By Lincoln Feast
SYDNEY (Reuters) - When Australian Prime Minister Tony Abbott swept to power in September's general election, his promise of a foreign policy that was "more Jakarta than Geneva" raised hopes of a new era of engagement with powerful Asian neighbors.
Less than three months into the job, Abbott's conservative government is embroiled in the worst diplomatic rift with Indonesia since the turn of the century and China, its biggest trade partner, is complaining bitterly about Australian comments regarding fresh tensions in the East China Sea.
The deterioration of relations between Australia and key regional powers has fuelled fears that trade, investment and security will suffer and have helped ensure a swift end to any post-election honeymoon enjoyed by Abbott's government.
"They've run headlong into the brutal reality that the distribution of power in Asia has shifted," said Hugh White, professor of Strategic Studies, at the Australian National University's School of International, Political & Strategic Studies. "They are dealing with both an Indonesia and a China that are stronger than they understood."
Tensions with China escalated after Australian Foreign Minister Julie Bishop described Beijing's weekend move to impose a new airspace defense zone over disputed islands the East China Sea as "unhelpful" and summoned China's ambassador to explain.
That sparked a terse response from China's Foreign Ministry, which rejected her remarks as "irresponsible" and "completely wrong".
Bishop, who heads to Beijing next month, denied the spat would damage Abbott's stated aim of concluding long-stalled talks over a free trade agreement with China within the year.
"No, I don't accept that," Bishop told Sky News on Thursday. "This is a matter of long-standing Australian policy. We've raised it before and the response from China was to be expected."
Chinese Foreign Ministry spokesman Qin Gang said on Thursday though that Australia had to change its attitude.
"Both sides are at present having close communications on the free trade talks. We hope that Australia can do more positive things and create more beneficial conditions for bilateral cooperation and the healthy, smooth development of ties," he told reporters.
Australia, which takes over chair of the G20 next month, relies on China and other Asian nations to buy the bulk of its exports, particularly minerals and agricultural products.
But a strengthening of ties with both the United States and Japan - which Abbott recently described as Australia's best friend in Asia - has put Australia in a difficult position as the strategic rivalry between China and the United States grows.
"I expect China to be a strong and valuable economic partner of ours because it's in China's interest to be a strong and valuable economic partner, but I think China fully understands that on some issues we are going to take a different position to them," Abbott said on Thursday.
The rising rhetoric with Beijing comes just days after relations between Australia and Indonesia slumped to their lowest point since 1999 following reports that Canberra had spied on top Indonesian officials including President Susilo Bambang Yudhoyono and his wife.
Indonesia responded by halting military and police cooperation until it received a personal explanation from Abbott.
Jakarta, a major importer of Australian wheat, live cattle and beef, has also been looking at alternatives for food imports, while a state-owned firm has suspended talks over the potential purchase of Australian cattle stations.
"The fact is, we need Indonesia more than Indonesia needs us and the Indonesians are in the process of demonstrating that," ANU's White said.
(Additional reporting by Ben Blanchard in BEIJING; Editing by Michael Perry)