China looms large in Australia’s destiny over the next decade, with the emerging Asian superpower increasing its influence over regional economic, security and diplomatic relationships. While Australia as a former British colony has long had its feet firmly planted in the US camp, it will have to adopt to a more assertive Beijing, which showed at Copenhagen its importance in international affairs.

Political stability is inherent to the region’s economic growth, but cracks may appear as the US alliance weakens and with the growth of a radical Islam in Southeast Asia. In short, Australia’s days as the ‘regional policeman’ appear numbered.

Domestically, Australia’s politicians will have to address the welfare and taxation burden of an older population, albeit one supported by immigration which in turn is straining urban infrastructure. Waves of ‘boat people’ displaced from the Pacific islands and other international trouble spots will test the liberal democracy’s humanitarian capacity.

Furthermore, a move towards becoming a republic is likely only upon the death of the popular British Queen.

Canberra will gain more power at the expense of the states, which will become regional tax collectors rather than lawmakers under a more centrist system. The political battlegrounds will likely be over education, health and industrial relations along with taxation.

Resources and energy, tourism and education will remain the mainstay of an economy which will show continued growth on the back of the industrialisation of China and India. Japan’s position as top trading partner has already been supplanted by China and is likely to further diminish, with Australia more likely to sign a free trade agreement with Beijing than Tokyo.

Finally, climate change will pose a major challenge for the world’s driest inhabited continent. The decline of the food basket of the Murray-Darling basin along with increasing drought, fires and floods will test the limits of the nation’s sustainable development ethos.

Anthony Fensom is an Australia-based writer.