John Edwards, a prominent Australian economist and former economic adviser to Paul Keating, has offered a reassessment of the economic rivalry between the United States and China, describing the ongoing competition as an opportunity rather than a source of concern for Australia. Speaking from his current role as a non-resident fellow at the Lowy Institute, Edwards recently published a paper titled *Overhaul: How Australia can adapt to a changing world economy*, which outlines strategies for Australia to navigate the evolving global economic landscape over the next quarter-century.

Edwards emphasizes that both the US and China will remain dominant global economies for decades to come, dispelling the notion that their current rivalry is a zero-sum race with a clear winner. He argues that Australia's position—maintaining strong security ties with the US alongside deep economic links with China—should be viewed as a strategic advantage. According to Edwards, smaller nations benefit from the presence of two major powers rather than one, and Australia should avoid choosing sides to maximize its own prosperity.

The report also calls for a revitalization of Australia’s economic statecraft, an area Edwards believes has been overshadowed recently by national security concerns, particularly regarding China. He suggests that Australia should adopt a more balanced and pragmatic stance, remaining cautious of economic coercion attempts by China but avoiding unnecessary provocations that could damage the bilateral relationship. Edwards points out that unlike Australia, many other countries with significant ties to China—such as Canada, Indonesia, and Malaysia—are not preparing for armed conflict, suggesting that Australia’s security anxieties may be overstated.

On the domestic front, Edwards is optimistic about the potential for Australia to rebuild its manufacturing sector, albeit in a limited and technologically advanced form. He highlights artificial intelligence and robotics as critical factors that could help Australia overcome high labor costs and restart manufacturing activities primarily integrated into global supply chains linked to China. However, he tempers expectations regarding employment, noting that future manufacturing jobs will likely be fewer and more specialized.

Edwards acknowledges widespread public unease about Australia’s economic future but challenges prevailing pessimism. He argues that despite numerous challenges over the past 25 years, including economic and geopolitical shocks, overall outcomes have been positive and comparable to the previous half-century. He contrasts Australia’s relatively strong economic performance with ongoing discontent in regions like Europe and the United States, where issues such as growing inequality, stagnant wages, and social unrest persist.

While Edwards admits that Australia faces current challenges, such as inflation control and low productivity growth, he is confident about its long-term prospects. He recognizes housing affordability as a pressing concern but characterizes it primarily as a supply-side problem that is now beginning to be addressed. Overall, Edwards advocates for a forward-looking approach to international engagement and domestic economic reform, viewing the US-China dynamic as a catalyst for Australia’s potential growth rather than a threat.