China's rise should be seen as an opportunity not a risk, says Malcolm Turnbull.
The first foreign policy white paper since 2003 was launched by the prime minister, Foreign Minister Julie Bishop and Trade Minister Steve Ciobo in Canberra on Thursday.
While the previous effort was drafted in the wake of the Bali and September 11 attacks, the latest blueprint comes in the context of an "America first" US president, a historic military build-up and economic expansion in Asia, the reshaping of Europe via Brexit and the continuing threat of Islamist terrorism.
"This is the first time in our history that our dominant trading partner is not also our dominant security partner. We must see this as an opportunity not as a risk," Mr Turnbull said.
He says the white paper presents a "framework for facing the challenges of an uncertain future with confidence," while issuing a warning to those nations inclined to use their military muscle in the region.
"We will never agree that 'might is right'," he said.
The Turnbull government's foreign policy will squarely focus on the Indo-Pacific region while also strengthening and building ties with nations in other regions.
The paper sets out five objectives:
* Promoting an open, inclusive and prosperous Indo-Pacific region in which the rights of all states are respected;
* Standing against protectionism and promoting business;
* Ensuring Australians are safe, secure and free in the face of threats such as terrorism;
* Promoting and protecting international rules;
* Greater support for the Pacific and Timor-Leste.
China is challenging America's position as the dominant power in the region, the paper says.
While the US alliance will remain central to Australia's approach to the region, the government is "committed to strong and constructive ties with China".
On North Korea, the paper urges the "strongest possible economic and other pressure" to stop the rogue state's "dangerous behaviour".
"North Korea's actions underline the importance of the United States' extended deterrence to Australia's security and the security of the Republic of Korea and Japan."
The threat from Islamist terrorism, cyber attacks and transnational crime "could worsen over the decade ahead", the paper warns, and more work will be needed to strengthen counter-terrorism cooperation in Southeast Asia as foreign fighters return from Iraq and Syria.
However, the risk from direct military threat was "low".
In the Pacific region, Australia will set three priorities: greater economic co-operation and labour mobility; maritime security; and strengthening people-to-people links, skills and leadership.
Papua New Guinea's stability and prosperity will be a key focus as the nation struggles to provide basic services to a rapidly growing population.
The lion's share of the $3.9 billion-a-year foreign aid budget will be concentrated in the region, based on four tests: the national interest; poverty reduction; leveraging funding from other sources; and results and value for money.