The completion of this neat cycle will mark the end of what future historians will probably see as an aberrant interlude in world history. Before the late eighteenth century, workers everywhere were more or less equally productive, which meant that national wealth, and hence national power, were simply functions of population: the bigger a country’s workforce, the richer and more powerful it was. The Industrial Revolution changed that. It broke the old nexus between a country’s size and its wealth and power, because it made workers in a few relatively small countries – the ones we call ‘The West’ – much more productive than those in most others, including China and India. Now these countries are catching up.As their workers become more productive, the world’s most populous countries are set to regain the top spots.

This is taking the West by surprise. As recently as five years ago, many serious observers simply dismissed the idea that China’s GDP could ever overtake America’s. The IMF’s latest estimate suggests that it might happen as soon as 2016. Even so, it is hard to fully grasp what this means. For two hundred years the West’s disproportionate share of world economic and strategic power has been the single biggest factor determining how international politics works. It has been so fundamental that the West has blithely assumed that this distribution of power is natural, inevitable, and immutable. Instead, it turns out to be a transitory interlude, and as it ends we are facing a new world of geopolitics.

Australia sits squarely on the fault-line of this seismic shift. The countries that are reclaiming the largest share of wealth and power are Australia’s neighbours, and they are also our most important trading partners. Their rise is, quite simply, the most momentous change in Australia’s international environment since European settlement. Our very existence as a country is, after all, a direct product of the era of Western power that is now so swiftly drawing to a close. The economic rise that propelled Britain to overtake China also propelled it to establish colonies here on this continent, and provided the money to maintain and protect them. When the United States later overtook Britain economically and strategically, it also took over Britain’s role as our protector. Since the First Fleet, therefore, we have always enjoyed the protection and patronage of the world’s richest and most powerful state, the dominant naval power in the Asian oceans, our great and powerful friend.

Our approach to Asia has always been framed by the assumption that it would be made safe for us by British or American power. This assumption is as strong today among critics of our alliance as it is among its supporters. It is so deeply embedded in our policy and our identity that we hardly notice it. Like the global preponderance of the West, we assume that Anglo-Saxon primacy in Asia is a permanent and inevitable part of the natural order. We cannot imagine how we could make our way in the world without the support and protection of a ‘great and powerful friend’. We hardly know how to ask, let alone answer, the questions that confront us now about what the shift in power from the West to Asia means for Australia. Instead, we pretend that nothing is happening.

This is the key message of Michael Wesley’s new book, There Goes the Neighbourhood. Wesley’s theme and message is that the rise of Asia is changing everything about Australia’s place in the world, while Australians, lulled into complacency by our success over the last twenty years, remain blissfully oblivious to what it will mean.

Wesley, a gifted academic who has worked in government, now heads the Lowy Institute in Sydney. He is an important figure in foreign policy debates, and is probably Canberra’s most widely consulted source of ideas about foreign affairs outside the government itself. His book shows why. It is short, clear, and pungent. It ranges widely across economics, social issues, and strategy. With equal aplomb it traverses remote and recent history, current events and future trends, yet it never strays far from the real world of practical issues. It is full of intriguing, bite-sized facts. Last but by no means least, it is fluently written and the argument is vividly illuminated by good stories, well told. In other words, this is just the kind of book that political leaders are likely to read, and one hopes they will.

Wesley’s argument is simple enough. The last two decades have been a time of unparalleled opportunity and achievement for Australia. But it has also – and not at all coincidentally – been a time when everything has gone right for our neighbours as well. Many of them, especially the biggest of them, have managed unprecedented increases in the productivity of their workforce and the material welfare of their people. In the process, of course, they have vastly increased their power as states. This is producing what he calls a ‘new geometry of power’ in Asia.

Wesley says that the main feature of the new geometry will be increased complexity. There will be more players with more power in different forms – exercised in different ways. How all this power is managed will be critical to Asia’s future, and Australia’s. The key to understanding that, Wesley says, is to explore the clash between Asia’s traditionally hierarchic conceptions of power and the very different conceptions imposed by the West. This clash shapes Asians’ experience of power and will influence what they do with their own power as it grows.

All this means that the region in which Australia lives and trades and must find its security will work very differently, and become even more important. We in Australia need to engage with it more closely, and with ever-greater sophistication and nuance, if we are to survive and prosper. However, our recent good fortune, Wesley argues, is turning us the other way – more and more insular, less and less engaged and interested in our region, blithely willing to assume that the world around us will always work for us on our own terms, as it always has in the past. The old pillars of Australian foreign policy – the US alliance and multilateral diplomacy – will not suffice any more. We need a completely new approach. Time, he says, for us to wake up, pay attention to what’s happening, and build a new foreign policy before it is too late.

This, then, is a valuable book with an important message. The core argument is undoubtedly correct. My only reservation is that it does not go far enough. Much as I admire the way the book draws our attention to things we have been trying to ignore, I was left hungry to hear more detail about the challenges we face and what we should do about them. In the end, There Goes the Neighbourhood raises a plea for a new Australian foreign policy, but says little about what that policy must address and how to do it.

For example, Wesley vividly explains how China’s power is growing at the expense of America’s, but not how the US–China relationship will evolve as a result. But this is the single most important factor shaping Asia’s stability and Australia’s security. Will Washington and Beijing find a way to share power, or will they slide deeper into strategic rivalry and, perhaps, conflict? Australia must do whatever it can to prevent escalating rivalry if that is at all possible, but so far our leaders simply pretend the danger does not exist, and unthinkingly urge America towards confrontation. Our most important diplomatic task over the next few years is to do whatever we can to prevent a needless escalation of competition between our major ally and our biggest trading partner. Wesley’s book would be stronger if he ventured to explore how this could be done.

Of course, that in turn raises huge questions about the future of our US alliance itself. Wesley draws the inevitable and important conclusion that, as America’s relative power in Asia declines, our alliance with the United States will do less for us than it has in the past. But he is tantalisingly reluctant to explain what that means in practice, and what Australia should be doing about it today.

I hope that Wesley has another book coming soon, extending his argument by offering more concrete ideas about the shape of a new Australian foreign policy for the Asian century. We need it.