For the first time in its 70-year history, NATO has directly called out China's foreign ambitions and "coercive policies" as a “systemic challenge", further raising tensions in an Asia-Pacific region experiencing a multi-nation arms race.

At its Madrid summit, attended by Prime Minister Anthony Albanese, the 30-country alliance committed to spending at least 2% of GDP on defence. China has rebuffed NATO's description as a slander and noted that it only spends 1.3% of its GDP on defence.

NATO secretary general Jens Stoltenberg described the 2% defence spending as a "floor, not a ceiling". “Since 2014, European Allies and Canada have spent an extra $US350 billion dollars. Nine Allies now reach -- or exceed -- the 2% target. Nineteen Allies have clear plans to reach it by 2024. And an additional five have concrete commitments to meet it thereafter."