Donald Trump is "surprisingly" good at foreign policy, according to former prime minister Paul Keating, who says the United States was directionless under the previous three administrations.

Keating on Friday said he had not expected Trump to have "such a pragmatic" foreign policy on China and Russia, and he urged the president to continue down the path he was on.

"America has gone on for 24 years without a strategy," Keating told a business conference in Sydney, during which he criticised Barack Obama's timidity and "lack of policy ambition" in office.

"Trump has, surprisingly - and I hope he maintains this - put his hand up for the right policy."

Advertisement

Keating credited Obama for avoiding major conflicts and underwriting some of the US's economic recovery, but argued he failed on the world stage.

"In terms of the big game, we lost two more terms," he said.

Keating described Bill Clinton as a "domestic politician" who missed the opportunity to remake the world after the fall of the Berlin Wall.

"We lost two Clinton terms as these huge changes in the post-colonial world were taking place."

He also criticised George W Bush for blowing two presidential terms attempting to "propagate American values in the Middle East".

"Meanwhile China is growing in the east," he said.

The former prime minister described Bush's deputy secretary of defence Paul Wolfowitz as "dreadful", and warned the US against attempting to remain a homogeneous power in Asia.

"The Chinese will never accept it - we'll have military problems, confrontations," he said.

"It will all come unstuck."

Keating argued the US should be a "balancing power" in Asia and learn to relinquish some control of the region.

Trump's strategy of using partnership diplomacy with China was a better approach than what Democrat Hillary Clinton would have adopted if elected, he added.

Keating said Russia had the power to "obliterate" the US, and urged Trump to maintain a workable relationship with the Kremlin.

"Russia alone has the capacity to obliterate the United States. If you're a country that lives under the threat of obliteration, you generally should have a policy."