Distinguished Leaders on Asia: Kevin Rudd

HOUSTON – Asia Society

29 May 2015

 KEVIN RUDD: It’s good to be here in Texas, I feel very much at home in this part of the world. I know you’ve had some pretty awful floods and I come from a part of Australia where that’s pretty much part of our life. When it gets real bad it gets really bad but communities come together and that’s certainly what I remember from my time as a child right through to the time which the river that flows right through our state capital, Brisbane, burst its banks only a few years ago and we had our largest flood in a century. It affects communities in huge ways so my solidarity with all of you here in Houston and those who have suffered loss as a result of these floods. This is a spectacular building and Charles I gather from all those who have briefed me in New York, New York that you have been one its principle driving forces as Chairman. So as we’d say in Australia, hats off to you mate. You’ve done it really well and this is an extraordinary building and the closest I have seen to it is the centre of the Asia Society in Hong Kong where our Chairman Ronnie Chan, globally, has been the driving force for over a decade in building an extraordinary centre there which is not just the Asian headquarters of the Asia Society but has also become an extraordinary centre for the civic life in Hong Kong. And I’m sure that here in Houston as the years roll by, and I’m sure it’s happening already, the place to come for civic occasions will certainly include this Asia Society centre here in Houston in Texas.Having grown up on a farm we had beef and dairy. Anyone here come from a cattle ranch in Texas? Good. You’re in a minority. How many head of cattle did you have? (This is a very Queensland-Texas question). One thousand. Okay, you had more than us. I’ve been in politics and you never misled knowingly. My father came out of the Second World War as a man with no education and I think that was very much the lot of that generation of Australians and I think many people in the United States as well. So he only had these two things to work with – the left hand and the right hand. So he left the wheat belt of South Western New South Wales and travelled north to my home state of Queensland, met my mother and married. His first job was cutting sugar cane by hand which is tough work if you’ve seen it done. He scraped together enough money to put together this property. As a child growing up I just remember the sheer delight of being able to grow up on the land with vast spaces. It’s a very liberating experience for a kid and I’m always sad that so many kids of this generation in this country and ours don’t have that experience. It widens your horizons and it gives you a sense of resilience and confidence and I think a deeply engrained sense of practicality. Because I think unless you do it with those two hands it’s usually not going to happen. I remember sitting, however, on a horse with my father. I must have been about the age of nine or ten and part of my job was to go and fetch everyday the cattle for milking. We had about 150 or 200 head of cattle. And it was a fairly easy task if you know anything about dairy cattle – they know when it’s time to be fed and basically there’s a Pavlovian response but my job was to make sure there was no stragglers.So I met my father up in the top corner of the – we call them paddocks, I’m not sure what you call them in this country? Field, paddock? It’s a paddock, right. I’m constantly told in New York that I speak a different dialect of English so when I see looks of general bemusement on people’s faces I then go into interpretation mode. So we’re up at this far paddock from the house and where the milking facilities were and out of the blue my father says to me, looking down from what I thought was this giant horse upon which he sat (because I’m nine or ten years old) and he said to me, “Kev, have you made decision yet?” This was a very searching question and you’re not quite sure what your father is getting at and what he actually knows about you that you thought he didn’t know about you! So under those circumstances always plead the Fifth and so I said, “I’m not quite sure what you mean Dad?” To which his response was, “No, you know. Have you made up your mind yet? The big decision in life.” I said, “Dad I just don’t know what you mean?” He said, “The big fork in the road that lies ahead of you, which way are you going to go? What will your choice be?” And I said, “Dad I don’t know what you mean?” As a kid of nine or ten you look down the road and you don’t see a fork in the road, you see a straight road and so what the hell is he talking about? He said, “No, this fundamental decision that you’re going to have to make about where you go in the future – this way or that way? Kev, for you is it going to be beef or dairy?”That’s when I discovered an interest in China. The thing you worry about most growing up with cattle is when you start talking to them and when things get really concerning is when you think they start talking back to you. So having grown up in that environment I thought it was not quite the environment for me. My mother who was not educated either, she’d been a nurse during the war attending many of your ex-servicemen in Brisbane which was MacArthur’s headquarters in the Pacific for some time. She’d not had the opportunity to get much past primary school and neither had my father. But she had this great and passionate belief in the value of education and so as a young kid growing up on this farm not quite in the middle of nowhere, but not far removed from the middle of nowhere, she would always feed me books. I remember her giving me this book, again when I was about ten or eleven years old, on classical architecture and she was keen that her son did not pursue a life on the land because she knew just how hard and difficult that was. And I just became fascinated by this world I didn’t know anything about which lay beyond the boundaries of rural