Monday, 31 December 2012


Address to the Chinese People’s Liberation Army National Defense University

Friday, 28 December 2012

It is a great honour to address the Chinese National Defense University. 

I am aware of the deep historical connection between this university and the Chinese People's Liberation Army (PLA).  As a student of Chinese history, I am also aware of the extraordinary history of the PLA since 1927.  In particular the military feats of the Red Army during the Long March and later the Eighth Route Army during the Japanese occupation.

My father also was a professional soldier who fought in the Pacific War against Japan.  As a child, he told me many stories from the war.  These were terrible times in China's history, in Asia's history and in Australia’s history.

China has changed remarkably since I began studying Chinese at the Australian National University in 1976.  Chairman Mao was still alive.  The Cultural Revolution had not concluded.  And our Chinese language text books also taught us to study Dazhai, to study Daqing and to study Lei Feng and Dong Cunrui.

Since then I have lived in China, worked in China and visited here about 100 times over the years.  As a scholar, a diplomat, a businessman, a Secretary-General of a provincial government, a Member of Parliament, as a Foreign Minister and as Prime Minister.  I have personally seen the changes unfold in this country.  I have also seen these changes from these many different perspectives.  And my conclusion is that these changes have been overwhelmingly good both for China and the world.

China has now become a middle income country with rising living standards and hundreds of millions lifted out of poverty.  China has just brought about a successful leadership transition.  And increasingly China is regarded as a great power both in the region and the world.  This has all happened over the last 35 years. 

It has been made possible because of strategic decisions taken by Deng Xiaoping.  Also because of a peaceful, stable and generally prosperous regional and global environment.  Our core challenge is to do what is necessary to preserve this international environment for the future.

The purpose of my address today is twofold.  First to discuss the future of the regional and global order as seen from different capitals: from Beijing, from Washington and from the other capitals of Asia.  Second, based on these different perspectives, can we build a new strategic roadmap for China US relations under President Obama and President-elect Xi Jinping?

The View from Beijing

The world and the region as seen from China is often very different from that which is seen from other countries.  This is not just because of different interests.  This is not just because of different values.  It is also because of different historical experiences and perspectives.

The beginning of wisdom is to understand the different worldviews of others.  And as Prime Minister Lee Hsien Loong of Singapore recently said in his address to the Central Party School, the world now carefully scrutinizes China’s every action as its foreign and domestic policies invariably affect other countries in the region and the world.  For the rest of the world, this is not just of theoretical interest.  It is of real, practical interest. 

This is because China in the next decade is likely to become the world’s largest economy.  It is because China is now pursuing a more assertive bilateral and multilateral foreign policy.  And because China's military modernization (conventional, nuclear and cyber-space) is relatively rapid.  So, given the rapid change in Chinese capabilities over the last several decades, the region and the world have a legitimate interest in China's worldview.

I am often asked about this around the world.  The ten points I make here today are the same as the ones I make in conferences around the world.

First, I believe China's worldview is shaped by the continuing central role of the Party in a political system which explicitly rejects the western democratic model.

Second, within that system, the PLA answers to the Party, not the government or the state.

Third, the fundamental responsibility of the Party and the army is to maintain the territorial integrity of the country.  This means a strong approach to separatist movements in Tibet, Xinjiang and Taiwan.  It also means asserting China's territorial claims along its disputed borders.

Fourth, the core task for the Party and the government for the decade ahead is to transform China's economic growth model.  This new model is outlined in the last Five Year Plan and the 18th Party Congress Work Report.  China recognizes that its economic success so far has depended on the internationalization of its own economy and access to global markets.  But for this next economic transformation to occur, China still needs a stable strategic environment.

Fifth, China also continues to need secure long term access to long term supplies of energy and raw materials.

Sixth, despite these clear economic objectives, and despite China's desire for a stable strategic environment to serve those objectives, China in fact has a difficult relationship with many of its neighbours.  This is seen in North East, South East and South Asia.  China also sees this as part of a pattern of US alliances and strategic partnerships both in Asia and beyond.

