It's a definitive move for a country in the Asia-Pacific region, experts say.
The security deal with the US and the UK gives Australia a huge defence upgrade from the world's most powerful military.
But it's a gift with strings attached. And there is debate over whether such a decision - made without public consultation - will play out in Australia's national interests.
As China has grown in power, it has begun to challenge US dominance in the Asia-Pacific region.
China has built the world's largest navy and has become increasingly assertive over contested areas such as the South China Sea.
Australia had long maintained it didn't have to choose between the two powers, but in recent years its attitude towards Beijing has hardened.
China has been suspected of interfering in Australian politics and of cyber attacks on key institutions.
Tensions were further inflamed last year when Australia called for an investigation into the origins of the coronavirus. A flurry of Chinese sanctions against Australian exports followed.
That was Australia's "a-ha" moment, says John Blaxland, an international security professor at the Australian National University.