Queensland. As I poured through the pictures of the Pantheon, the Parthenon, Ancient Egypt, Thebes, Memphis, Mesopotamia, the Kingdom of Ur and the rest and in the very last page they had the Forbidden City in the middle of Beijing. And I looked at this picture, it was just one picture, and I thought I thought, “That is seriously neat!” Just like an uneducated kid from nowhere. Looking at the sheer elegance of the design of a classical Chinese roof and then replicated a thousandfold which is what you see across the roofs of the Forbidden City, for those of you who’ve been to Beijing and looked down on the city from what’s called ‘Cold Hill’ from the Northern side. And that’s what began this kid’s level interest in what the hell was going on that part of the world? How did it produce such a radically different aesthetic to what we were used to in the West, and certainly in my part of the West down there in rural Australia?The next thing I remember my mother handing me was, in fact, a cutting from a local newspaper which was dated in 1971 and the headline of that newspaper read, “China Admitted to United Nations: Taiwan Kicked Out.” That’s what it said. So my mother, again never having really been past primary school, walks into my room which I’m allegedly doing some homework and hands me this cutting and then she says, “Read this it’s going to be very important for your future.” There’s something about rural women I think – they kind of have this deep wisdom about things. They read what they can, they listen to the radio, they try and distil. And, of course, being a dutiful son in a hierarchical family in rural Australia you always do what your mother says, right guys? But I did actually read it and so that added a new dimension to my fascination.So after high school and because of reforms by the then Australian Labour Government kids like me who had no financial background, it became possible for us to go to university for the first time. My mother had saved all her life to get me to university. A change in government policy made it possible for kids with no money to get there. So I was a beneficiary of those reforms. And I elected to go to the Australian National University to study Chinese and that’s how it all came about and having been there for five years and graduating with half-reasonable Mandarin. I then discovered in the 1980s in Australia at that time you’re essentially unemployable. You study classical Chinese, modern Chinese, Chinese history from classical times to modern times, Chinese literature, Chinese philosophy, Chinese aesthetics, we even did a year of Chinese painting and calligraphy except that mine was appalling. Aesthetics has never really been a big thing for me in terms of my ability to execute.It then became plain to me that the only place I could possibly get myself employed was in the Australian Foreign Service. And to my great surprise, not knowing a single soul in the Department of Foreign Affairs, I was admitted and became an Australian diplomat. Of course, a bit like the State Department, if you arrive there with a knowledge an exotic and important language like China at a time where Deng Xiaoping has just returned to the political stage, the Chinese economic reform process is just underway and there is a fundamental shift in China’s direction from that which we had observed with some horror in the 60s and 70s through the ravages of the ‘Great Leap Forward’ and then the ‘Cultural Revolution’. This was a time when foreign services were beginning to pay attention to developments in the Middle Kingdom so the Australian Foreign Service said, “It’s terrific we’ve got you on board, we need first-class Mandarin speakers, we’re glad that you’ve got this expertise and that’s why we’re going to send you as Third Secretary to our Embassy in Sweden.” There’s not a lot of Chinese spoken in Sweden, I don’t know if you’ve been there. Back in those days there wasn’t even a single decent Chinese restaurant.So having spent several years in Stockholm and having just married my wife Therese we came out of there with enough Swedish to sound like a decent imitation of the Swedish Chef from the Muppet Show and some slightly rusty Chinese. But the long and short of it is that we ended up in Beijing and lived in China for an extraordinary two or three years when the reform program, which continues today, got going in earnest. So I have been in and out of China now for 30 years, most years for 30 years, in one capacity or another – either as a student or a diplomat, later as a businessman then as a member of the Australian House of Representatives, a State Government official for a while and then as Foreign Minister and as Prime Minister, and now as Joe Citizen. And it’s been an extraordinary journey to observe how this country has changed and it’s something that has intellectually fascinated me from the beginning.But China for all of us is not just a matter of intellectual fascination, China matters for all of us everywhere in the world. It matters for the 1.4 billion people who live there. It matters also for the 5.5 billion people who live elsewhere. It matters in terms of the air we breathe. It matters in terms of what happens to the future of the planet in terms of climate change. It matters in the geopolitical stability of East Asia and the West Pacific. It matters in terms of the global economy, given that the largest increment of economic growth each year now comes out of the growth in the Chinese economy despite a recent slowing in that growth. And so the China-factor is no longer an object of abstract intellectual curiosity. The China-factor is real and it’s mainstream and it affects all of us in fundamental ways. I recently did a Ted Talk on China. I don’t know if any of you watch Ted Talks, they’re watched around the world apparently. I didn’t know them until they invited me to do one. But in doing this Ted Talk we were asked in 18 minutes to summarize everything that’s happened since the beginning of time and to be funny about it on the way