Seventh, China sees US actions as part of a de facto policy of containment.  China believes the intention of this policy is to frustrate China's peaceful rise.  China does not accept the "China threat" thesis.  China emphasizes the historical record that even when China has been powerful in the past, it has no history of invading other countries.  Instead, China argues that it wants to build a harmonious world based on the principle of mutual advantage.

Eighth, China's worldview is also driven by its historical experience.  Including its hundred years of foreign humiliation.  And its natural desire to resume its proper role as a great power, as in the past.

Ninth, China resents the fact that the current global order was created by the Anglo Saxon victors after the last World War.  China does not accept multilateral criticism on human rights and climate change.  China does not accept criticism of its relationship with states like North Korea, Syria and Sudan.  China does not believe this criticism is fair because of its longstanding policy of mutual non-interference in one another’s internal affairs.  China argues that the principles of mutual non-interference and national sovereignty are core parts of the UN Charter.  China argues its voting pattern in the UN Security Council is driven by these longstanding principles.

Finally, despite these difficulties with the UN system, China is under pressure to contribute more to the UN as a "responsible global stakeholder."  China argues that it is still a developing country.  Nonetheless, China is now doing more in the world in areas such as peacekeeping and in development of what it calls south-south cooperation.

It is, of course, impossible for a foreigner to attempt to describe the region and the world as seen from Beijing.  And this list is undoubtedly flawed and incomplete.  But I believe it gives some sense of China's view of the opportunities and obstacles it sees today in the current regional and global order.

US Perspectives on China's Rise

You will not be surprised to learn that the world as seen from Washington is a little different.  The United States is also profoundly shaped by its historical experience.  

America sees itself as the decisive power that determined the outcome of two World Wars in the last century.  The US sees itself as having paid a great price for this in "blood and treasure."  The US then built much of the post war order that has preserved the global peace.  And this strategic stability has underpinned the age of post-war economic prosperity.  The US then saw the collapse of the Soviet Union after a half century of Cold War.  For the last twenty years the US has seen itself, and been seen by the world, as the world’s only remaining superpower.  It may seem strange here in Beijing, but the US sees its global leadership role as both a privilege and a burden.

The US has been profoundly affected by the events of September 11.  The war against terrorism has dominated much of US domestic and foreign policy over the last decade.  The wars in both Afghanistan and Iraq have had a deep impact on America’s perception of its future global role.

American economic self-confidence was badly affected by the Global Financial Crisis.  Five years later, the United States is still recovering from this crisis.  Many now debate whether the financial and economic model that created the crisis is appropriate for the future.  But despite this there is still an overwhelming sense of American economic self-confidence; that economic renewal and recovery will occur.  There is little sense in the United States that its days as either economic or military superpower are coming to an end.

This is the broad framework in which the United States sees the rise of China.  The United States is very conscious of China’s strengths.  It is also very much aware of China’s weaknesses.  The United States deeply respects China’s formidable economic achievements over the last third of a century.  It respects the formidable work ethic of the Chinese people.  It respects China’s strategy in laying out basic economic infrastructure across the entire country.  It also respects the pace of China’s military modernisation.

Like China, however, the US questions the sustainability of China’s current economic growth model.  It questions the environmental impact of this model.  It also challenges China’s adherence to intellectual property rights and whether China is always playing by the international trade rules.

The United States, together with the rest of the West, also believes democracy is a universal value.  In the case of the United States, this is underlined by what is called “American exceptionalism”.  This is well described in Henry Kissinger’s latest book “On China”.  American exceptionalism is their belief they have a moral responsibility to propagate democratic ideas into the world.  For this reason, democracy and human rights will continue to be areas of disagreement with China.

In Asia, the US believes that China is now competing for traditional US strategic dominance.  The US is aware that China is the major trading partner of most of the economies of Asia.  America is also aware that China has obviously extended its scope of political, cultural and economic diplomacy across Asia, Africa and Latin America.  America has also looked with concern at the level of regional tensions arising from border disputes, both in the East China Sea and the South China Sea. 

