CANBERRA (Reuters) – Australia will spend $580 million to upgrade four northern military bases and expand war games with the United States, Prime Minister Scott Morrison said on Wednesday.

In an announcement that comes amid an increasingly bitter diplomatic and trade spat with China, Mr. Morrison said Australia must expand its military assets in the Northern Territory to be able respond to unspecified tensions in the Asia-Pacific region.

“Our objective is a free and open Indo-Pacific, to ensure a peaceful region, one that, at the same time, Australia is in a position to always protect its interests,” Mr. Morrison told reporters in Darwin.

While Mr. Morrison avoided naming China on Wednesday, Australia’s military focus on the Indo-Pacific area comes amid rising competition between the two for influence in the region in recent years.

Relations between Australia and China deteriorated even further after Canberra called last year for an international inquiry into the origins of the coronavirus, prompting trade reprisals from Beijing.

Mr. Morrison said an airstrip in the Northern Territory will be lengthened to support larger aircraft, firing ranges overhauled and new training facilities set up for defense personnel and U.S. marines.

The military upgrades will begin this year and be finished by 2026.

The funds are part of an Australia defense plan that will see Canberra spend $270 billion in the next decade to improve Canberra’s long-range strike capabilities.

Mr. Morrison said last year the funding was needed as the Asia-Pacific region was experiencing the greatest level of economic and strategic uncertainty since World War II.

Australia’s increasingly assertive approach has won favor with Washington, and Mr. Morrison said the new facilities will enhance joint military drills with the United States.

More than 2,000 U.S. Marines are already in Australia’s north as part of annual joint training activities.

Australia and the United States also hold biennial war games, the next of which is scheduled to begin in August.

Typically, more than 30,000 troops participate in the exercises off Australia’s east coast.

“The United States and Australia have been deeply engaged in defense cooperation for over half a century,” said Michael Goldman, Charge d’Affaires at the U.S. embassy in Canberra. “We will continue to look for additional ways to partner with Australia, as our ally, to advance the security and prosperity of Americans, Australians, and the peoples of the Indo-Pacific region.”

The latest Australia military upgrade announcement comes just days after one of the country’s most senior security officials said liberal democracies must brace for war.

Home Affairs Department Secretary Mike Pezzullo did not specify the catalyst for his warning but it follows the sharp deterioration in Australia’s relationship with China and a rise in regional tensions over Taiwan.

Australian Defense Minister Peter Dutton on Sunday also said a conflict between China and Taiwan “should not be discounted.”