through.I sought to present the worldwide audience with a very simple fact and that is, when China becomes the largest economy in the world (and by one measure it already is, that’s parity purchasing pricing and by one it’s not yet which is market exchange measures) – but when China becomes the largest economy in the world and by that latter measure that will occur in the next decade then it will be the first time since George III was on the throne in England that the largest economy in the world will be a non-Western country, a non-English speaking country and a non-democracy. If you look at this country’s occupancy of that position from the 1860s and 1870s to the present, and prior to that by Great Britain. So anyone who thinks, therefore, in the world at large today that this deep change will not have significance for the rest of the world is deluded. It is quite profound, the nature of the change that we are now living through. There is often an assumption for those who are not students of history that, frankly, life is just a rolling set of continuities and you don’t have deal with large-scale change, change is only incremental. I think we are privileged and challenged to live through a time when that assumption is so fundamentally being challenged itself.John D. Rockefeller III, when he set up the Asia Society in ’56 or ’57 was an extraordinary visionary. Obviously I never met the guy but I knew the name, he was reasonably famous. And prior to becoming President of the Asia Society Policy Institute I’d spoken at the institution many times over the years in New York either as Foreign Minister or Prime Minister or in other capacities. But I’d never really looked at the history of the institution. And when John D. Rockefeller III was planning to establish the Asia Society in ’56-’57 before I was born, he delivered a speech here in Houston on December 14^th, 1955. Rockefeller emphasized, and I quote here, that “However much knowledge Americans possessed that might benefit others, they needed to be as willing to learn from other people as we are to assist them.” Furthermore, Rockefeller stated that any ideas shared with other nations or their citizens should be shared freely, “as we cannot impose our ideas or way of life on other peoples.” The danger, he concluded, amounted to an, “unhealthy case of hubris.” He noted that, “we sometimes give the impression to others that we think their problems would be solved if they adopt our system in its entirety.” In contrast, Rockefeller emphasized, “As we work with others we must recognize that no people or nation should be expected to conform to a pattern of life other than that of their own choosing.” Now for someone in the mid-50s, in the middle of the Cold War and when Senator McCarthy was an active force and becoming a more active force in American politics, these were remarkable observations for someone of his standing to make. And it certainly incorporated within it the spirit which he subsequently reflected in the institution of the Asia Society itself.People often ask me, “Well, what is this thing? Do you collect a bit of porcelain or what do you do down there at the Asia Society?” Consistent with Rockefeller’s vision, my best way of explaining it is as follows, we the Asia Society see ourselves as the bridge between the various countries of Asia and this country, the United States, and the United States through the collective West. If you look around there are not a huge number of bridges over that period of time, the last 60 years, this has been one of the few continuing ones and in its history it has sought to bring together different peoples, different cultures, different historical traditions around common tables. Around one level of discourse or another – whether it is about civilization or its about politics through the Williamsburg series of conferences or through other processes. And if you dig deeper into that again the way in which I’ve sought to conceptualize it, as I’ve now been asked by the Asia Society to establish its first think-tank, is we in the Asia Society take as our number one organizing principle – how do the individual countries of Asia think about a given policy problem or challenge in the world, why do they think that, what is the basis for their approach, to what extent is it malleable (that is, changeable), to what extent is it fixed, and having done that where are the intersecting points of interests and values with the rest of us including the United States?Often in think-tanks in the United States, legitimately, they see themselves I think as broad extensions of the US foreign policy process in Washington. And I understand the discipline well and I’ve been a head of government and the virtue of people coming in and saying, “Prime Minister, you should do X, Y and Z not A, B and C to further the Australian national interest.” Well I understand, therefore, how institutions in Washington and others in New York and other centres in the United States do the same. You have a very rich array of think-tanks in this country which do that and do it very well. But I haven’t found one yet which takes its organizing principle as saying, “Let’s understand how the other guy thinks.” Whether it’s Korea, whether it’s Japan, whether it’s China, whether it’s Mongolia, whether it’s Kazakhstan, whether it’s India, whether it’s Burma, Myanmar, whether it’s Indonesia or whether it is Laos. Because each of those societies, each of those polities, is indeed ancient and articulates sets of values and interests which don’t necessarily follow the way of thinking which we take to be normal here in the United States or more broadly in the West.As I’ve said often in speeches over the years, the beginning of wisdom in international relations is to understand how the other person thinks. This is not an alien business to those of you in business. The beginning of wisdom in business is to understand how the other person thinks, what they hold to be true, what they hold to be dear, what values they have, what interests