China’s capacity to strike Australia will grow over the next decade, according to a foreign policy think tank, posing a serious strategic challenge to the country.

In a new report, the Lowry Institute says China’s “ability to interdict Australia’s maritime trade, sever undersea communications infrastructure, conduct sophisticated cyber operations, and project naval power into Australian waters is robust and will grow substantially over the coming decade”.

China can already hit northern Australia with ballistic missiles deployed to its South China Sea outposts, the assessment notes, “and its capacity to strike the Australian landmass from Chinese territory will grow over the next decade as the DF-27 intermediate-range ballistic missile, and potentially a conventionally armed intercontinental ballistic missile, grow in service numbers.”

The DF-27 has a strike range of between 5,000km and 8,000km, according to the US military.

The think tank notes that Beijing’s rapid military expansion represents a “historic shift” in the regional balance of power, with significant implications for Australia’s security.

This build-up has “already eroded US military primacy in the Indo-Pacific, increased the threat to Taiwan and created structural pressure on regional states to accommodate Beijing’s preferences”.

“Two factors could quickly and dramatically escalate the strike threat against the Australian landmass,” the report warns, “China could field a new long-range bomber, or it could deploy existing bombers and missiles to bases closer to Australia”.

Sam Roggeveen, director of the Lowy Institute’s International Security Program, said the assessment was “neither hawkish nor dovish, neither alarmist nor complacent”. “I think the growth of the People’s Liberation Army is the most important thing to happen to Australian security since the collapse of the Soviet Union, and there is a pressing need for a more informed Australian discussion about it,” he said.

“Capabilities take years to build and intentions can change overnight,” he told the ABC. “So Australia needs to keep a laser-like focus on China’s capabilities because, however good our relationship with China, we can never know how the world will change.”

Though China’s ability to strike Australia directly was “limited”, Mr Roggeveen said, it was “growing in a worrying fashion”. “I’d argue that for a military force of China’s size, that direct strike capability is still fairly modest, as China’s focus has been closer to home,” he said. “But that is now clearly beginning to change.”

Australia has already made a series of defence policy decisions in response to China’s military rise. “It has committed to its biggest and most ambitious procurement project ever”, the report says, referring to the supply of nuclear submarines under the AUKUS arrangement, “to the stationing of US combat forces on Australian soil for the first time since the Second World War and to increasing the defence budget so that it reaches roughly 2.4 per cent of GDP by 2034.”

The report further notes that “China’s military build-up is reshaping Asia’s security order and bringing into question Australia’s relative isolation from military threats”.

It says that “while long-range power projection forces of the kind needed to strike Australia are not the highest priority in China’s military modernisation, its capabilities are nevertheless growing”.

“We also see some evidence emerging that China is looking at long-range drone systems, not just for surveillance but potentially one which could act as a bomber, which could potentially reach Australia,” Mr Roggeveen said while talking about assessments suggesting China is developing a long-range stealth bomber called H-20 that could place the Australian mainland within range, “although it is difficult to see China fielding that capability within a decade.”

“We have no photographic evidence it even exists, but there is plenty of reporting from good open sources and Pentagon annual reports which refer to this design,” he added.

“It’s quite possible that photographic evidence emerges this year. We assume it’s close to breaking cover.”

The report notes that Chinese president Xi Jinping’s “purges of senior military leaders, beginning in 2022 and peaking in 2025, indicate that he’s far from satisfied about the military’s ability to conduct complex missions”.

The Independent has reached out to Australia’s Department of Defence for comment.