The federal government has approved a request from Washington to extradite a former US marine pilot.
Daniel Duggan was arrested in the New South Wales Central West in October, the same week the British government issued a rare warning about China's recruitment of retired military pilots.
The US government issued an extradition request on December 9, alleging Mr Duggan had breached money laundering and arms export control laws.
Mr Duggan denies wrongdoing and has signalled through his lawyer that he will fight extradition.
The matter will now come before a magistrate in January, although Mr Duggan has avenues to appeal, including to the Full Court of the Federal Court, or to the High Court with special leave.
Attorney-General Mark Dreyfus had until Christmas Day to decide whether to approve the request.
The 54-year-old has been in custody since his arrest in October, with a psychologist describing his detention as "inhumane".
Mr Duggan's lawyer, Dennis Miralis, told a Sydney court earlier in December that the extradition request was "doomed to fail".
He said the dual criminality requirement would not be met and his client would have the ability to raise a political objection, due to the nature of the alleged offences, which were intended to preserve America's political and geo-political interests.
"We've also informed the attorney-general [that] one of the reasons why he should not exercise his discretion is because the inspector-general of intelligence is conducting an independent investigation, which has commenced, in relation to Mr Duggan's circumstances," he said.
Those circumstances related to Mr Duggan's interactions with Australian intelligence prior to his departure for China, in China and after his time in China, all of which was relevant, he said.
Mr Duggan, a father of six, is an Australian citizen who lived in Orange, and has renounced his US citizenship.
A petition started by his family — lobbying for his release — described the case against him as "politically motivated".
"Daniel has been caught in a geo-political storm for working in China, doing work that has been done there for decades by Western, African and European pilots for decades, with the full knowledge of these governments," it said.
The matter will return to court in January.