they seek to defend and articulate and to what extent are they malleable, that is, to what extent are they capable of engagement and compromise and to what extent are they not? So what we seek to do now through the Asia Society on a broader canvas is to look at the big challenges of our day – whether it is the future of free trade in Asia, whether it is the future of carbon emissions in North Asia, whether it is the security dilemmas of the South China Sea. We seek to understand to the greatest extent possible how these are seen, first and foremost, through local eyes and why. Then there is a second piece of analysis which is, and where do US values and interests line up? And thirdly, how can these two sets of realities be brought together? That, we see as our credo in the Asia Society and the Asia Society Policy Institute which I am pleased and honoured to lead.A few more thoughts about China itself and then I’m happy to open up to whatever questions you choose to ask and those which I then may seek to evade. I’ve been trained in politics, we know how to evade the really hard ones. In the work I’ve done in the last twelve months I’ve lived in the United States, and that’s all been at the People’s Republic of Cambridge Boston – which I’ve discovered is not exactly the same as Texas. But with a great university, Harvard University, working at the Harvard Kennedy Centre at the Belfer School with Graham Allison and some extraordinary minds – Joe Nye and the leaders of international relations debate in so many centres across the world and many recently departed officials, or should I say retired officials from administrations around the world. It’s a great collection of brainpower. They asked me to do one thing – to spend last year, 2014, looking at the single question of alternative futures for US-China relations. Rather than assuming it was just one. Because I have been an active student of China for 35 years or more, going on 40 years now, and certainly been a practitioner of diplomacy as it relates to Chinas as well in one capacity or another. I thought this was actually an important year to spend as the interests and values of China and the United States come together, rub up against each other, irritate the hell out of each other from time to time but are still able to produce common paths of cooperation at the same time as well. And all of the above put together. And so the work that I produced, which if you’re interested is on the Asia Society website, it’s called ‘US-China 21: The Future of US-China Relations, Constructive Realism for a Common Purpose’. What do I mean by that? A few words on that and then I’ll close and throw it open to Q and A.Constructive, realism, common purpose. Let’s start with the ‘realism’ bit first. Students of international relations or practitioners of international relations or if you’re just a person out there in business doing practical things, realists are basically those who assume that you’re in a highly competitive environment. In the case of international relations, that you’ve got nation states deeply safeguarding their core national interests against one another and the best way of preparing for any fundamental threats to those interests is through their military capabilities and their development and concentration and, if necessary, their deployment over time. That’s what realists think and do. So when I talk about realism in the US-China relationship it lights up a whole lot of lights both in Beijing and in Washington, within the beltway and certainly within the foreign policy establishment of Washington about what you’re talking about. Which is, here are the big realist or realistic disagreements between the United States and China right now.It’s always easy to list them. Much harder to solve them but very easy to list them. You start, of course, with the enduring problem of Taiwan. You go to now the conflicting territorial assertions in the East China Sea between China and Japan and to a lesser extent between Japan and Korea and even between China and Korea. Then you move to that which is in the news at present in the South China Sea where you have six sets of claimant states or entities including Taiwan. Then, of course, you have other realist disagreements and challenges between the two including different postures or perspectives on the future of the Korean Peninsula and what happens with the regime in Pyongyang. You have different and realist and realistic differences on the rule of law, human rights and democracy. These are familiar topics for those of us who study US-China relations. They’ve been around from the beginning and they’ve been part and parcel or every set of exchanges since Henry Kissinger first lobbed into Beijing back in 1971-72, as Henry told me again last week when I exchanged notes with him in New York. Often, however, what I find in the attention that people dedicate to the US-China relationship is the list of strategic difficulties becomes the exclusive focus and parallel to that the economic and commercial problems, the whole issue of cyber security, allegations of cyber theft as well as traditional arguments about the sanctity of copyright and trademark and patents. Those have been around for a while too although the cyber dimension is new.These represent quite fundamental disagreements, but why I say a possible framework for the future of the relationship is one of constructive realism is because the other half of reality is, in my judgement, equally important. That is, what the United States and China are doing together and can do together and could do together further in the future at a larger scale in order to build political capital and diplomatic ballast into the relationship over time. Bilaterally, there’s a bucket load of things that China and the US could be doing together and are doing together. One which is currently before the administration here and will be before the government in Beijing is the bilateral investment treaty. But there are a large number of others as