<i>Illustration: John Shakespeare</i>

Illustration: John Shakespeare

While we've been busy with the small picture - sometimes very small - of Australia's election campaign, there have been some pretty interesting developments in the bigger picture of our neighbourhood.

The arms race and territorial tensions to our north have continued apace. The "Asian century" that the Gillard government liked to spruik involves much more than export opportunities.

Kevin Rudd called the election on August 4. The next day, Western experts confirmed that satellite photos of a large ship under construction in a Chinese shipyard showed a part-built aircraft carrier. It is to be the country's first made-in-China carrier.

China bought and refurbished a discarded Russian aircraft carrier, which it put to sea in 2011. Evidently satisfied that it has the know-how it needs, it's now adding indigenous aircraft carriers.

The Chinese navy, growing rapidly, is now about the same size as the US Pacific Fleet, according to the fleet's outgoing commander, vice-admiral Scott Swift.

On the same day, China said it was in "no rush" to sign up to a set of proposed international rules designed to prevent territorial clashes with its smaller neighbours in south-east Asia.

Beijing has active disagreements over sea borders with Vietnam, the Philippines, Malaysia and Brunei, all members of Association of South-East Asian Nations. It has sent its navy and coast guard into tense standoffs with the Philippines and Vietnam in recent months.

ASEAN wants China to agree to a code of conduct for resolving disputes peacefully. But China foreign affairs minister Wang Yi says while Beijing is prepared to discuss a code, "China believes that there should be no rush" and some countries have "unrealistic expectations" of rapid progress.

The next day, the Philippines took possession of a second-hand frigate donated by the US. It is only the second significant vessel in its feeble navy, and is 46 years old.

But the Philippines, feeling intimidated by China, is spending $1.7 billion on a build-up including a dozen fighter jets and two frigates from South Korea. It is also in talks with Washington to host more US forces.

"Real growth is possible only if there's genuine stability and peace in our nation," Philippines president Benigno Aquino said as he watched the frigate arrive.

The same day, Japan unveiled its biggest warship since World War II, a $US1.2 billion flat-topped helicopter carrier with a 250-metre flight deck.

Provocatively, it's named the Izumo, after the flagship in Japan's invasion of China in the 1930s. A Chinese government mouthpiece, the China Daily newspaper, said it raised "grave concerns about the country's military build-up".

The next day, China countered by sending four ships into Japanese territorial waters around the disputed islands that Japan calls the Senkaku and that China calls the Diaoyu islands. The ships stayed in Japan's waters, defying orders to leave, for 28 hours, provoking a formal protest from Tokyo. Japan called it "totally unacceptable".

The next week, India unveiled its first home-built aircraft carrier, the Vikrant. It was a "remarkable milestone", Indian Defence Minister A.K. Antony said.

This is India's second carrier, part of its stated aim to build the world's biggest navy after America's. Although the carrier is afloat, it is not yet fully fitted or in service. It puts India ahead of China to become only the fifth country in history to be able to build a carrier.

In this same fortnight, a prominent Indian analyst, Brahma Chellaney of the Centre for Policy Research in Delhi, described China's frontier strategy of constant outward pressure on its borders as one of "salami slicing".

Meaning? "A steady progression of small actions, none of which serves as a casus belli by itself, yet which over time lead cumulatively to a strategic transformation in China's favour." He described it as "creeping, covert warfare".

Can Australia do anything in the face of accumulating arms and rising tensions? Foreign Affairs Minister Bob Carr has quietly advanced alternative approaches in recent months.

Carr observes that the disputes themselves are "entrenched and intractable and extraordinarily difficult to resolve".

So instead of resolving them, he has proposed another way: "Set aside the disputes and strike agreements to exploit resources and split the proceeds. There are precedents."

He cites the Antarctic Treaty of 1961, where a dozen countries, including Australia, agreed to set aside territorial disputes to allow scientific research, but without in any way ceding their claims.

There are three other examples in the region. Malaysia and Thailand struck a treaty in 1979 to allow for oil and gas drilling, and Malaysia and Vietnam did the same in 1992. The oil flows, the profits are shared, and the underlying disputes are unresolved but dormant.

Australia and East Timor struck a similar treaty in 2006, though Dili is unhappy and is seeking to revise it. Carr says he has "mentioned it in a low-key way" and hopes the idea finds support.

But that supposes that countries are more interested in doing business than asserting national greatness. That seems to be a rash assumption.

These sobering developments to our north have all happened in the past fortnight. We can only imagine what the next three years could bring. Our leaders certainly aren't talking about it.

Peter Hartcher is the international editor.

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