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A very different view of the impact of the rise of China than that now in vogue in official circles and the military-industrial complex here from the former prime minister and current foreign minister of a country with a booming economy, citizens' rights that remain uneroded by the struggle with Islamist terrorists, and a growing weight in regional and global affairs.
The Hon Kevin Rudd MP
13 January 2012
Speeches, E&OE, proof only
The world today is approaching a turning point of truly historic proportions.
Historical trends are by definition slow to emerge.
They then gather pace, often with a sudden burst of momentum.
Then having gathered their own dynamic, a tipping point is reached, often well before the political community and broader public opinion has fully woken up to the fact.
And so it is with the global economic power of the United States of America.
For the last 130 years the United States has been the world's largest economy.
Within the current decade, that will no longer be the case when China takes its place.
Two weeks ago the Economist almost matter-of-factly reported that China will have a larger economy than America's in purchasing power parity less than five years from now.
And based on reasonable projections of relative real growth rates and the relative values of the US Dollar and the Yuan, China will have the larger GDP as measured by market exchange rates within the next seven years.
2016 and 2018 therefore loom as profound dates on both the global and historical calendars.
US global economic pre-eminence, together with the spread of the political and economic values that have accompanied that pre-eminence, have been with us across most of the modern industrial age.
From well before the collapse of China's Qing dynasty.
Through the First World War. Proving to be decisive in the Second. And ultimately triumphant in the Cold War.
Initially isolationist, refusing to become embroiled in the wars of the European imperial powers.
Subsequently internationalist, the architect of the post-1945 global order, reflected in the UN Charter and the Bretton Woods institutions, but always anchored in the strategic fundamentals of American power.
This has been the deep reality underpinning the political, economic and strategic order for generations, whether we choose to be conscious of it or not.
History teaches us that all power is ultimately grounded in economic power and the economic principles that in turn drive an economy forward.
In the full sweep of history, therefore, we are now on the cusp of profound change.
This is reflected across a range of economic measures beyond the crude calculations of GDP alone.
Once again, these are methodically chronicled by The Economist. Just consider the following measures, both past and projected:
China's net foreign assets surpassed the United States in 2003 (China's net foreign assets of $2 trillion today versus US net foreign debt of $2.5 trillion);
Chinese exports surpassed the US in 2007;
Chinese fixed capital investment took the lead in 2009;
Manufacturing output in 2010;
Energy consumption also in 2010;
The total number of Chinese patent applications granted exceeded the United States applications for the first time in 2010.
Looking forward,
The total value of Chinese imports will be greater than the US by 2014;
Chinese retail sales will outpace the United States by 2014;
Chinese firms in the Global Fortune 500, now half those of the US, will pass the US by 2016;
And Chinese stock market capitalisation will be greater than America's by 2020, leaving Wall Street in its wake.
And finally, The Economist controversially projects that based on current trends, Chinese defence expenditure – currently one fifth of the United States – will pass the United States in absolute terms by 2025.
None of this has happened by accident.
It has been the product of considered Chinese statecraft over the last three to four decades.
China's leaders have sought to overcome a century of shame and humiliation brought about by a series of foreign occupations from the Opium Wars to the rise of the People's Republic through their own national search for wealth and power, so that China can once again resume its historical place as a respected great power.
What is remarkable is that the rise of China, as measured by economic indicators alone, has been achieved within a generation of the initiation of Deng Xiaoping's deep domestic and international economic reforms from late 1978.
Furthermore, the momentum of economic transformation has built on itself – most particularly in the decade that has elapsed since the Asian Financial Crisis of the late 90s.
China emerged intact from a financial crisis that impacted severely on Korea and South-East Asia. Not only intact, but for the first time, as a driver of Asian economic growth and one offering a different development model to that prescribed by The Washington Consensus and its embodiment in the policies of the International Monetary Fund.
This was repeated at scale during the Global Financial Crisis a decade later where Chinese demand (augmented by its own expansionary fiscal and monetary policies) has been critical to global economic recovery.
And with the threat of a second Global Financial Crisis still looming out of the continuing uncertainties in Europe, it has been remarkable to see European states publically seeking Chinese support to intervene in Euro-bond markets.
And all this within the last decade alone.
Once again, none of this has been achieved by accident.
It has been the product of considered Chinese policy, entirely mindful of the fragilities emerging elsewhere in the global economy, as well as a decade of intensive, almost all-consuming US military and foreign policy engagement in Iraq, Afghanistan and the wider Middle East.
Both Hu Jintao and Wen Jiabao have spoken publically about the need for China to grasp these strategic opportunities during the first two decades of the 21st Century.
As early as 2003 Hu had spoken of a unique convergence of domestic and international trends, putting China in a position to advance its development by “leaps and bounds”…
And like other rising powers before it, if China “lost the opportunity presented it would become a straggler”.
Again in 2007, Wen warned the opportunities were “rare and fleeting”, but that the first two decades of the new century was a period “which we should tightly grasp and in which we can get much accomplished”.
China has therefore been exceptionally diligent in achieving its national objectives of lifting its people out of poverty, developing its national wealth and power, and resuming its rightful place in the community of nations.
Of course, we are all familiar with the dangers of linear projections about China's inexorable rise.
And China's leaders themselves constantly remind us of the formidable domestic challenges that lie ahead, any one of which could de-rail their national project.
According to the World Bank, more than 150 million Chinese live in abject poverty;
Massive income inequalities between cities and the countryside (although, once again, it should be recorded that last year for the first time in history, more Chinese lived in urban rather than rural China);
The profound development gaps between coastal and inland provinces; between Central and Western China; as wealth declines the further west you travel;
The problems of corruption;
Urban pollution on a massive scale;
China's significant dependency on energy and raw materials from abroad;
Separatist movements in Tibet, Xinjiang and Taiwan;
And China's own date with demographic destiny with the peaking and then rapid aging of its population, with alarming new figures on the working age/retirement age population ratios for the future – all the product of the one child policy as well as rising living standards.
Then there are the rigidities of a political system that finds it difficult to embrace diversity and dissent, be it local protest movements on controversial land use decisions, or crises or anxieties that arise from Tiananmen, or individual cases such as Fang Lizhi, the Nobel Laureate Liu Xiaobo and the artist Ai Weiwei.
It is also important to monitor the deep changes in Chinese society itself, always notoriously difficult to measure, often relying on subjective judgements of the type recorded by William Hinton half a century ago at the village and local community level in his landmark work Fanshen.
But this is part of a much broader sociological challenge of understanding what the Chinese people actually expect of their government today – rather than the narrower debates on the future of Chinese democracy and the future of human rights.
Nonetheless, despite these great challenges, China has continued to drive ahead in rigorous pursuit of its national objectives in the three sets of leadership changes that have occurred since 1978 – and, as we are about to see, the fourth later this year.
