As China continues to rise in the face of North Atlantic decline, it is again flexing its geo-political muscle.

The Middle Kingdom has forcefully reiterated territorial claims to the bulk of the resource-rich South China Sea through bold gunboat diplomacy.

China only recently stepped back from a month of naval brinksmanship with the Philippines over Scarborough Shoal. Added to this, the Chinese military has authorised the deployment of a garrison to Sansha, the newly created local government unit that will administer territory claimed by Brunei, Malaysia, the Philippines, Taiwan and Vietnam.

The latest flare-up in the South China Sea dispute once more raises the dilemma of how far Chinese power should be accommodated and at what point China's ambitions should be contained.

This is not an academic question for Australia.

Australia's decision to station up to 2500 US Marines in Darwin on a rotating basis was perceived by Beijing as complicity in a US attempt to contain China. Cui Tiankai, China's Vice Foreign Minister, recently launched thinly veiled criticisms at Australia's deepening military ties with Washington, cautioning against ''the resurgence of a Cold War mentality''.

Such Chinese hypersensitivity has raised doubts about the wisdom of our intimate security relationship with the United States, China's principal geostrategic competitor. Commentators like ANU professor Hugh White and former chief of army Peter Leahy have suggested that our US security partnership risks straining Australia-China relations.

As high stakes as this policy problem might be, White, Leahy and others are wrong to worry. Just as surely as we must accommodate China's growing military and economic footprint, Chinese ambitions should be contained through an ongoing and substantial US military presence in the Asia-Pacific.

Accommodating China is not just a matter of principle; it is a necessity.

The International Monetary Fund predicts that China's share of world GDP will equal the US share by 2014, and by 2050, China's economy will be double that of America's.

With wealth comes the means to acquire military power.

The Pentagon estimates that after increasing military spending by 11.2 per cent in March, China's total military budget is between $US120 billion and $US180 billion. Irrespective of the exact number, China is already the world's second-largest defence spender and is expected to reach US levels by around 2025.

Although we should not seek to check this growing Chinese power at every turn, China cannot expect its power to go entirely unchecked.

The push to counteract Chinese power will admittedly be driven by a US desire to not cede military pre-eminence to a would-be Asian superpower.

The commitment to US military primacy is bipartisan in the United States. In his State of the Union address this year, President Obama rebuffed any suggestion of US decline, while Mitt Romney, the presumptive Republican presidential nominee, continues to call for an ''American Century''.

Australia is therefore serving the US goal of maintaining its military primacy by being part of US attempts to counteract Chinese power in the Asia-Pacific.

However, despite Chinese rhetoric at its most caustic painting Australia as a US lackey, Asian nations also support the US ''pivot'' to Asia.

From south-east Asia to north Asia, the consensus is that great benefits flow from a large US security presence in the region.

As Kantathi Suphamongkhon, former Thai foreign minister, recently indicated, the Association of South-East Asian Nations has always wanted the United States in the region ''as a force for stability''. Similarly, Japanese Defence Minister Satoshi Morimoto has said that the Japanese-US alliance ''plays an extremely important role in promoting peace and stability in the Asia-Pacific region''.

Containment versus accommodation is an exciting prism through which to view the rise of China. It makes for poor foreign policy though. Australia's stance should be neither unyielding containment nor endlessly pliant accommodation.

As difficult as determining the right balance of accommodation and containment might be, it is far from an intractable policy dilemma. It is rather, as it ever was, just the stuff of difficult foreign policy planning.

Benjamin Herscovitch is a policy analyst at the Centre for Independent Studies and was previously a Desk Officer at the Department of Foreign Affairs and Trade.