Austin issued the directive after receiving a classified document from a China Task Force he set up in February to look into the challenges posed to the United States by Beijing.
"The efforts I am directing today will improve the department's ability to revitalize our network of allies and partners, bolster deterrence, and accelerate the development of new operational concepts, emerging capabilities, future force posture and a modernized civilian and military workforce," Austin said in a statement.
Specific steps under Austin's plan are secret, but in testimony before the Senate Armed Services Committee on Thursday, the defense secretary said the proposed $715 billion Defense Department budget focuses on "matching the pacing challenge that we clearly see from the People's Republic of China," so it includes "more than $5 billion dollars for the Pacific defense initiative" in 2022.
Overall, the five-year initiative aims to provide billions to upgrade US forces around the region, including the Aegis Ashore missile defense system for Guam, new radar defenses for Hawaii; more intelligence and reconnaissance assets; more munitions; more Navy, Air Force and Marine troops in the region; and more training and exercises with allies and partners.
Questioned by Sen. Dan Sullivan, R-Arkansas, on whether the Defense Department was prioritizing China or distracted by other issues such as climate change, Austin was adamant.
"The most significant military threat that we're focused on -- and you've heard me say this probably 100 times senator -- is China," Austin said.
US military commanders say China is assembling an increasingly offensive military and expanding its regional footprint, as it steps up efforts to supplant American military power in Asia.
Taiwan played prominently in Thursday's hearing, with Sen. Josh Hawley, R-Missouri, asking the top US uniformed military leader if US forces could defend Taiwan in the event of a People's Liberation Army invasion to take control of the island.
"I can assure you that we have the capabilities if there were political decisions made in accordance with the Taiwan Relations Act," said Gen. Mark Milley, chairman of the Joint Chiefs of Staff, in response to the senator.
Hawley is a staunch supporter of Taiwan and last year introduced the Taiwan Defense Act, a bill that would require Washington to maintain the ability to defeat a Chinese invasion of Taiwan. The bill died without receiving a vote.
Though the Taiwan Relations Act -- US law since 1979 -- does not state outright whether the US will intervene militarily should China attack the island, it does mandate that Washington "maintain the capacity of the United States to resist any resort to force or other forms of coercion that would jeopardize the security, or the social or economic system, of the people on Taiwan," as well as providing Taipei with defensive weaponry.
The US military's ability to defend Taiwan has come under increasing scrutiny as China has built up and modernized its military, including adding platforms and weaponry US military leaders have described as aggressive in nature.
Milley told senators on Thursday taking Taiwan by force would be no easy feat for China's People Liberation Army.
"If you're talking about a military invasion in Taiwan, crossing the straits, the Taiwan straits with a sizable military force to seize an island the size of Taiwan against the military that they have, and the population that they have, that's an extraordinarily complex and difficult operation if, against an unopposed force, that's a very hard thing to do," Milley said.
But Hawley pushed the general on whether the US could militarily block an invasion of Taiwan if Taipei could not resist on its own.
"Yes," Milley replied.
While Taiwan was a focus in Thursday's hearing, a report from a prominent Washington think tank earlier in the week cautioned that the US will need to take a broader approach to countering increasing Chinese influence in Asia and globally.
"As the competition intensifies, US military planners may need to expand the portfolio of possible contingencies involving China beyond such traditional hotspots as Taiwan," said the report, titled "China's Quest for Global Primacy," from researchers at the RAND Corp.
"Chinese success in establishing itself as a principal arbiter in Middle Eastern affairs, as the main sponsor of Africa's economic development, and as a major partner in Latin America could result in a severe weakening in the strategic position of the United States as a global leader and undercut its position in the Indo-Pacific theater as well," the report says.
But the RAND report also said the US maintains strong advantages that it should nurture, including supporting allies and partners.
"The People's Liberation Army (PLA) remains an unattractive partner for many countries, especially in Asia," the report said.
"And the (Chinese) military's lack of power-projection capabilities limits its ability to provide the public security goods that helped make US global leadership so successful," it said.
And that goes back to Austin's China Task Force recommendations.
"The most noticeable effort for service members will probably be in outreach to allies and partners. Military-to-military relationships are part of this outreach and there will be more exercises with allies and partners," a Defense Department report on the task force said.