Therefore I have so far found no evidence to support the multiple analyses over several decades now that China was on the verge of breaking up, or its rising middle class was about to bring about a Chinese version of the Arab Spring and with it the collapse of Communist Party rule.
This has perhaps been more of a reflection of wishful thinking by some, rather than any real analysis of Chinese politics on the one hand and the actual performance of the Chinese economy on the other.
Deng once urged the Chinese people to “seek truth from facts”.
We should heed his exhortation and do the same.
One further cautionary note, however, on China and American economic relativities is that as we analyse China's rise, we should be very wary of any conclusions of America's absolute decline.
The data continues to demonstrate that America will continue to grow and because of its vast migration program, it has no impending date with demographic destiny.
Furthermore, both America and the American economy have demonstrated time and time again a formidable capacity to re-invent itself, to generate new innovations, technologies, and enterprises on a mass scale.
America, therefore, will remain a formidable economy and strategic force through to mid-century and beyond.
The real question today is what does the rise and rise of China mean for the regional and global order – for peace, prosperity and stability for the immediate decades ahead.
Because the historic shift I referred to earlier is already upon us.
And the challenge for policy makers everywhere is how to shape the changes that are unfolding in the international system today, rather than simply being interested, arm-chair analysts and critics, passively observing the unfolding events, sometimes politely, other times not.
Because when placed in an even wider historical context than the relative metrics of Chinese and American power, let us recognise the global implications arising from China rising to the top of the global economic ladder.
This will be the first time since the rise of the Spanish Empire 500 years ago that a non-western power will be the dominant global economic power.
And the first time since Pitt the Younger that a non-democracy will be the world's largest economy.
It is therefore a subject worthy of the most serious reflection and analysis, not just in Beijing and Washington, but across Asia, across Europe and across the world.
Because how Asia embraces the rise of China will not just be of significance to Asian peace and prosperity.
How we in Asia embrace this change will have profound consequences for the world at large.
And as a western, democratic nation of largely Judeo-Christian origin, fully engaged in practically all of the institutions of Asia, Australia finds itself in a unique position of experiencing the winds of change earlier than most.
The key questions are as follows:
First, what does China want for the future of the regional and global order?
Second, what does America want?
Third, what do the rest of us in Asia want?
Fourth, is this diverse range of national values and interests capable of being accommodated?
Fifth, if so, how can this be given institutional effect?
China's attitude to its role in the global order has many parts.
First, the Chinese have long argued that modern China must operate within an international system, rather than outside it, as it did during the Cultural Revolution. For China this has been important for its own interests (e.g. WTO accession) as well as its international standing as a respected power.
But second, this has always been accompanied by a call for the reform of the international system as well.
China has long objected to a uni-polar world and instead called for ‘the democratisation of international relations' in the context of a genuinely multi-polar world.
This has taken many forms – a new order based on three poles of the US, China and Europe; or more recently a new order which accommodates a new power bloc of emerging economies like the BRICS (Brazil, Russia, India, China and South Africa).
Importantly, China has not officially embraced any program for UN Security Council reform that would dilute its own power against say Japan, India or even Germany.
But the diffusion of US power through a more “democratic” and “multipolar” order remains a continuing Chinese objective.
Third, critically, China in the late 1970s eschewed the export of its own ideology as part of its own international relations policy.
Imagine for a moment if China was still in the business of exporting revolution as it was for the first half of the history of the People's Republic. Today, China's so-called ‘united-front' actively continues but is totally engaged with the ever-growing Chinese diaspora around the world ‘to help build the motherland'.
Fourth, China resents any attempt to use the international system to export western ideology (i.e. human rights, religious belief systems or democracy) to China. Or to hold China to account for failing to meet these standards.
Fifth, China instead, through Hu Jintao, has argued for what is called a “harmonious society” at home, mandated by a “harmonious world” abroad.
While many in the West may find such a formulation banal (in fact with China, many political concepts can literally be lost in translation) the fact remains that this represents a Chinese attempt to accommodate a diversity of values, and a diversity of interests in the international order, and a commitment to peaceful dialogue, not sabre-rattling conflict, as a means of dealing with difference. I have also long argued this concept of a harmonious world (hexie shijie) which has deep resonance in classical Chinese philosophy, is a concept which the West can work with.
Finally, above all, Beijing, consistent with most states, seeks to use the international system to advance its national interests. China wants a peaceful regional and global environment in order to grow its own economy and in so doing achieve the overriding social objectives of lifting its people out of poverty, giving jobs to its youth and raising the living standards of working people so that they can enjoy a better life, better than the mass deprivations of the past. At the same time, China's leadership seeks to lift international prestige as a proud people with arguably the oldest continuing civilisation on earth.
These two factors are also core to the continuing legitimacy of the Chinese Communist Party.
The uncertain question for many in the West is whether these national goals, and the national and international policies that give them effect, are either tactical or strategic.
This hangs very much on a long-standing debate of Deng Xiaoping's core maxim of “hide your strength, bide your time” (tāo ɡuānɡ yǎnɡ huì) – a maxim that was recently, explicitly and at some length revisited and re-explained by China's leading foreign and national security spokesman, State Councillor Dai Bingguo.
Some argue that the concept of “hide your strength, bide your time” means that China's current adherence to international norms consistent with the concept of a “harmonious world”, is purely tactical – i.e. that once China has actually obtained national wealth and power it will increasingly act unilaterally.
Others argue that China's acceptance of the multilateral rules-based order is now an enduring and possibly permanent condition for China.
While there is acute debate on this in Beijing among the ever increasing number of official and semi-official think tanks, my own view remains very much the latter. This is because it will remain in China's overwhelming national interest to continue to support a multi-lateral rules-based order that has served it so well in the past, China will seek to influence and shape that order in the future, but not to defy it.
Nonetheless the fact remains that many regional states are likely to take active measures to hedge against the alternative possibility (i.e. a more unilateral China in the future) so that they are not caught unprepared.
Henry Kissinger has made plain in his landmark work “On China”, that a core difference between American and Chinese worldviews is American exceptionalism. This is the view that the political and economic freedoms that are the heart and soul of the American tradition, are not only a birth-right for every citizen of the United States, but they also represent a “light on the hill” for every citizen of the world.
With this tradition there is of course a debate about means and ends – with regime change at one end of the spectrum; moral suasion based on international norms (such as the Universal Declaration of Human Rights) at the other; and an activist human rights diplomacy somewhere in the middle.
But the critical difference is this; the Chinese Government fundamentally disagrees with the universality of western perceptions of human rights.
China argues that it is the right of all states to develop their own form of government; that states should not pry beyond the borders of other states as this offends national sovereignty which remains a cornerstone of the international system; and that in China's case many “western political values” are deeply incompatible with Chinese values, not only for post-1949 China, but throughout China's 2000 year old Confucian tradition.
