China’s expanding presence beyond the first island chain is most likely to generate incidents, friction and escalation risks not through deliberate aggression but through growing operational proximity.

As Chinese military, paramilitary and law-enforcement activity becomes more persistent across the Southwest Pacific, Australia’s maritime approaches and the Indian Ocean, regional countries will encounter Chinese forces more frequently. Over time, this will produce a denser and more contested operating environment in which the risks of incidents, coercion and miscalculation will grow.

These conclusions draw on ASPI war gaming conducted in March. Earlier analysis in this daily series of articles explored how the regional environment may evolve by 2031 and 2036 under current trends. The next article will examine how these dynamics could shift if Beijing accelerates its approach over the coming decade.

In the Southwest Pacific, friction is most likely to emerge through coast guard and maritime militia activity around fisheries and maritime zones. As Chinese presence shifts from episodic engagement to routine operations, Chinese vessels will increasingly operate alongside those of Pacific island countries and their traditional partners, such as Australian and New Zealand. These interactions will create points of tension, particularly where enforcement activity is perceived as coercive or linked to broader political pressure.

Pacific governments are unlikely to accept overt coercion, but their capacity to resist it will remain limited. Responses will therefore focus on reinforcing sovereignty while preserving strategic balance. Pacific island countries are likely to strengthen maritime domain awareness with the help of traditional partners and use regional institutions such as the Pacific Islands Forum to reinforce norms and constrain external security activity. At the same time, most of the island countries will seek to maintain non-aligned positions, including by allowing access and transit to multiple partners.

This balancing act will not always succeed. Diverging national approaches, ranging from deeper engagement with Beijing to closer alignment with traditional partners, will continue to complicate efforts at maintaining regional cohesion. The result will be a crowded operating environment in which Chinese ships, Pacific patrol boats and partner forces operate in close proximity. Even with restraint, the risk of incidents, whether about fishing rights or enforcement actions, will increase.

In Australia’s maritime approaches, friction will be sharper and more directly tied to intimidation tactics. Chinese naval task groups, intelligence vessels and survey ships are likely to operate more frequently to Australia’s north and west, bringing them into routine contact with the Australian Defence Force. These activities are often legally permissible but will be interpreted in Canberra as deliberate signalling.

The war game highlighted particular concern around undersea cables and energy supply chains. Survey operations near seabed infrastructure, interference with commercial shipping and more frequent live-fire exercises would expand Beijing’s grey-zone toolkit. These actions are inherently difficult to contest without risking escalation.

Australia’s response is likely to emphasise persistent presence and deeper coordination with partners. This includes shifting force posture northward, increasing naval readiness and investing in intelligence, surveillance and reconnaissance capabilities. More frequent exercises with partners such as Japan, South Korea and the United States, alongside deeper engagement with Southeast Asian states, will reinforce this posture. Expanded access to facilities such as Manus Island will support sustained operations across the northern approaches.

These measures, however, will contribute to a denser and more contested operating environment. As both sides increase presence and readiness, interactions will become more frequent and more complex. Close manoeuvring, shadowing operations and competing surveillance activities will heighten the risk of incidents.

The Indian Ocean presents a third arena for friction. As China deepens partnerships with selected regional countries, expands its logistics network and develops a more persistent naval presence, interactions with India and other actors will intensify.

The war game results suggests that India, supported by partners such as Australia and the US, will respond by strengthening its presence and coordination with other countries in the region. This will include expanded efforts and monitoring activity on and below the sea surface, more-complex joint exercises and growing focus on undersea capabilities. There is likely to be increased emphasis on emerging technologies, such as uncrewed underwater systems to monitor activity in key sea lanes and chokepoints.

Friction in the Indian Ocean is likely to arise manly from proximity and perception. India and its partners will closely monitor Chinese naval deployments near critical chokepoints, increased submarine activity and expanding access arrangements to regional ports. Encounters between naval vessels and submarines operating in contested spaces carry inherent risks, particularly as both sides seek to demonstrate presence without triggering escalation.

Across all three regions, the pattern will be consistent. China will build presence incrementally and regional actors will respond through surveillance, partnerships and operational activity. The greatest danger lies in cumulative friction. Individual incidents may be manageable, but repeated interactions will increase the likelihood that one is misinterpreted or escalates beyond initial intent. This will be a particular issue when trust is limited and communication channels are underdeveloped.

Managing this risk will depend on clear signalling of intent, robust communication mechanisms and a shared interest in avoiding unintended escalation. Yet the very nature of grey-zone competition complicates these efforts. Ambiguity, which China uses to manage escalation, also increases the potential for misinterpretation by others.

As China’s presence beyond the first island chain continues to expand, friction will become an enduring feature of the Indo-Pacific security environment. The challenge for Australia and its partners will be to operate effectively in this environment while limiting the risks that come with it.