But now China is our largest two-way trading partner in goods and services ($150 billion), our largest export market ($86 billion) and our largest source of imports ($64 billion). And the integrated East Asian economic zone is the world's fastest growing.

So, how do we negotiate the tension between our major security partner and our major trading partner?

China sees as vital to its security the string of archipelagos from northern Borneo to the Kuril Islands north-east of Japan. It has piled sand onto reefs in the South China Sea, creating seven new artificial islands, and has installed missile batteries and radar facilities, giving it effective control over sea and air traffic in the region.

Earlier this year US Secretary of State Rex Tillerson said he wanted to "send China a clear signal that, first, the island-building stops, and second, your access to those islands also is not going to be allowed."

Two weeks later, Foreign Minister Julie Bishop said in Los Angeles that "most nations wish to see more United States leadership, not less, and have no desire to see powers other than the US, calling the shots."

Increased tension between the US and China seems inevitable, and Australia may well get dragged in.

Last year the RAND Corporation published a report called "War with China: Thinking Through the Unthinkable". It makes sobering reading. Their research team concluded that "war between the two countries [the US and China] could be intense, last a year or more, have no winner, and inflict huge losses and costs on both sides."

China's defensive military capabilities will continue to increase, and it will be able to inflict heavy losses on its opponents.

As both sides' technologies and doctrine create a preference for striking first, the potential for miscalculation is high. Each side may believe that by striking first it can gain and retain the initiative, and by doing so it might be able to end a conflict quickly.

Yet this kind of thinking has uncomfortable parallels with Europe of a century ago, when the belligerents initiated their own military plans to attack before being attacked, and both sides believed that in doing so they would gain operational dominance and end the war swiftly. Back then, both sides had strong economic ties, which 'experts' said would prevent any conflict.

Furthermore, using the line and military strategy attributed to Sun Tzu, China may decide to "kill the chicken to scare the monkey" – sink an Australian vessel to warn off the United States Navy.

 Are we truly ready for the consequences of a war? Unlike Afghanistan and Iraq, where there were relatively few casualties, this time we may see large numbers of body bags returning, or never returning at all, since they may have been sunk at sea.

Is Australia ready for a relentless parade of funerals? For calls from the extreme political fringe for Chinese Australians to be interned in camps? For India reinforcing its troops along its border with China? For Russia to be emboldened along its western border? For increased activity in the Middle East, as extremists there take advantage of US preoccupation in the South China Sea? We already know what the invasion of Iraq unleashed.

And back home the consequences would be catastrophic, both for our economy and society.

RAND said a US-China war could shrink China's GDP by up to 35 per cent and the USA's by up to 10 per cent. But given our much higher trade dependence on China and the region, a 30 per cent contraction would not be out of the question.

And demographically? Seeing Chinese Australians and Chinese students on our streets shows how integral they've become to our nation's fabric.

A war with China would rip Australia's economy and society apart.

The signals we send to either side about Australia's position are of the highest economic and strategic significance. What we do requires extensive consideration in the Australian Parliament. Contrary to public belief, the ANZUS Treaty doesn't commit the US to come to our assistance, or us to theirs – only to "act to meet the common danger in accordance with [our] constitutional processes".

Australia alone should decide which wars we go to, and the circumstances in which we go to them. That goes to the heart of our sovereignty.

Australia must not get involved in a South China Sea conflict until every member of the Australian Parliament has voted on it, and explained their reasons individually – not hide behind a party line.

What's more, that process should be enshrined in Australian legislation; no Australian military actions ought to occur without parliamentary authorisation, except in self-defence. More than ever, since 1788, it's a law whose time has come.

Nick Xenophon is a South Australian Senator. This is an edited version of a speech given at Australian Strategic Policy Institute.

This article was first published by The Age -

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