Second, beyond human rights, the United States still sees itself, as do most of its friends and allies, albeit with varying degrees of explicit enthusiasm, as the ultimate strategic backstop of the current global and political rules-based order. From Korea, to Kosovo, to Kabul, this has been a constant since the Second World War.
There are obvious tensions within this tradition: when to intervene and when not to; whether all such interventions should be authorised by the UNSC because in the case of Iraq, this was spectacularly not the case; and critically whether the US continues to have the global military capacity and the national political will to intervene in international theatres way beyond its immediate spheres of national interest.
This later debate is, of course, very much alive in the current debate on the US Global Force Posture review.
Nonetheless, within the Asia-Pacific region itself, the United States has stated explicitly in recent doctrinal statements in Honolulu, Canberra and Manila that the United States will not allow any net withdrawal of military assets from across the Asian hemisphere for the decades ahead.
This is because the US has concluded that it not only has vital interests in this region in the century ahead, but also that this region will progressively represent the centre of gravity of global economic and strategic power. The US has recommitted itself to honouring its many regional alliances.
The US sees itself, as do most of its allies, as constituting much of the strategic ballast that has kept the region in peace for more than a generation, thereby enabling open economies to develop, trade and commerce to flourish, and democracies to emerge.
This again is where core American and Chinese strategic concepts rub up against each other: a Chinese view that US alliance structures in Asia are relics of a Cold War past that should be disbanded; that the retention of these alliances is designed to constrain China; and, in doing so, continue to frustrate the reunification of Taiwan with the motherland.
On the other hand, the US argues indisputably that it is an Asia-Pacific power with long-standing international interests in Asia, and that its commitments to Taipei have been explicit since diplomatic normalisation with Beijing in 1979.
In this context, it should be noted that no one should ever underestimate the capacity for Taiwan to become a flashpoint for armed conflict in the future, given the visceral nature of the sovereignty issue both in Beijing and Taipei, and the competing demands of the Shanghai Communique and the Taiwan Relations Act.
But what about the rest of us who live, work and have our being in Asia.
The future of Asia is not some Sino-American duopoly – fundamental though the Beijing-Washington relationship remains.
Neither globally nor regionally is the concept of some sort of a “G2” ever going to fly in Asia.
It is, for example, a fact that the combined GDP of the rest of Asia vastly exceeds that of China and is roughly equivalent to that of the United States.
Furthermore, Japan remains the world's 3rd largest economy, and economies like India, Korea, Indonesia and Australia (all G20 economies) are growing rapidly.
Take Indonesia alone – on the cusp of becoming a US$1 trillion economy, now growing consistently at more than 6 per cent per annum and with a population approaching 250 million.
Indonesia, under the new policy direction of President Yudhoyono and his economic team is likely to emerge as one of the top six economies in the world by 2030.
Moreover, most of these dynamic, emerging economies are also robust democracies and committed to open economic policies.
Free Trade Agreements are expanding.
Australia and New Zealand's FTA with South East Asia, now in force for all 12 signatories, is a free trade area now embracing $3 trillion plus of regional economic activity and rising.
Australia is also nearing conclusion of an FTA with Korea and is involved in other similar negotiations, including with China, India and Japan.
Others are doing the same, including the recent significant steps taken at the 2011 APEC Summit on the future of the Trans-Pacific Partnership, as well as the work being done on other forms of broader regional economic integration.
To put the economic dynamism of Asia, including China, into a global perspective: 30 years ago, Asia represented less than 20 per cent of global GDP and the US 30 per cent.
But within the next five years, Asia will constitute nearly a third of global GDP and the US less than a fifth.
The Atlantic was once the centre of the global economy with Asia and the Pacific at the periphery, now this is in the process of being turned on its head.
The data itself demonstrates that the peace and prosperity of Asia for the decades ahead is not only critical for Asia itself but it is now equally critical for the global economy as well.
The countries of our region are also acutely aware that both continental and archipelagic Asia are still beset by unresolved territorial disputes, each capable of impacting or even undermining the prosperity we have seen so far. These include:
The Korean Peninsula;
The East China Sea;
The Taiwan Straits;
The South China Sea;
The Thai/Cambodian border;
Burma's civil conflicts in its border areas;
Together with the outstanding disputes between India and Pakistan over Kashmir, as well as unresolved areas on India's border with China.
There is therefore a brittleness in the security policy realities of our region that potentially runs counter to the deeper and deeper economic engagement and interaction we have seen in recent decades.
As I've said elsewhere, Asia is home to all the world's hopes for the 21st century global economy, while handicapped by all the rigidities of an almost 19th century set of territorial and security policy disagreements.
Although a number of these disputes are intrinsically internal, there is an interest across Asia in how we collectively chart our common course - and build a capacity to generate common platforms for dialogue on some of the seemingly intractable problems that have a capacity to spiral out of control.
It should also be noted that many of these disagreements bear no relationship to the state of Sino-US relations, although a number plainly do.
In summary, in Asia we see there is a strong trend in support of democracy; a strong interest in expanding open economies (both internally and externally); along with a strong interest in national sovereignty whereby states do not have to fear any intrusion into their foreign and domestic political autonomy; as well as shared and strong desire to avoid the polarisation of the region into Chinese and American blocs.
Instead we see a strong desire to build the institutions and the habits of cooperation which will enable all of us to deal collaboratively with individual security challenges as they arise, and over time to inculcate a culture of common security across a region where so many hopes are alive for the future.
So what then is to be done?
Can the dissonant values, aspirations and interests of the United States, China and the rest of Asia be managed, embraced or even reconciled in the decade ahead?
And if so, how can this be given institutional expression in a way that helps shape such a common future, rather than hindering it.
Or are we consigning ourselves to a different future based on strategic drift, ideological conflict and irreconcilable interests where there regrettably is usually one inevitable poor outcome.
Australia, through the agency of what we call creative middle-power diplomacy, is optimistic that we can learn from history and craft a common future for our hemisphere.
Ultimately there is nothing determinist about history.
History is decided by women and men, of goodwill or ill, based either on sound knowledge or ill-informed prejudice.
There is nothing, repeat nothing, inevitable about some form of Sino-American conflict in the future.
Such conflict would undermine all our interests, and in all probability betray our most fundamental values.
At a global level, a good, albeit imperfect start has been made with the establishment of the G20.
With the onset of the Global Financial Crisis in 2008 it was clear to all that the G7 was not representative of the new economic realities.
China, India, Brazil and Australia legitimately argued that the principal institution of global economic governance has to be representative of where the new locus of economic power was shifting – principally Asia.
