In July 2014, Australia's new Prime Minister, Tony Abbott, and his Japanese counterpart, Shinzō Abe, elevated the status of bilateral ties to a ‘special strategic relationship’. Both sides also agreed on intensifying their defence technology cooperation, including in the submarine space. As well, Prime Minister Abbott called Australia a ‘strong ally’ of Japan. Yet, the prospect of a further strengthening of Australia–Japan defence relations has led to criticism by Australian strategic commentators. In particular, critics argue that closer strategic relations with Japan could damage Australia’s ties with a rising China. In a worst-case scenario, Australia might even become ‘entrapped’ in a Sino-Japanese conflict. However, this argues that a closer defence relationship is in Australia’s strategic interests in the face of China’s increasing challenge to the rules-based order in the region. China’s uncompromising position in the South China Sea and its more assertive behaviour have led to a greater congruence of threat and risk assessment between Australia and Japan. Indeed, Australia and Japan are increasingly facing a security dilemma vis-à-vis China, albeit to varying degrees. Therefore, for Australia, promoting Japan's ‘security normalisation’ contributes to regional stability. As well, the article points out that closer strategic ties with Japan do not automatically come at the expense of Sino-Australia relations. China’s leverage to ‘punish’ Australia for unwanted strategic behaviour is limited, and concerns about ‘entrapment’ in a Sino-Japanese war are exaggerated. However, the more China exerts coercive diplomacy, the closer Australia–Japan defence relations are likely to become.