In my view, by far and above, America’s greatest regional concern is North Korea’s nuclear weapons program.  No one should underestimate the political and strategic significance of North Korea’s most recent long-range ballistic missile test.  This has focussed the minds of the entire region, most particularly Washington, Tokyo and Seoul but also more widely in the region, including in Australia.  The US will continue to ask China to do more to restrain North Korea’s nuclear weapons program because this program represents a fundamental challenge to long-standing regional stability.

The Obama administration has sought to redefine its strategic engagement in Asia in five different ways

  •  First, the so-called “rebalance” of its military assets to Asia.
  • Second, the American decision to join the East Asia Summit.
  • Third, America’s support for the extension of the trans-Pacific partnership to include Japan and possibly China.
  • Fourth, under Secretary of State Hillary Clinton, engaging in active bilateral diplomacy in all the capitals of Asia.
  • Fifth, the continuation of the Bush Administration’s strategic engagement with India.
The goal of the Obama Administration is to demonstrate to the entire region that America intends to remain an Asia-Pacific power in the 21st century.

 America recognises that the centre of global economic gravity has moved to Asia.  America also recognises that the centre of global strategic gravity will follow.  As the world’s remaining superpower, the US sees itself as responding naturally to these global shifts, from the Atlantic to the Pacific, from Europe to Asia.  The US also sees itself as having provided much of the underpinning strategic stability in both maritime and mainland Asia in the past.  This in turn is seen as fundamental to Asia’s great economic success story in recent decades.  The US also believes that its treaty relationships with Japan and Korea have prevented both from becoming nuclear weapon states in the face of the North Korean threat.

For these reasons, the United States sees itself as having a central role in underpinning the strategic stability of Asia for the future as well.  Importantly, the five measures I refer to above have been welcomed in practically all of the capitals of Asia.

The rise of China as seen from the rest of Asia

Asia’s economic and strategic future does not depend on China and the United States alone.  There are 18 member states of the East Asia Summit.  In South East Asia, China’s rise is seen as both an economic opportunity and a foreign policy challenge. 

The economic opportunities speak for themselves.  The Chinese economy is now deeply integrated into most of the economies of East Asia.  If the Chinese economy was to stop tomorrow, economic growth across Asia would collapse the day after.  This is a simple statistical reality.

But on the foreign policy front, questions are asked in many Asian capitals about the foreign policy implications of the 18th Party Congress Work Report.  For example, will China seek to consolidate its broader influence in Asia? Also, does the protection of China’s interests in the maritime domain represent a new element in China’s foreign policy formulations?  Furthermore, does China intend to use its international influence to reform the current international order and if so in what direction? These are the questions asked in many Asian capitals today.

China’s foreign policy engagement across South East Asia had proceeded smoothly until about 2010.  From that time on, a number of South East Asian states have expressed concerns about China’s assertion of its territorial claims in the South China Seas.  For the record, Australia has always remained neutral on these questions.

North East Asia boundary questions have also emerged with both Korea and Japan.  This has also resulted in an increase in foreign policy tensions in the region.  Some have argued that the election of President Park and Prime Minister Abe provides a fresh opportunity for a fresh start.  Based on my understanding of Japanese domestic politics, the internal politics of the LDP and the stated positions of Shinzo Abe, I do not agree. 

In fact, I am deeply concerned about a generational change in Japanese attitudes towards China and what that means for the future.  I’m also concerned about the possibility of Japan installing meteorological devices on the disputed islands.  I’m also concerned about the likely Chinese reaction to such a step.  Just as I am concerned about the temperature of public opinion in both countries.  I have studied the relationship between these countries for all of my professional life.  But I have never seen it as bad as this.

There is of course one major strategic bright spot in wider East Asia.  And that is the issue of Taiwan.  Decisions taken in both Beijing and Taipei over the last four years have contributed significantly to the stabilization of cross-strait relations.  In fact, cross-strait relations are in better shape now than at any time since 1949.  And this is excellent news for regional stability.

