Following its time-honoured ‘great and powerful friends’ foreign policy tradition, Australia has been cultivating close ties simultaneously with the United States and China. Yet, as a rivalry between the two powers apparently looms large, Australia faces an acute dilemma. While the rise of China and the question of Taiwan are often cited as main causes of US–China discord, this article argues that the American neoconservative policy on China, underpinned by a belief in both military strength and moral clarity, is integral to this growing competition and is, by extension, partly responsible for the emergence of Australia's predicament. To avoid such a difficult choice, the article suggests that Australia should strive to curb the policy influence of neoconservatism both in the United States and at home by pursuing a more independent foreign policy, making clear its strategic postures on US–China relations, and helping establish a trilateral strategic forum between Australia, the United States, and China.