As a result, China, India, Korea, Indonesia and Australia, along with Japan, now sit at the same table to deliberate on global policy responses to financial regulation, global financial imbalances, appropriate responses to global recession, as well as reform of the international financial institutions to give greater voice to emerging economies.
China has played a significantly constructive role in this forum so far.
To apply Bob Zoellick's framework of half a decade ago, China during the Global Financial Crisis has indeed demonstrated itself to be both willing and able to act as a responsible global stakeholder. In fact, without China, the global economy would not have recovered as rapidly as it did.
The G20 has also provided a framework for discussion on sensitive global financial matters including the future value of the Yuan, the future of the global reserve currency and the range of proposals for various currency baskets that could be used in the future.
As China seeks to take its place in the global order, it has turned increasingly to its own grouping - the BRICS.
Together with India, Brazil, Russia and South Africa, China is seeking to enhance its global leverage with other emerging economies in major global negotiations in the G20, on trade, on climate change and more broadly.
The BRICS meets regularly and at multiple levels. It is likely to be a continuing feature of the international system. But with the exclusion of the United States, it does not provide a common platform to deal with common policy challenges, either in Asia or for that matter, in any other region in the world.
For Asia itself, a range of institutions have emerged over the years.
ASEAN has been far and above the most successful and the most enduring - turning former strategic adversaries into partners and transformation of South East Asia into an economic community by 2015.
APEC has recently celebrated its 20th anniversary and has achieved great success in promoting trade liberalisation both between and behind national borders. It has been a major facilitator of economic growth by advancing the cause of open markets.
There has, however, been a gap in the region's institutions. There has not been a single institution with a wide enough membership to include all the critical players of Asia (including China and the United States) and with a wide enough mandate to provide a common platform to deal with the full range of regional challenges that confront us (both security and economic) and to do so at Summit level.
Dr Kissinger in his recent book On China argues for the development of a Pacific Community:
The argument that China and the United States are condemned to collision assumes that they deal with each other as competing blocs across the Pacific. But this is a disaster for both sides… the concept of a Pacific Community in a region to which the US, China and other states all belong and in whose peaceful development all participate would make the US and China part of a common enterprise. Shared purposes – and the elaboration of them - would replace strategic uneasiness to some extent. It would enable other major countries such as Japan, Indonesia, Vietnam, India and Australia to participate in the construction of a system perceived as joint, rather than polarised between “Chinese” and “American” blocs.
This very much reflects Australian thinking when we launched the concept of an Asia-Pacific community in 2008.
Our argument was that an APc could have evolved by adding a political and security arm to APEC – although the absence of India and the presence of Taiwan, Hong Kong and a number of other states made this highly problematic.
The second route was to expand the membership of the East Asia Summit (already made up of ASEAN plus the three north east Asian states, as well as India, Australia and New Zealand) to include the United States and because of the Russian Far East, Russia. The advantage of this route was that the EAS already had a wide mandate including security and economic matters.
In 2011, this vision came to fruition at the Bali Summit of the EAS where for the first time in the history of Asia – China, the United States and all the other principal states of the region have sat around a common table at summit level to deliberate on the region's future.
This also represents an historic opportunity to begin crafting a common vision for Asia's future.
At this inaugural Summit, leaders spoke about how to deal with the long-standing problem of the South China Sea. ASEAN is now developing a code of conduct on the South China Sea in collaboration with China. This is a positive development.
Agreement was reached on a joint Australian-Indonesian proposal for a common regional strategy to deal with future national disasters. This is a major priority for our region - when the next big one hits, we must be able to say that we are better prepared.
It is also an important area of potential soft security cooperation between the emergency services and the armed forces of the region - and therefore has the potential to evolve as a confidence and security building measure among us all, including China and America.
Leaders also tasked EAS finance ministers to meet for a second time in 2012 – another practical step forward in crafting an agenda for financial collaboration for the future. The Eurozone crisis demonstrates the need for comprehensive and systematic engagement between our respective financial systems given the global financial volatility that continues to prevail – and the capacity of a financial crisis to rapidly bring on a broader economic crisis.
Finally, further steps were taken by East Asian leaders in other areas of social and environmental policy collaboration, with regular ministerial meetings on education and collaborative work on climate change and sustainable cities.
President Obama in Bali called for an expansion of the focus of the institution. We agree. This has been a good beginning, but comes after decades of regional drift and the absence of a core institution to help drive a collaborative agenda for the future.
None of us are naïve about the capacity of nascent institutions to deal with strategic distrust built up over the decades.
There will be many testing times ahead. But on the broader regional agenda we have made a solid start. As Churchill said, “to jaw-jaw always is better than to war-war”.
First, the habits of regular leaders' level dialogue on an open agenda for which security policy dialogue is considered entirely normal, is itself inherently normalising. Otherwise, purely bilateral summits are often few and far between, during which drift can occur, misinterpretations can become entrenched and crises arise.
Second, the fact that security dialogue can occur between the United States and China in the company of those directly affected by the outcomes of that dialogue (namely, the countries of Asia themselves) of itself begins to build the habits of collaboration rather than defaulting to conflict. The concept of common security is as much a habit as it is a concrete doctrine on a set of specific actions.
Third, as Dr. Kissinger again reminds us, the future of Asia will be shaped to a significant degree by how China and America envision it. That is true. But the rest of us in Asia do not simply see ourselves as collateral damage if it all goes wrong.
The rest of the region shapes that common strategic vision for the future because this region is also our home.
Fourth, we should not be deterred from tackling truly difficult challenges when they arise. North Korea's nuclear weapons program and its proliferation practices are not simply matters for those participating in the 6 Party Talks. Given the range of North Korean rockets and the nuclear devices they already possess, all of us are affected, whether we like it or not.
Finally, collaboration over time can build transparency, confidence and trust. Greater transparency of military budgets and military exercises and increasing the number of confidence and security building measures can contribute to building that trust.
Major differences in the respective national interests and values systems of China and the United States will, however, be with us for the foreseeable future.
But there is something in China's concept of a ‘harmonious world'; which the US, the rest of the region and the rest of the world can work with.
The concept is compatible with the future evolution of the multilateral rules-based order. Including the evolution of the rules-based order for the Asia Pacific.
If a common strategic vision ultimately proves to be elusive between the United States and China, then common strategic co-existence within the framework of agreed norms should not.
On these questions, Australian policy remains optimistic and Australia will continue to be positive participants in our regional processes to evolve a concept of common security for the future.
These are truly historic times.
History has seen many peaces before – some lasting, others not.
Pax Romana, Pax Brittannica, Pax Americana – all however underpinned by a single nation possessing dominant economic and military power.
The task today is whether together we can craft something which the history books of the future might call Pax Pacifica - a peace that will ultimately be anchored in the principles of common security, recognising the realities of US and Chinese power as well as the continuation of US alliances into the future.