But despite the good news on Taiwan, what we tend to see as the general trend across Asia is two competing forces at work.  One is the force of globalisation.  The second is the force of nationalism.  The force of globalisation brings economies, peoples and countries closer together.  The forces of nationalism tend to tear economies, peoples and countries apart.  Globalisation is the force of the 21st century.  Nationalism is the leftover force of the 19th and 20th centuries.  Globalisation has become a positive force.   Nationalism has increasingly become a negative force.  And nationalism is spreading across Asia.

But if we in Asia want to have a different future to the European experience of the 19th and 20th centuries, then we will need to do things differently.                            

Future directions for the Asian hemisphere

So what then is to be done?

What I have attempted to do in this address so far is to describe different perspectives on strategic reality from Beijing, Washington and the rest of Asia.  I have not tried to define who is right and who is wrong.  That does not help anybody.  Nor does it help solve common challenges. 

So how could we craft a common future together as opposed to a future based on conflict?

The end of 2012 has seen three very different electoral processes take place for the world's three largest economies.  President Obama was re-elected in the United States and will hold office until early 2017.  Xi Jinping was appointed General Secretary of the Chinese Communist Party and Chairman of the Central Military Commission where he will remain until at least 2017.  He is also likely to retain those positions, as well as the Presidency of China, until 2023.  And then on 16 December in Japan, nationalist LDP leader Shinzo Abe was elected in a landslide as Prime Minister.  This will Japan’s eight Prime Minister since 2001.  But given the size of his super majority in the Japanese lower house, he now has a reasonable prospect of serving a full four-year term.

I argue that much of the future of East Asia will be determined by the decisions taken in Beijing, Tokyo and Washington over the next four years.  There are two broad strategic approaches available.

The first is what I call “strategic drift”.  Under the “strategic drift” scenario, Beijing, Washington and Tokyo will simply seek to “manage” each issue as it arises.  This is both a passive strategy and a reactive strategy.  Also, because the issues in these relationships are increasingly difficult, issue management will become increasingly difficult.  Issue management is also likely to increasingly overwhelm the strategic fundamentals of China-US relations in particular.

The alternative is an active strategy of strategic cooperation.  Some argue that the core problem in China-US relations is an absence of trust and that trust must be re-established before cooperation can occur.  I believe in the reverse logic.  The only way to build trust is by undertaking active projects of cooperation and concluding them successfully.  That way, trust is built on cooperation and success.

I believe there is some interest in Washington in using these next four years to develop a new strategic framework for the China-US relationship.  I have also noted very carefully what General Secretary Xi Jinping has said about the need for a “new type of great-power relationship”.  In particular with the United States.

This was emphasised by Xi Jinping during his visit to the United States in February this year.  Specifically, China has emphasised that this “new type of great-power relationship” should not be based on the old types of great-power relationships that we have seen in Europe in the past.  These old style great-power relationships were based on hegemonic relations which often ended in conflict and war.

Instead, Xi Jinping argued in the United States that a new relationship with the United States should include increased strategic trust, deepened mutually beneficial cooperation, and enhanced cooperation and coordination on global issues – as well as respecting one another’s core interests.  Furthermore, at a Tsinghua University forum in July this year, Xi Jinping noted that “a country must let others develop as it seeks its own development; must let others feel secure as it seeks its own security; must let others live better when it wants to live better itself”.

I would argue that these also represent useful concepts for the further development of China-US relations.  I therefore believe there is an opportunity to try and bring US and Chinese strategic thinking together on this subject.

I argue that President Obama and President Xi need to outline a five year US-China strategic roadmap.  In the absence of such a strategic roadmap, there is a real danger of strategic drift.  Such a strategic roadmap could provide both central organising principles as well as a practical work program within both administrations.

