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Since World War II, U.S. military dominance has underpinned the Asia-Pacific region's prosperity and relative peace. So it's cause for concern when one of America's closest allies sees that power ebbing amid unstable nuclear regimes such as Pakistan and North Korea and the expanding military power of China.
But without sustained U.S. defense spending and focus on the Asia-Pacific, it's unclear which nation will ultimately dominate the region -- and that could have profound effects on security and trade. The clearest challenge comes from China, which the Pentagon estimates spent $105 billion to $150 billion in 2008 bulking up its forces. Australia also worries about instability among its Pacific island neighbors, terrorism, the proliferation of weapons of mass destruction and emerging threats like cyber war.