If we manage to craft such a common future together, then not just our children but the world at large will thank us all for learning the lessons of history, not simply repeating them.
The Hon Kevin Rudd MP
Australian Minister for Foreign Affairs
Speech to the Asia Society - The prospects for peace in the Pacific: The future of the expanded East Asia Summit
New York13 January 2012
Speeches, E&OE, proof only
Historical trends are by definition slow to emerge.
They then gather pace, often with a sudden burst of momentum.
Then having gathered their own dynamic, a tipping point is reached, often well before the political community and broader public opinion has fully woken up to the fact.
And so it is with the global economic power of the United States of America.
For the last 130 years the United States has been the world's largest economy.
Within the current decade, that will no longer be the case when China takes its place.
Two weeks ago the Economist almost matter-of-factly reported that China will have a larger economy than America's in purchasing power parity less than five years from now.
And based on reasonable projections of relative real growth rates and the relative values of the US Dollar and the Yuan, China will have the larger GDP as measured by market exchange rates within the next seven years.
2016 and 2018 therefore loom as profound dates on both the global and historical calendars.
US global economic pre-eminence, together with the spread of the political and economic values that have accompanied that pre-eminence, have been with us across most of the modern industrial age.
From well before the collapse of China's Qing dynasty.
Through the First World War. Proving to be decisive in the Second. And ultimately triumphant in the Cold War.
Initially isolationist, refusing to become embroiled in the wars of the European imperial powers.
Subsequently internationalist, the architect of the post-1945 global order, reflected in the UN Charter and the Bretton Woods institutions, but always anchored in the strategic fundamentals of American power.
This has been the deep reality underpinning the political, economic and strategic order for generations, whether we choose to be conscious of it or not.
History teaches us that all power is ultimately grounded in economic power and the economic principles that in turn drive an economy forward.
In the full sweep of history, therefore, we are now on the cusp of profound change.
This is reflected across a range of economic measures beyond the crude calculations of GDP alone.
Once again, these are methodically chronicled by The Economist. Just consider the following measures, both past and projected:
China's net foreign assets surpassed the United States in 2003 (China's net foreign assets of $2 trillion today versus US net foreign debt of $2.5 trillion);
Chinese exports surpassed the US in 2007;
Chinese fixed capital investment took the lead in 2009;
Manufacturing output in 2010;
Energy consumption also in 2010;
The total number of Chinese patent applications granted exceeded the United States applications for the first time in 2010.
Looking forward,
The total value of Chinese imports will be greater than the US by 2014;
Chinese retail sales will outpace the United States by 2014;
Chinese firms in the Global Fortune 500, now half those of the US, will pass the US by 2016;
And Chinese stock market capitalisation will be greater than America's by 2020, leaving Wall Street in its wake.
And finally, The Economist controversially projects that based on current trends, Chinese defence expenditure – currently one fifth of the United States – will pass the United States in absolute terms by 2025.
None of this has happened by accident.
It has been the product of considered Chinese statecraft over the last three to four decades.
China's leaders have sought to overcome a century of shame and humiliation brought about by a series of foreign occupations from the Opium Wars to the rise of the People's Republic through their own national search for wealth and power, so that China can once again resume its historical place as a respected great power.
What is remarkable is that the rise of China, as measured by economic indicators alone, has been achieved within a generation of the initiation of Deng Xiaoping's deep domestic and international economic reforms from late 1978.
Furthermore, the momentum of economic transformation has built on itself – most particularly in the decade that has elapsed since the Asian Financial Crisis of the late 90s.
China emerged intact from a financial crisis that impacted severely on Korea and South-East Asia. Not only intact, but for the first time, as a driver of Asian economic growth and one offering a different development model to that prescribed by The Washington Consensus and its embodiment in the policies of the International Monetary Fund.
This was repeated at scale during the Global Financial Crisis a decade later where Chinese demand (augmented by its own expansionary fiscal and monetary policies) has been critical to global economic recovery.
And with the threat of a second Global Financial Crisis still looming out of the continuing uncertainties in Europe, it has been remarkable to see European states publically seeking Chinese support to intervene in Euro-bond markets.
And all this within the last decade alone.
Once again, none of this has been achieved by accident.
It has been the product of considered Chinese policy, entirely mindful of the fragilities emerging elsewhere in the global economy, as well as a decade of intensive, almost all-consuming US military and foreign policy engagement in Iraq, Afghanistan and the wider Middle East.
Both Hu Jintao and Wen Jiabao have spoken publically about the need for China to grasp these strategic opportunities during the first two decades of the 21st Century.
As early as 2003 Hu had spoken of a unique convergence of domestic and international trends, putting China in a position to advance its development by “leaps and bounds”…
And like other rising powers before it, if China “lost the opportunity presented it would become a straggler”.
Again in 2007, Wen warned the opportunities were “rare and fleeting”, but that the first two decades of the new century was a period “which we should tightly grasp and in which we can get much accomplished”.
China has therefore been exceptionally diligent in achieving its national objectives of lifting its people out of poverty, developing its national wealth and power, and resuming its rightful place in the community of nations.
Of course, we are all familiar with the dangers of linear projections about China's inexorable rise.
And China's leaders themselves constantly remind us of the formidable domestic challenges that lie ahead, any one of which could de-rail their national project.
According to the World Bank, more than 150 million Chinese live in abject poverty;
Massive income inequalities between cities and the countryside (although, once again, it should be recorded that last year for the first time in history, more Chinese lived in urban rather than rural China);
The profound development gaps between coastal and inland provinces; between Central and Western China; as wealth declines the further west you travel;
The problems of corruption;
Urban pollution on a massive scale;
China's significant dependency on energy and raw materials from abroad;
Separatist movements in Tibet, Xinjiang and Taiwan;
And China's own date with demographic destiny with the peaking and then rapid aging of its population, with alarming new figures on the working age/retirement age population ratios for the future – all the product of the one child policy as well as rising living standards.
Then there are the rigidities of a political system that finds it difficult to embrace diversity and dissent, be it local protest movements on controversial land use decisions, or crises or anxieties that arise from Tiananmen, or individual cases such as Fang Lizhi, the Nobel Laureate Liu Xiaobo and the artist Ai Weiwei.
It is also important to monitor the deep changes in Chinese society itself, always notoriously difficult to measure, often relying on subjective judgements of the type recorded by William Hinton half a century ago at the village and local community level in his landmark work Fanshen.
But this is part of a much broader sociological challenge of understanding what the Chinese people actually expect of their government today – rather than the narrower debates on the future of Chinese democracy and the future of human rights.
Nonetheless, despite these great challenges, China has continued to drive ahead in rigorous pursuit of its national objectives in the three sets of leadership changes that have occurred since 1978 – and, as we are about to see, the fourth later this year.