well. Regionally, there are common challenges which China and the United States face and they have common interests in dealing with these challenges, not least of which is the proliferation of natural disasters across East Asia including in China itself. Globally, China and the United States have a deep and vested interest in there being a functioning global order because in the absence of order, great powers in the world find it very difficult to operate. And so if you look down the positive side of the ledger whether it’s the expansion of bilateral trade and bilateral investment, whether it’s regionally working on a range of confidence and security building measures, working on a range of initiatives to deal with disasters when they hit, or globally to deal with massive dysfunctions in the global order, for example, the non-performance of the World Health Organization in the recent Ebola crisis in South West Africa – which could frankly happen in any part of Asia any day, could break out in Myanmar, could break out in Pakistan and what then happens? But if you look at these common areas of constructive engagement they are huge but under-deployed in my argument.Realism, constructive engagement and the third basket I said was common purpose. I’ll finish on this – what’s the ultimate common purpose between China and the United States? I alluded to it before. Those of you who are familiar with the Chinese tradition know that there’s one set of words which ultimately terrify Chinese political leaders. It’s the prospect of their country ever degenerating once again into chaos. The Chinese words are [CHINESE], which is, “chaos under heaven,” or “creating chaos.” Because China has seen a fair bit of that in period from the Opium Wars through to 1949 and then again they saw lots of chaos during the Cultural Revolution. This lights up a whole lot of lights in China’s mind. You might say, however, “Well what does that have to do with the global order, isn’t that just China domestically?” To which my answer is, when China looks to the world at large it also sees the evidence which we see which is chaos in the global order. When you start to see outfits like ISIS and ISIL threatening the fundamental viability of nation states whether it is in Syria or it’s in Iraq and look at their proposed extension of their Islamic caliphates from one end of the Middle East to the other, when you look at what Boko Haram are doing in Central West Africa, when you see what al-Shabaab are doing in Somalia, when you’ve seen what Jemaah Islamiyah and others are doing in South East Asia and the Indonesian archipelago, when you see what al-Qaeda is still doing in various parts of the world and now you see the extension of those terrorist activities into Western China and into Xinjiang and through Xinjiang into the Chinese capital itself, Beijing – terrorist attacks there and also terrorist attacks in Kunming – we face a global problem. And China and the United States face this problem together because these terrorists – ISIS and ISIL are just one set – militant violent jihadism is a threat to the other of states and is now a threat to China as well in terms of what is unfolding in its Northwest. It is certainly a threat to the geographic map drawn across the Middle East after the First World War with the Sykes-Picot Accord. So it is that but other deep threats to, let’s call it, the global order. Even cyber security – cyber got out of control and cyber attacks got out of control and we’ve seen what North Korea is capable of in recent times. This has a fundamental capacity to undermine the stability of states. I see cyber as the next weapon of mass destruction in terms of its ability to, by apparently non-violent means, to close down a city, killing its essential infrastructure by flicking a switch. But beyond that again think through what’s happening in terms of global pandemics. What will be the next generation of global pandemics and, given our depleted stocks of antibiotics and what is happening in research of antibiotics, where does that leave us going into the future as well? And so the list goes on.So my concluding point is, yes, there are a bunch of fundamental disagreements between China and the United States and I’m realist enough to accept that they exist, as to people both in Beijing and Washington. There are equally a much longer list of cooperative enterprises between the United States and China – bilaterally, regionally and globally – which not only can be done but should be done and over time are capable, as I said, of building greater levels of strategic trust between the two countries. The third element which I think is new is that the external threats to world order itself which China and the United States now see and other countries around the world including my own see as well, that there is a new potential consensus to make sure we have a sustainable and strong global order to deal with these external challenges to order itself. For those of you who’ve seen a bit over the years, and our parents or in some cases around the room our grandparents who’d tell stories of the Second World War – it is quite a recent phenomenon in history, in fact, post-’45 that we have seen a global rules-based order. Prior to ’45 there wasn’t one. There was a half-baked attempt with the League. But prior to the League of Nations in 1919, the so-called ‘Concert of Europe’ in the 19^th century was an absolute misnomer. Massive wars across that continent, quite apart from colonial expansion from all countries apart from the United States across the developing world. And prior to that, centuries of the Wars of Religion. So the phenomenon of having a global rules-based order is a recent one in history and it is not automatically, by a process of magic and mystical powers, self-sustaining. Nations have to work together to make an order work. That’s what they did in ’45 – they got together in San Francisco under first the Roosevelt Administration and then the Truman Administration. And that’s what we have