counter rising Chinese military power in the Pacific, Washington has voiced concerns about defence cuts by one of its key regional allies.
Hillary Clinton, the US secretary of state, and Leon Panetta, the defence secretary, arrived in Australia yesterday for two days of talks with their Australian counterparts, Bob Carr and Stephen Smith.
The meeting, which is held annually between the two countries, comes at a time of change in the diplomatic and political landscape. Mrs Clinton has said she will not continue in the post in the second term of the US president, Barack Obama. A new Chinese leadership is being put in place, and polls show that Australia will likely shift power from the Labor government to the conservative opposition in next year's election.
The US is Australia's most important defence ally and China its biggest export market - mainly for resources such as iron ore and coal to feed one of the world's fastest-growing economies.
Australia's position is made more delicate by its election to a non-permanent seat on the United Nations Security Council last month, meaning it may now often have to choose between China and the US on issues such as Syria - or abstain.
Ahead of the talks, a senior US official expressed concern over Australia cutting its defence spending to the lowest share of its gross domestic product since 1938. Australian defence spending has fallen to about 1.6 per cent of GDP in the fiscal year ending in June 2013 from 1.8 per cent in the previous financial year.
"In my conversations with Leon Panetta … he's made the point to me that we are all going through fiscal difficulty," Mr Smith said on Sunday.
Both nations are struggling to balance an increased military and strategic focus on the Asia-Pacific region and more spending on counter-terrorism with less money to pay for boots on the ground and for big-ticket defence items, such as ships, submarines and aircraft.
Budget restraints have the US cutting US$500 billion (Dh1.8 trillion) from defence spending over the next decade. That figure could more than double if Washington cannot rein in its budget deficit, economists and defence analysts have said. US defence spending is projected to fall to 3.5 per cent of GDP in 2012 from 4.7 per cent in 2011. China's military budget has quadrupled since 2000, according to a study by the Center for Strategic and International Studies, a Washington-based think tank.
Defence spending in China, India, South Korea and Taiwan totalled US$224 billion in 2011 - double what those countries spent in 2000, the study said.
South-east Asia is beset by bitter and sometimes violent territorial disputes between China, Taiwan, the Koreas, Vietnam, Brunei, Japan, the Philippines, Cambodia, Myanmar, Thailand, Malaysia and Indonesia.
Kurt Campbell, the US assistant secretary of state for East Asian and Pacific affairs, has been quoted in US and Australian media expressing concern about Canberra's cutback in military spending in relation to others in the region.
The Age newspaper cited US officials accusing Australia of "freeloading" off Washington to defend the country - relying on someone else to pay for its defence.
When Mr Obama announced a renewed military and diplomatic emphasis on Asia last year, Australia dramatically increased its commitment to the US military presence in Australian naval and ground bases.
Initial plans to train a few hundred US marines in Australia's "Top End", around Darwin - just a few hours flight from most of South-east Asia - could soon evolve into the stationing of several thousand US soldiers as well as ships and planes, Mr Smith said on Sunday.
That decision will be made within the next year, before the next national election in Australia, he said.
Under the Obama plan announced last year, US forces would also store supplies on Australian soil for deployment in the event of conflict or need for disaster relief in Asia.
But Australia's next election - in which polls show the conservative Liberal-National coalition could oust the government - could dramatically reshape the regional defence dynamic.
The coalition wants to buy or lease about a dozen nuclear-powered - but not nuclear-armed - US Virginia-class submarines,
These US$2.5bn fast-attack submarines, armed with Tomahawk cruise missiles and the ability to launch mini-subs for special operations, are aimed at replacing the fault-plagued Australian-built diesel Collins class vessels brought into service in the 1980s.
The Collins class subs were once described by an unimpressed senior Naval submariner as running as silently as "a rock band underwater".