Therefore I have so far found no evidence to support the multiple analyses over several decades now that China was on the verge of breaking up, or its rising middle class was about to bring about a Chinese version of the Arab Spring and with it the collapse of Communist Party rule.
This has perhaps been more of a reflection of wishful thinking by some, rather than any real analysis of Chinese politics on the one hand and the actual performance of the Chinese economy on the other.
Deng once urged the Chinese people to “seek truth from facts”.
We should heed his exhortation and do the same.
One further cautionary note, however, on China and American economic relativities is that as we analyse China's rise, we should be very wary of any conclusions of America's absolute decline.
The data continues to demonstrate that America will continue to grow and because of its vast migration program, it has no impending date with demographic destiny.
Furthermore, both America and the American economy have demonstrated time and time again a formidable capacity to re-invent itself, to generate new innovations, technologies, and enterprises on a mass scale.
America, therefore, will remain a formidable economy and strategic force through to mid-century and beyond.
The real question today is what does the rise and rise of China mean for the regional and global order – for peace, prosperity and stability for the immediate decades ahead.
Because the historic shift I referred to earlier is already upon us.
And the challenge for policy makers everywhere is how to shape the changes that are unfolding in the international system today, rather than simply being interested, arm-chair analysts and critics, passively observing the unfolding events, sometimes politely, other times not.
Because when placed in an even wider historical context than the relative metrics of Chinese and American power, let us recognise the global implications arising from China rising to the top of the global economic ladder.
This will be the first time since the rise of the Spanish Empire 500 years ago that a non-western power will be the dominant global economic power.
And the first time since Pitt the Younger that a non-democracy will be the world's largest economy.
It is therefore a subject worthy of the most serious reflection and analysis, not just in Beijing and Washington, but across Asia, across Europe and across the world.
Because how Asia embraces the rise of China will not just be of significance to Asian peace and prosperity.
How we in Asia embrace this change will have profound consequences for the world at large.
And as a western, democratic nation of largely Judeo-Christian origin, fully engaged in practically all of the institutions of Asia, Australia finds itself in a unique position of experiencing the winds of change earlier than most.
The key questions are as follows:
First, what does China want for the future of the regional and global order?
Second, what does America want?
Third, what do the rest of us in Asia want?
Fourth, is this diverse range of national values and interests capable of being accommodated?
Fifth, if so, how can this be given institutional effect?
China's attitude to its role in the global order has many parts.
First, the Chinese have long argued that modern China must operate within an international system, rather than outside it, as it did during the Cultural Revolution. For China this has been important for its own interests (e.g. WTO accession) as well as its international standing as a respected power.
But second, this has always been accompanied by a call for the reform of the international system as well.
China has long objected to a uni-polar world and instead called for ‘the democratisation of international relations' in the context of a genuinely multi-polar world.
This has taken many forms – a new order based on three poles of the US, China and Europe; or more recently a new order which accommodates a new power bloc of emerging economies like the BRICS (Brazil, Russia, India, China and South Africa).
Importantly, China has not officially embraced any program for UN Security Council reform that would dilute its own power against say Japan, India or even Germany.
But the diffusion of US power through a more “democratic” and “multipolar” order remains a continuing Chinese objective.
Third, critically, China in the late 1970s eschewed the export of its own ideology as part of its own international relations policy.
Imagine for a moment if China was still in the business of exporting revolution as it was for the first half of the history of the People's Republic. Today, China's so-called ‘united-front' actively continues but is totally engaged with the ever-growing Chinese diaspora around the world ‘to help build the motherland'.
Fourth, China resents any attempt to use the international system to export western ideology (i.e. human rights, religious belief systems or democracy) to China. Or to hold China to account for failing to meet these standards.
Fifth, China instead, through Hu Jintao, has argued for what is called a “harmonious society” at home, mandated by a “harmonious world” abroad.
While many in the West may find such a formulation banal (in fact with China, many political concepts can literally be lost in translation) the fact remains that this represents a Chinese attempt to accommodate a diversity of values, and a diversity of interests in the international order, and a commitment to peaceful dialogue, not sabre-rattling conflict, as a means of dealing with difference. I have also long argued this concept of a harmonious world (hexie shijie) which has deep resonance in classical Chinese philosophy, is a concept which the West can work with.
Finally, above all, Beijing, consistent with most states, seeks to use the international system to advance its national interests. China wants a peaceful regional and global environment in order to grow its own economy and in so doing achieve the overriding social objectives of lifting its people out of poverty, giving jobs to its youth and raising the living standards of working people so that they can enjoy a better life, better than the mass deprivations of the past. At the same time, China's leadership seeks to lift international prestige as a proud people with arguably the oldest continuing civilisation on earth.
These two factors are also core to the continuing legitimacy of the Chinese Communist Party.
The uncertain question for many in the West is whether these national goals, and the national and international policies that give them effect, are either tactical or strategic.
This hangs very much on a long-standing debate of Deng Xiaoping's core maxim of “hide your strength, bide your time” (tāo ɡuānɡ yǎnɡ huì) – a maxim that was recently, explicitly and at some length revisited and re-explained by China's leading foreign and national security spokesman, State Councillor Dai Bingguo.
Some argue that the concept of “hide your strength, bide your time” means that China's current adherence to international norms consistent with the concept of a “harmonious world”, is purely tactical – i.e. that once China has actually obtained national wealth and power it will increasingly act unilaterally.
Others argue that China's acceptance of the multilateral rules-based order is now an enduring and possibly permanent condition for China.
While there is acute debate on this in Beijing among the ever increasing number of official and semi-official think tanks, my own view remains very much the latter. This is because it will remain in China's overwhelming national interest to continue to support a multi-lateral rules-based order that has served it so well in the past, China will seek to influence and shape that order in the future, but not to defy it.
Nonetheless the fact remains that many regional states are likely to take active measures to hedge against the alternative possibility (i.e. a more unilateral China in the future) so that they are not caught unprepared.
Henry Kissinger has made plain in his landmark work “On China”, that a core difference between American and Chinese worldviews is American exceptionalism. This is the view that the political and economic freedoms that are the heart and soul of the American tradition, are not only a birth-right for every citizen of the United States, but they also represent a “light on the hill” for every citizen of the world.
With this tradition there is of course a debate about means and ends – with regime change at one end of the spectrum; moral suasion based on international norms (such as the Universal Declaration of Human Rights) at the other; and an activist human rights diplomacy somewhere in the middle.
But the critical difference is this; the Chinese Government fundamentally disagrees with the universality of western perceptions of human rights.
China argues that it is the right of all states to develop their own form of government; that states should not pry beyond the borders of other states as this offends national sovereignty which remains a cornerstone of the international system; and that in China's case many “western political values” are deeply incompatible with Chinese values, not only for post-1949 China, but throughout China's 2000 year old Confucian tradition.