sort to do in the period since then. So unless we as major powers in the world, by which I mean the United States and China, recognize the value in sustaining the global rules-based order given the external threats to order itself which are emerging, including again energy security long-term, then I fear that the future may be a perilous one.So the ideas that I have put both to the administration in Washington and through the Chinese translation of the 40 or 50 page report which you’ll see online in Beijing is along these lines. And it’s me simply seeking to be a helpful Australian from a diary farm; a rural Queenslander trying to help a little bit at the margins. I thank you for your attention. HOST: Thank you Mr Rudd. Mr Rudd has been gracious enough to allow us about fifteen minutes for question and answer. So we have two staff with microphones that will be in the audience. Please raise your hand and keep your comments to questions please. Go ahead and state your name and affiliation please. RUDD: Abuse is okay as well, I’m used to that in politics. AUDIENCE MEMBER: I’m Chase Untermeyer, global businessman. Thank you, Mr Rudd, for your presence here. Could you talk a little more on the South China Sea conflict? As I see it, China’s attitude is more than just territorial about certain specks of territory but with the so-called nine-dash line essentially claiming the entire sea as sovereign territory. Is that a correct interpretation and, if so, what are the implications for other countries? RUDD: I think a bit of history is always useful in answering complex questions like this. The first is, the nine-dotted line so-called, is not an invention of the Communist Party. In fact, it was first framed by the nationalists back in 1948. This actually is a real dynamic in the current debate. Why do I say that? Because in the dynamics of the internal politics within China, the idea that you would pursue a softer position than the claims of the Nationalist Part in 1948, doesn’t fly politically back home. That’s one factor. I’m seeking to describe here, not to defend. I’m trying to describe different points of view. That first point is actually a deep point in the minds of the Chinese administration about its historical legitimacy. It’s in part an extension of the Chinese view that it has on the long-term status of Taiwan. No Chinese leader in Beijing can survive if they were to kiss goodbye to China’s claim of sovereignty over the island of Taiwan. It does not pass muster. The fact that the maps of China including Taiwan go back so many centuries and, by extension, you have the pre-’49 maps if you like of the South China Sea.Secondly, people often seek to analyse what is it about the resources in the South China Sea that would animate this level of activity, not just by China but by the other claimant states. I hasten to add here, a voice of authority on the question of hydrocarbons. I’m in one of the hydrocarbon centres of the world, it’s called the state of Texas, and when it comes to oil and gas I’d defer to the expertize around me. I would, however, be bold enough to say that I do not think that the principle driving factor in China’s deep interest in their territorial claims is hydrocarbons. I think to be fair to the Chinese they have offered over a period of time to their Southeast Asia partners to have joint extraction exercises and share the revenue from whatever is pulled up from the ocean floor. So another school of thought says that the Chinese interest and the competing interest for that area must be to do with protein, given that it’s an enormous source of fish stocks and fish stocks represent a very large slice of China’s overall annual protein intake. When you look at the extent to which fish stocks are now challenged around the world in terms of their size, their sustainability and their quality, given what we’re doing as a planet to the health and wellbeing of our oceans. Then does that add up to a sufficient reason for China to do this? I’m not sure it does.Therefore, when I look at this, what I tend to see is a long-standing nationalist view which goes back to the pre-’49 period and goes back to the accepted core interests of China under the Chinese Communist Party leadership of today. Now on the other side of the ledger, you’ll find no single Southeast Asian state will accept any of those propositions, as we know. When you look at the map, as I’ve said to my Chinese friends on many occasions, it doesn’t actually give a good impression when you’re seeking to lodge a claim down to effectively the high-tide point on the coast of the Philippines or wherever. Certainly if you’re the government in the Philippines, the government in Vietnam or any of the other claimants – be it Brunei, Indonesia or Malaysia, and of course Taiwan itself – then they all have a different perspective. And if you look at the map in detail, the intersecting claims represent – frankly, the biggest overlap in the intersecting claims is between Vietnam and China, the second largest is between the Philippines and China and the others are relatively small by comparison.Two final points about the above is that I always have concerns – on the question of land reclamation I should mention this. Land reclamation which the Chinese have advanced significantly in the last twelve to eighteen months has not been an exclusive Chinese exercise. Vietnam has initiated land reclamations in the past itself. Of course, the Chinese are doing it at considerable scale. So where does the future lie? What I say in the report and it is welcomed by some and opposed by others – the one that I’ve just released about a month or so ago – is that it would be very useful, given the stakes involved in this if the contending parties could actually use an instrument which has solved so many disputes elsewhere around the world, namely, the United Nations Convention on the Law of the Sea and the UNCLOS Tribunal which is established for these very purposes. Or the International Court of Justice which has determined