(Bloomberg) -- Australia seeks to balance its economic and security relationship with China even as it maintains a longstanding defense alliance with the US at a time of heightened geopolitical tensions, according to Defense Minister Richard Marles.

“How you navigate those two things is complex, it’s not obvious, it requires discussion,” Marles said in an interview in Singapore Saturday with Bloomberg Television’s Haslinda Amin. “We can be an ally of the United States and we can build a productive relationship with China. We firmly believe that is possible and that’s the line we seek to pursue.”

At the same time, Marles expressed anxiety over China’s continuing military expansion in Asia while supporting the US stance. 

“We are seeing a very significant buildup of its military and that’s happening without a sense of strategic reassurance to us, or to the region and the world about its purpose. So we’ve got our issues,” he said about China.

Australia’s position highlights the predicament that many nations find in a region that has become increasingly reliant on China’s economic engine while requiring support from America’s military to maintain defensive postures. Australia, a longstanding security ally of the US, is seeking to mend economic ties with China — its largest trade partner — that soured during the pandemic.

Read More: US Chides China Over Defense Talks as Navy Sails Taiwan Strait

Marles’s comments come as the US Navy is conducting a transit through the Taiwan Strait. That development occured on the same day that US Defense Secretary Lloyd Austin called for greater communication between Washington and Beijing to avoid a conflict that would be devastating to the global economy. Marles defended the transit.

“International waters, international airspace are there for everyone and the United States is operating in accordance with its rights within those waters,” Marles said.

At the same time, he said “we do have a significant economic relationship with China and we want to manage that as well.” Marles is in Singapore to attend the annual Shangri-La Dialogue defense summit, where Australian Prime Minister Anthony Albanese gave the keynote speech Friday night.

Albanese called on the US and China to work together with partners to avoid war in the Indo-Pacific, saying the region was not “an arena for the ambition of others.”

Under Albanese’s government, relations between Australia and China have rapidly improved, with top-level ministerial meetings restarting between Canberra and Beijing over the past year and trade sanctions lifted on timber and coal.

At the same time, Australia’s center-left Labor government is keeping its close security alliance with the US. Earlier this year, Marles confirmed Australia would purchase a small fleet of US Virginia-class submarines under the Aukus agreement, while Albanese has attended two meetings of the Quad partnership with the leaders of the US, Japan and India in his first year in office.

Australia is currently working to reshape its defense forces, transitioning away from traditional land-based warfare to focus instead on area denial capabilities including long-range missiles and drones. The government also wants to boost Australia’s domestic military manufacturing.

Strategic Review

A major defense review commissioned by Marles that was released in April revealed Australia’s defense forces were not “fit for purpose” for the new strategic environment in the Indo-Pacific region. On Saturday, the defense minister said the review is being done every two years “to make sure our posture is always contemporary.”

Marles, who is also Australia’s deputy PM, is scheduled to visit Indonesia and Vanuatu after Singapore.

--With assistance from Andy Clarke and Richard Lewis.

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