Second, beyond human rights, the United States still sees itself, as do most of its friends and allies, albeit with varying degrees of explicit enthusiasm, as the ultimate strategic backstop of the current global and political rules-based order. From Korea, to Kosovo, to Kabul, this has been a constant since the Second World War.
There are obvious tensions within this tradition: when to intervene and when not to; whether all such interventions should be authorised by the UNSC because in the case of Iraq, this was spectacularly not the case; and critically whether the US continues to have the global military capacity and the national political will to intervene in international theatres way beyond its immediate spheres of national interest.
This later debate is, of course, very much alive in the current debate on the US Global Force Posture review.
Nonetheless, within the Asia-Pacific region itself, the United States has stated explicitly in recent doctrinal statements in Honolulu, Canberra and Manila that the United States will not allow any net withdrawal of military assets from across the Asian hemisphere for the decades ahead.
This is because the US has concluded that it not only has vital interests in this region in the century ahead, but also that this region will progressively represent the centre of gravity of global economic and strategic power. The US has recommitted itself to honouring its many regional alliances.
The US sees itself, as do most of its allies, as constituting much of the strategic ballast that has kept the region in peace for more than a generation, thereby enabling open economies to develop, trade and commerce to flourish, and democracies to emerge.
This again is where core American and Chinese strategic concepts rub up against each other: a Chinese view that US alliance structures in Asia are relics of a Cold War past that should be disbanded; that the retention of these alliances is designed to constrain China; and, in doing so, continue to frustrate the reunification of Taiwan with the motherland.
On the other hand, the US argues indisputably that it is an Asia-Pacific power with long-standing international interests in Asia, and that its commitments to Taipei have been explicit since diplomatic normalisation with Beijing in 1979.
In this context, it should be noted that no one should ever underestimate the capacity for Taiwan to become a flashpoint for armed conflict in the future, given the visceral nature of the sovereignty issue both in Beijing and Taipei, and the competing demands of the Shanghai Communique and the Taiwan Relations Act.
But what about the rest of us who live, work and have our being in Asia.
The future of Asia is not some Sino-American duopoly – fundamental though the Beijing-Washington relationship remains.
Neither globally nor regionally is the concept of some sort of a “G2” ever going to fly in Asia.
It is, for example, a fact that the combined GDP of the rest of Asia vastly exceeds that of China and is roughly equivalent to that of the United States.
Furthermore, Japan remains the world's 3rd largest economy, and economies like India, Korea, Indonesia and Australia (all G20 economies) are growing rapidly.
Take Indonesia alone – on the cusp of becoming a US$1 trillion economy, now growing consistently at more than 6 per cent per annum and with a population approaching 250 million.
Indonesia, under the new policy direction of President Yudhoyono and his economic team is likely to emerge as one of the top six economies in the world by 2030.
Moreover, most of these dynamic, emerging economies are also robust democracies and committed to open economic policies.
Free Trade Agreements are expanding.
Australia and New Zealand's FTA with South East Asia, now in force for all 12 signatories, is a free trade area now embracing $3 trillion plus of regional economic activity and rising.
Australia is also nearing conclusion of an FTA with Korea and is involved in other similar negotiations, including with China, India and Japan.
Others are doing the same, including the recent significant steps taken at the 2011 APEC Summit on the future of the Trans-Pacific Partnership, as well as the work being done on other forms of broader regional economic integration.
To put the economic dynamism of Asia, including China, into a global perspective: 30 years ago, Asia represented less than 20 per cent of global GDP and the US 30 per cent.
But within the next five years, Asia will constitute nearly a third of global GDP and the US less than a fifth.
The Atlantic was once the centre of the global economy with Asia and the Pacific at the periphery, now this is in the process of being turned on its head.
The data itself demonstrates that the peace and prosperity of Asia for the decades ahead is not only critical for Asia itself but it is now equally critical for the global economy as well.
The countries of our region are also acutely aware that both continental and archipelagic Asia are still beset by unresolved territorial disputes, each capable of impacting or even undermining the prosperity we have seen so far. These include:
The Korean Peninsula;
The East China Sea;
The Taiwan Straits;
The South China Sea;
The Thai/Cambodian border;
Burma's civil conflicts in its border areas;
Together with the outstanding disputes between India and Pakistan over Kashmir, as well as unresolved areas on India's border with China.
There is therefore a brittleness in the security policy realities of our region that potentially runs counter to the deeper and deeper economic engagement and interaction we have seen in recent decades.
As I've said elsewhere, Asia is home to all the world's hopes for the 21st century global economy, while handicapped by all the rigidities of an almost 19th century set of territorial and security policy disagreements.
Although a number of these disputes are intrinsically internal, there is an interest across Asia in how we collectively chart our common course - and build a capacity to generate common platforms for dialogue on some of the seemingly intractable problems that have a capacity to spiral out of control.
It should also be noted that many of these disagreements bear no relationship to the state of Sino-US relations, although a number plainly do.
In summary, in Asia we see there is a strong trend in support of democracy; a strong interest in expanding open economies (both internally and externally); along with a strong interest in national sovereignty whereby states do not have to fear any intrusion into their foreign and domestic political autonomy; as well as shared and strong desire to avoid the polarisation of the region into Chinese and American blocs.
Instead we see a strong desire to build the institutions and the habits of cooperation which will enable all of us to deal collaboratively with individual security challenges as they arise, and over time to inculcate a culture of common security across a region where so many hopes are alive for the future.
So what then is to be done?
Can the dissonant values, aspirations and interests of the United States, China and the rest of Asia be managed, embraced or even reconciled in the decade ahead?
And if so, how can this be given institutional expression in a way that helps shape such a common future, rather than hindering it.
Or are we consigning ourselves to a different future based on strategic drift, ideological conflict and irreconcilable interests where there regrettably is usually one inevitable poor outcome.
Australia, through the agency of what we call creative middle-power diplomacy, is optimistic that we can learn from history and craft a common future for our hemisphere.
Ultimately there is nothing determinist about history.
History is decided by women and men, of goodwill or ill, based either on sound knowledge or ill-informed prejudice.
There is nothing, repeat nothing, inevitable about some form of Sino-American conflict in the future.
Such conflict would undermine all our interests, and in all probability betray our most fundamental values.
At a global level, a good, albeit imperfect start has been made with the establishment of the G20.
With the onset of the Global Financial Crisis in 2008 it was clear to all that the G7 was not representative of the new economic realities.
China, India, Brazil and Australia legitimately argued that the principal institution of global economic governance has to be representative of where the new locus of economic power was shifting – principally Asia.
As a result, China, India, Korea, Indonesia and Australia, along with Japan, now sit at the same table to deliberate on global policy responses to financial regulation, global financial imbalances, appropriate responses to global recession, as well as reform of the international financial institutions to give greater voice to emerging economies.