terrestrial boundaries in the past. But I say this as a sobering conclusion to an American audience, when I put this to the Chinese they have one response. That is, “Why should we apply UNCLOS to this jurisdiction and the resolution of these disputes when the United States Senate refuses to ratify the UNCLOS treaty?” So we get back to square one. So it is full of complexity. As I said, there are radically different views along the lines that I’ve just described but if any of you are talking to a Senator, let me tell you it would be very helpful, given the United States in reality on the ground adheres to UNCLOS principles in what it does, to then go to the next and logical step which is to ratify UNCLOS and thereby establish it unequivocally as the global normative mechanism to determine international territorial and maritime claims. AUDIENCE MEMBER: My name is Yu Minjiao, I’m with the Deputy Counsel in Houston representing China. I’m glad to hear what you are saying. China-US relations are actually quite multifaceted. On the one hand our two nations, two peoples are working together to solve the regional and international challenges. On the other hand China and the US have so many differences which regards to human rights, economic conflicts and also, as you mentioned, the maritime issues. Some people ask why China-US relations are so complicated. The main reason is that there are misunderstandings and mistrust between the two people. RUDD: Deputy Counsel you’re supposed to ask questions not then answer them! (LAUGHTER) AUDIENCE MEMBER: Okay! My question is, do you have any advice for our American friends on how to solve the mistrust between the two nations. And my second question is – RUDD: I’ll have some advice for our Chinese friends as well. AUDIENCE MEMBER: Okay, sorry. Once Dr Kissinger said something like, exceptionalism between China and the US when dealing with international affairs. So what do you think of this exceptionalism? Thank you. RUDD: Well let me go to the first question first. The responses I get to the question of “trust”, mutual trust or [CHINESE] is identical in the Pentagon and the PLA, the People’s Liberation Army. As various Chinese generals have said to me over the years, and their counterparts in the Pentagon, and one said to me recently, “Strategic trust is much over-rated, that’s not the way nation-states behave.” Certainly the baseline approach that I encounter when I deal with colleagues at the Chinese Academy of Military Sciences and the Chinese National Defence University and elsewhere is that when you ask colleagues from China, “Do you base your national security strategy on principles of strategic trust as it relates to external parties?” The answer is usually no. The reason is born out of Chinese history where you’ve had so many border conflicts over so many centuries, either in the north or elsewhere across the border too. Chinese military planners, like all military planners, make worst-case security planning their business and that’s what they do around the world. But here’s the problem – if that actually becomes the dominant orthodoxy within governments as opposed to within militaries then there is a danger that that sort of worst-case planning against each other becomes a self-fulfilling prophecy. In other words, everyone simply adopts a mental posture and an intellectual posture that, in fact, the interests and values are so deeply engrained in conflict that it’s not simply a case of if there will be conflict between two states but when.So, why do I put forward a different framework? I don’t know if you’ve had a look at this report that I’ve written but what it seeks to do is acknowledge all those realities and say those exist with one common principle underpinning them which is that the common protocol between both sides should be not to allow any one of those individual security disagreements to destroy the entire relationship. Then, on the other side of the relationship, which needs a lot more energy devoted to it, is what I’ve described as the constructive side of the relationship. And in the report that I’ve written you’ll see 21 specific recommendations – bilateral, regional and global – which are not farfetched but are difficult. But if there’s political will they can be done. So when I say over time then it’s a bit like a relationship. I don’t know you at all but if we had a cup of coffee afterwards (which we probably won’t because I’ve got to fly to London but next time I’m down here we probably will), we get to know each other and what happens after several years? Levels of comfort begin to emerge. Like any other human relationship or relationship between states and governments. That is a long way from absolute trust but there are levels of comfort and what I describe as ‘political capital’ or what I also describe in that report as ‘diplomatic ballast’, that is, stuff that is able to underpin and stabilize the relationship in difficult times. Which can then be drawn upon – having gone through one, two or maybe 21 exercises of strategic engagement – you have enough political resources then to draw upon to deal and resolve some of these fundamental strategic disagreements which are impossible to solve just now.So why I put forward this framework of constructive realism for a common purpose is how do you anchor disagreement and prospective constructive agreement within a single strategic framework, rather than seeing one as permanently tearing down the other? That’s my best answer to your question and on exceptionalism, we’ll have a seminar about that another day. AUDIENCE MEMBER: [INAUDIBLE] You said, unless I’m mistaken, that you are realist enough to accept fundamental differences. Does that mean you don’t have the slightest hope that China will become more affluent, that democracy will prevail in the future or that China will accept international laws in terms of Law of the Sea? RUDD: Well on the domestic question of China and its evolution I often use this analogy. When I went to live in China 30 years ago