China Could Strike Key US Ally in Pacific: Report
China is developing long-range missiles capable of striking Australian territory but already possesses the means to inflict significant economic pain in the event of a regionwide war with the United States, Australia's Lowy Institute think tank said in a new report released on Sunday.
The People's Liberation Army's (PLA) rapid arms buildup has eroded U.S. military primacy in the Indo-Pacific and is creating "structural pressure on regional states to accommodate Beijing's preferences," according to the report's authors.
A possible conflict over Taiwan, the self-ruled island claimed by Beijing but backed by U.S. security guarantees, remains the PLA's top priority, they said. But China is also looking to "project military power over long distances" using missiles, aircraft and ships that can reach Australia.
The assessment of potential threats from each branch of the PLA, including its rocket and cyber forces, calls China's military rise "a historic shift that affects Australia's interests regardless of China's capacity to strike Australian territory directly."
The Chinese government said in a response on Monday that it was "committed to a path of peaceful development."
"Its efforts to strengthen defense capabilities are aimed at safeguarding national sovereignty, security and development interests, and are not targeted at any country," China's Foreign Ministry spokesperson Lin said told reporters at a regular press conference in Beijing.
"China's growth in military strength reinforces the force for peace in the world," he said.
Missile Threat
Chinese missiles can already hit Australian territory when delivered from the sea or air, but the DF-26 intermediate-range ballistic missile so far is the only conventional, land-based weapon that can reach northern Australia when fired from China's artificial island bases in the South China Sea.
A newer DF-27 missile with an estimated reach of up to 5,000 miles would cover "the entire Australian landmass when fired from the Chinese mainland," the Lowy report said. The weapon may already be in service, according to the U.S. Defense Department.
In a war, such as one in which Australia provides the U.S. with military and other support, what China chooses to target would depend on its motives, the report said: strikes on offshore oil facilities to send a warning; missile or cyberattacks on public infrastructure to coerce the Australian government; or attacks on government buildings to decapitate Australia's political leadership.
The authors said they did not consider China's nuclear weapons, which include a DF-31AG intercontinental ballistic missile fired into the South Pacific with a dummy warhead in the fall of 2024. The ICBM can reach the continental United States.
However, they noted that the size of China's nuclear warhead stockpile, currently numbering 620 by public estimates, could triple by 2035, and that China's military modernization was being enabled by a defense budget that was roughly twice the publicly disclosed amount-possibly as high as $540.7 billion, according to the authors' calculations.
Naval Threat
Already at risk are the key maritime trade routes that Australia relies on to sustain its economy, the Lowy report said, along with vital subsea cables that are "open to sabotage."
An economic impact study by the Ports Australia industry group said 99 percent of Australia's international trade by volume in 2024 went through its seaports, equal to 1.6 billion tons or $460 billion dollars.
Oil, gas and fuel accounted for 50 percent of its imports that year-by far the largest category by volume-followed by construction materials at 10 percent and chemicals at 9 percent, the industry report said.
"Maritime traffic to Australia could be restricted by a quarantine, a demonstration of force via the sinking of one or more ships, a distant blockade of ships trading with Australia, or a close blockade of Australian ports," the Lowy authors said.
In March 2025, a Chinese naval flotilla deployed from the South China Sea circled Australia and conducted a live weapons firing in the Tasman Sea between Australia and New Zealand, both of which said they received no advanced notice of the maneuvers.
"Such deployments, including with aircraft carriers, are likely to become regular and more frequent over the coming decade," the report said.
Australia's response has been to hike its defense budget and align more closely with the U.S., including through the procurement of nuclear-powered submarines under the AUKUS pact to hosting U.S. military forces on its territory.
The defense preparations could be fuel China's own security concerns, in a dangerous cycle for the region.
Capability vs. Intent
Australian Defense Minister Richard Marles has repeatedly called China's military buildup the largest by any nation since the end of World War II.
The U.S. similarly has said that China's failure to engage in arms control talks raises concerns about its ambitions beyond the Indo-Pacific region.
Senior American officials believe Chinese leader Xi Jinping has ordered the PLA to be capable of seizing Taiwan by force by 2027, but they also say an invasion isn't imminent.
Lin, the Chinese government spokesperson, said the Lowy report "tries to interpret China through the trite pattern that a great power is bound to seek hegemony
"This is a grave strategic miscalculation," Lin said.
The Lowy authors said they did not consider at length China's possible motives "because intensions can change in moments."
"We make no judgements about why China would ever attack Australia, only how it could do so. Governments…need to plan on the basis of what a foreign country is able to do," they said.
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This story was originally published June 15, 2026 at 11:35 AM.