China has played a significantly constructive role in this forum so far.
To apply Bob Zoellick's framework of half a decade ago, China during the Global Financial Crisis has indeed demonstrated itself to be both willing and able to act as a responsible global stakeholder. In fact, without China, the global economy would not have recovered as rapidly as it did.
The G20 has also provided a framework for discussion on sensitive global financial matters including the future value of the Yuan, the future of the global reserve currency and the range of proposals for various currency baskets that could be used in the future.
As China seeks to take its place in the global order, it has turned increasingly to its own grouping - the BRICS.
Together with India, Brazil, Russia and South Africa, China is seeking to enhance its global leverage with other emerging economies in major global negotiations in the G20, on trade, on climate change and more broadly.
The BRICS meets regularly and at multiple levels. It is likely to be a continuing feature of the international system. But with the exclusion of the United States, it does not provide a common platform to deal with common policy challenges, either in Asia or for that matter, in any other region in the world.
For Asia itself, a range of institutions have emerged over the years.
ASEAN has been far and above the most successful and the most enduring - turning former strategic adversaries into partners and transformation of South East Asia into an economic community by 2015.
APEC has recently celebrated its 20th anniversary and has achieved great success in promoting trade liberalisation both between and behind national borders. It has been a major facilitator of economic growth by advancing the cause of open markets.
There has, however, been a gap in the region's institutions. There has not been a single institution with a wide enough membership to include all the critical players of Asia (including China and the United States) and with a wide enough mandate to provide a common platform to deal with the full range of regional challenges that confront us (both security and economic) and to do so at Summit level.
Dr Kissinger in his recent book On China argues for the development of a Pacific Community:
The argument that China and the United States are condemned to collision assumes that they deal with each other as competing blocs across the Pacific. But this is a disaster for both sides… the concept of a Pacific Community in a region to which the US, China and other states all belong and in whose peaceful development all participate would make the US and China part of a common enterprise. Shared purposes – and the elaboration of them - would replace strategic uneasiness to some extent. It would enable other major countries such as Japan, Indonesia, Vietnam, India and Australia to participate in the construction of a system perceived as joint, rather than polarised between “Chinese” and “American” blocs.
This very much reflects Australian thinking when we launched the concept of an Asia-Pacific community in 2008.
Our argument was that an APc could have evolved by adding a political and security arm to APEC – although the absence of India and the presence of Taiwan, Hong Kong and a number of other states made this highly problematic.
The second route was to expand the membership of the East Asia Summit (already made up of ASEAN plus the three north east Asian states, as well as India, Australia and New Zealand) to include the United States and because of the Russian Far East, Russia. The advantage of this route was that the EAS already had a wide mandate including security and economic matters.
In 2011, this vision came to fruition at the Bali Summit of the EAS where for the first time in the history of Asia – China, the United States and all the other principal states of the region have sat around a common table at summit level to deliberate on the region's future.
This also represents an historic opportunity to begin crafting a common vision for Asia's future.
At this inaugural Summit, leaders spoke about how to deal with the long-standing problem of the South China Sea. ASEAN is now developing a code of conduct on the South China Sea in collaboration with China. This is a positive development.
Agreement was reached on a joint Australian-Indonesian proposal for a common regional strategy to deal with future national disasters. This is a major priority for our region - when the next big one hits, we must be able to say that we are better prepared.
It is also an important area of potential soft security cooperation between the emergency services and the armed forces of the region - and therefore has the potential to evolve as a confidence and security building measure among us all, including China and America.
Leaders also tasked EAS finance ministers to meet for a second time in 2012 – another practical step forward in crafting an agenda for financial collaboration for the future. The Eurozone crisis demonstrates the need for comprehensive and systematic engagement between our respective financial systems given the global financial volatility that continues to prevail – and the capacity of a financial crisis to rapidly bring on a broader economic crisis.
Finally, further steps were taken by East Asian leaders in other areas of social and environmental policy collaboration, with regular ministerial meetings on education and collaborative work on climate change and sustainable cities.
President Obama in Bali called for an expansion of the focus of the institution. We agree. This has been a good beginning, but comes after decades of regional drift and the absence of a core institution to help drive a collaborative agenda for the future.
None of us are naïve about the capacity of nascent institutions to deal with strategic distrust built up over the decades.
There will be many testing times ahead. But on the broader regional agenda we have made a solid start. As Churchill said, “to jaw-jaw always is better than to war-war”.
First, the habits of regular leaders' level dialogue on an open agenda for which security policy dialogue is considered entirely normal, is itself inherently normalising. Otherwise, purely bilateral summits are often few and far between, during which drift can occur, misinterpretations can become entrenched and crises arise.
Second, the fact that security dialogue can occur between the United States and China in the company of those directly affected by the outcomes of that dialogue (namely, the countries of Asia themselves) of itself begins to build the habits of collaboration rather than defaulting to conflict. The concept of common security is as much a habit as it is a concrete doctrine on a set of specific actions.
Third, as Dr. Kissinger again reminds us, the future of Asia will be shaped to a significant degree by how China and America envision it. That is true. But the rest of us in Asia do not simply see ourselves as collateral damage if it all goes wrong.
The rest of the region shapes that common strategic vision for the future because this region is also our home.
Fourth, we should not be deterred from tackling truly difficult challenges when they arise. North Korea's nuclear weapons program and its proliferation practices are not simply matters for those participating in the 6 Party Talks. Given the range of North Korean rockets and the nuclear devices they already possess, all of us are affected, whether we like it or not.
Finally, collaboration over time can build transparency, confidence and trust. Greater transparency of military budgets and military exercises and increasing the number of confidence and security building measures can contribute to building that trust.
Major differences in the respective national interests and values systems of China and the United States will, however, be with us for the foreseeable future.
But there is something in China's concept of a ‘harmonious world'; which the US, the rest of the region and the rest of the world can work with.
The concept is compatible with the future evolution of the multilateral rules-based order. Including the evolution of the rules-based order for the Asia Pacific.
If a common strategic vision ultimately proves to be elusive between the United States and China, then common strategic co-existence within the framework of agreed norms should not.
On these questions, Australian policy remains optimistic and Australia will continue to be positive participants in our regional processes to evolve a concept of common security for the future.
These are truly historic times.
History has seen many peaces before – some lasting, others not.
Pax Romana, Pax Brittannica, Pax Americana – all however underpinned by a single nation possessing dominant economic and military power.
The task today is whether together we can craft something which the history books of the future might call Pax Pacifica - a peace that will ultimately be anchored in the principles of common security, recognising the realities of US and Chinese power as well as the continuation of US alliances into the future.
If we manage to craft such a common future together, then not just our children but the world at large will thank us all for learning the lessons of history, not simply repeating them.
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