there were no private cars (though I might say that’s a blessing), there were two colours of clothing – green and blue, everyone was told where they were going to work once they finished school or if they were going to university and, if so, which one and what they would study, there was zero opportunity for private international travel abroad by Chinese citizens, China was utterly homophobic in terms of same-sex couples. Then I look 30 years on and I actually see, in terms of the individual personal freedom of individual Chinese citizens, it has changed considerably. I think any fair person would say for the better. You read Chinese newspapers and journal literature about what is going on in China today – yes there is still censorship, the Chinese will happily confirm that to you and it is significant censorship – but the discussion about what I’d describe as wide-ranging social and economic issues is actually pretty broad and is certainly different to the one I encountered 30 years ago when there was ‘a’ view and it was the Party’s view, and you read it and you memorized it and you heard it again. It’s different.On the future trajectory I do not know. I just do not know. I think anyone who assumes will permanently remain in one form of political structure or another is a very brave person to make a projection about such a large slice of humanity. And remember the differentiating factor with China is this continuous pull of at least 3000 years of continuous recorded history, some would say 3000 but at least 3000. Whereas countries like mine, we’ve been kicking around for a couple hundred years. The United States as a settled society from Europe at about 400 years. These are relatively recent innovations. So the pull of history is actually quite strong in China. But where does it land? I don’t know. There are hundreds of thousands of Chinese students currently studying at American universities. That’s going to be the case for a long, long time. The second biggest destination for Chinese students abroad is Australia, in quantitative terms. You have about 200 000 Chinese students here a year, we have about 140 000 or 150 000 in Australia each year. And we’re half the size of California in population by the way. What do all those kids think when they go back? I don’t know. But what I do know is this, the evolution of the Chinese political system will be shaped by themselves internally. That’s how it’s ended up how it’s been in ’49. That’s how it’s evolved and how it’s been for most of the previous centuries as well, apart from the foreign incursions during the Opium Wars. So I think it’s an open question. Next question. Take one there and then I’ll have to zip or I won’t catch my plane. AUDIENCE MEMBER: Thank you very much for your lecture. My name is Elaine Xaio with the Chinese Credit Group. My question is, I want to ask about the way many people talk about Asian Infrastructure Investment Bank and many major domestic countries join as members but we noticed that America didn’t join. I wanted to know how do you think that would affect the relations between America and China, how it affects the international economic orders? RUDD: I think we can get excessively obsessed about the AIIB debate. The bottom-line is I’ve always been pretty sanguine about it. Why? Look across Asia, look at Pan-Asia, look at the Asian infrastructure deficit calculated over the next five years by the World Bank as lying in the vicinity of between US$8-12 trillion. Bear those numbers to one side but it’s a fair amount of cash. And over here you have the World Bank, the Asia Development Bank, the new Asia Infrastructure Investment Bank from China, Silk Road Fund as it unfolds though it has a slightly different nature – it has more of an exercise in private equity as I understand it but it’s also engaged in the infrastructure sector. The combined public capital available through those enterprises would not begin to even scratch the sides of the infrastructure deficit across wider Asia. So my view is the Chinese want to invest $50 billion, $100 billion, $150 billion apart from what is in their sovereign funds or their sovereign institutions – the China Development Bank, the Chinese Investment Corporation – well fine! It develops Asia. And I see there’s been a huge deal recently between Japan and I think a very large project of $100 million-plus elsewhere in the region. I was reading a report about it just two days ago. And then you’ve got the enormous role played by private capital.So what do I see in the future as being on the great infrastructure debate across Asia, I think it is this, because public capital – however it is sourced from China, from the multilateral development banks within the Bretton Woods institutions – public capital is limited. How do we use scarce private capital to leverage much more abundant private capital into large-scale infrastructure projects across Asia by brining down the risk level and providing a sufficient rate of return to make it worth their while against risk considerations. There’s an outfit in in the World Bank in Washington called the MIGA – the Multilateral Investment Guarantee Association or Agreement, I think it’s called. And what it does, specifically on large infrastructure projects funded by the corporate sector, it injects public capital to the extent that it can adjust a projected rate of return from say 12% or 14% which might be perfectly acceptable in a developed economy but not acceptable in a developing economy for a whole series of attended risks. How do you actually get the rate of return up to 20% or 22% through the injection of public capital? Now there are all sorts of complexities, financial complexities, associated with that. But for me the real debate about lifting people out of poverty for goodness sake, is how do we use scarce public capital across the world to leverage private capital to do the job and to do it in a manner which is environmentally sustainable and we don’t all choke to death as a result. Thank you for your time.