This paper argues that Australian governments of both political stripes have responded pragmatically and effectively to the rise of China, the relative decline of the United States and the increased assertiveness of the Association of Southeast Asian Nations (ASEAN). When they have made mistakes, the Howard, Rudd and Gillard governments have worked hard to improve relations. Into the future, successful Australian foreign policy in Asia will require continuing pragmatism and heightened resistance to the immediate temptations of either dreamy or nightmarish scenarios. While it is possible either extreme could eventuate, relying on the former prognostication might leave Australia and the West unprepared and the latter over-prepared. An excessive focus by the West on a nightmare scenario centred on China's rise might have the added disadvantage of generating a self-fulfilling prophecy.