For Australia to build nuclear-powered submarines for the first time, using technology provided by the US.
The Aukus pact, which will also cover AI and other technologies, is one of the countries’ biggest defence partnerships in decades, analysts say.
China has condemned the agreement as “extremely irresponsible”.
Foreign ministry spokesman Zhao Lijian said it “seriously undermines regional peace and stability and intensifies the arms race”.
China’s embassy in Washington accused the countries of a “Cold War mentality and ideological prejudice”.
The pact also created a row with France, which has now lost a deal with Australia to build 12 submarines.
“It’s really a stab in the back,” France’s Foreign Minister Jean-Yves Le Drian told France Info radio.
The new partnership was announced in a joint virtual press conference between US President Joe Biden, UK Prime Minister Boris Johnson and his Australian counterpart Scott Morrison on Wednesday.
And while China was not mentioned directly, the three leaders referred repeatedly to regional security concerns which they said had “grown significantly”.
“It is growing its navy [and] air force at a huge rate. Obviously it is engaged in some disputed areas,” he said. “Our partners in those regions want to be able to stand their own ground.”
In recent years, Beijing has been accused of raising tensions in disputed territories such as the South China Sea.
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On Thursday, UK Prime Minister Boris Johnson said the pact would “preserve security and stability around the world” and generate “hundreds of high-skilled jobs”.
He also said the relationship with France was “rock solid”.
The Aukus alliance is probably the most significant security arrangement between the three nations since World War Two, analysts say.
The pact will focus on military capability, separating it from the Five Eyes intelligence-sharing alliance which also includes New Zealand and Canada.
While Australia’s submarines is the big-ticket item, Aukus will also involve the sharing of cyber capabilities and other undersea technologies.
“This is an historic opportunity for the three nations, with like-minded allies and partners, to protect shared values and promote security and prosperity in the Indo-Pacific region,” the joint statement read.
“This really shows that all three nations are drawing a line in the sand to start and counter [China’s] aggressive moves in the Indo-Pacific,” said Guy Boekenstein from the Asia Society Australia.
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