The new AUKUS pact will pave the way for Australia to acquire nuclear technology for a fleet of submarines.

Australian National University defence and strategic studies analyst Hugh White said China retaliating to the agreement could not be ruled out.

"That is a very big deal indeed, full of risks and certainly changing the way Australia approaches the region," he told ABC radio on Thursday.

Professor White said it would be seen as a further demonstration that Australia had sided with the US in the face of a rising China.

"It will further amplify the already very loud signals that are being sent that we are seeing a new Cold War in Asia," he said.

The trilateral pact would serve American interests by giving a key ally stronger submarine capacity in the Pacific, he added.

"In the escalating rivalry between America and China, we're siding with the United States and we're betting they are going to win this one," Prof White said.

"The Chinese are making things very difficult for us.

"But the fact is, that when we look 10 or 20 years ahead, I don't think we can assume the United States is going to succeed in pushing back effectively against China."

The deal paves the way for Australia's troubled $90 billion submarine deal with a French company to be scrapped.

Prof White said describing the deal as dysfunctional was a mild assessment.

Australia will become the only non-nuclear armed country in the world with nuclear-powered submarines.

Prof White said the fact that the UK needed American permission to share the top-secret nuclear technology was behind the trilateral nature of the deal.

It showed how seriously America was taking the need to "muscle up" in the Asia-Pacific.

"I don't think there'd be any chance of the UK or US sharing nuclear sub propulsion technology if it were not for China," he said.

"It's a very significant enhancement, you might say escalation of the cooperation of between the three in response to the China threat."

Australian Strategic Policy Institute executive director Peter Jennings said China's bullying and coercion had led to the deal.

"We should call the first submarine in this new category the Xi Jinping (after China's president) because no person is more responsible for Australia going down this track," he told the ABC.

Foreign affairs commentator Keith Suter said Prime Minister Scott Morrison had made one of the most significant international relations announcements in decades.

"It's clearly part of America's sort of ganging up against China, which will feed China's paranoia," he told the Seven Network.

"When the Chinese look out on the world, they are surrounded by countries that are antagonistic towards them. That is a problem."

Australian Associated Press