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Shortly after U.S. President Barack Obama and Australian Prime Minister Julia Gillard sealed a bilateral defense deal in November 2011, under which 2500 U.S. marines will be stationed in Australia, Obama announced a new strategic defense guidance in January 2012. The latter document claims that China’s rise has important implications on U.S. economic and strategic interests, and noted that countries such as China and Iran continue to pursue asymmetric means of countering U.S. power projection capabilities. Many have taken these developments to mean that competition between the United States and China amounts to a new 'Cold War.'

How do the characteristics of Sino–U.S. relations affect trends in their bilateral ties? Where will strategic...