The Chinese often complain about United States’ policy being inconsistent both within and between administrations.  The United States often complains that the Chinese government does not always speak or act with the full engagement or compliance of the Chinese military.  A US-China Strategic Roadmap would assist in removing some of these uncertainties and ambiguities.

Further, I would recommend seven elements to such a roadmap for the future.  These are virtually the same as those I argued in Washington last week when I addressed the Brookings Institution.

First, President Xi and President Obama need to meet regularly with all the key members of their respective staff.  These individuals need to become highly familiar with each other. At present they are not. This should involve three to four sets of substantial engagements scheduled regularly throughout each calendar year. 

Fortunately the G20, APEC, the UN General Assembly (and possibly the East Asia Summit) provide opportunities for regular engagement.  But these need to be substantive half or full day engagements around a long term structured agenda – that is a strategic roadmap – not just the protocol requirements of the day or, for that matter, the issue management of the day.  As these regular summits tend to occur in the second half of the year – there should also be agreement for a regular bilateral summit in one another’s capitals in the first half of the year.
Second, both President Xi and President Obama need to have an undisputed “point person” to be the ultimate “go to” person on the relationship.  At the United States end, this should mean the National Security Advisor or a senior official within the National Security Council (NSC) who can speak comfortably across the Administration, and with authority. At this critical juncture of US-China relations, America needs the next Henry Kissinger for all the back-channelling that is necessary, both behind and between official Presidential meetings.  

Similarly China needs its own Henry Kissinger as well.  The Chinese system does not have a NSC. It needs one.  In the absence of an NSC, it needs a senior official who can speak across the political, security and economic agenda with authority.  Trust between these two individuals on the United States and China sides is critical.

Third, globally, the United States and China should embark on a realistic program to make the current global rules-based order work.  Increasingly it doesn’t. We are all familiar with the impasse over Syria which is not likely to be resolved in the near term.  But in other critical blockages in the UN System (e.g. the Doha Round, climate change and nuclear non-proliferation) both the United States and China have an interest in demonstrating that the rules-based order can work – and can deliver real results.

Furthermore, a new period of Sino-US strategic cooperation will also make the G20 work more effectively given the complex array of global financial and global macroeconomic challenges that lie before us.  As China becomes the world’s largest economy, a properly functioning G20 becomes even more important.  Both China and the United States should identify at least one of these areas of potential global cooperation which together they can drive to a successful global conclusion.  This would also demonstrate to one another and the world that they can in fact make the global rules-based order work.

Fourth, regionally, a new US-China Strategic Roadmap should embrace the principles of how to build a new rules-based security order for East Asia.  I outlined this in an address to the Asia Society in New York earlier this year and again in late September at the Singapore Global Dialogue.  The latter in particular details a range of specific measures of how we can create a new Pax Pacifica which is neither a new Pax Americana by another name, nor a Pax Sinica.  This involves working and agreeing on the strategic and conceptual language of such a regional rules-based order. 

Language is particularly important so that strategic concepts are made comprehensible in both countries and the rest of the region.  For example, western concepts of collective, multilateral security cooperation can be made compatible with Chinese concepts of strategic harmony and balance.  Almost a foreign policy equivalent of the “The Golden Mean” (Zhong Yong). 

Apart from language, however, a Pax Pacifica should also include basic principles of regional security cooperation.  As well as specific confidence and security building measures that help facilitate dispute resolution as well as prevent conflict through miscalculation.  The East Asia Summit and the ASEAN Defence Ministers’ Meeting +8 provides a readily available mechanism for doing this work.

Fifth, bilaterally, the US and Chinese militaries need a much closer working relationship.  At present, there is a formal strategic and security dialogue at Deputy Defence Minister, Deputy Chief of General Staff, Deputy Foreign Minister level.  This should be elevated to ministerial and Chief of General Staff level.  The purpose of this bilateral, security dialogue should be to develop confidence and security-building measures between these two important militaries.  This should focus on service-wide protocols for avoiding and managing incidents at sea and incidents in the air.

Sixth, beyond political and security cooperation, at the economic level a new US-China strategic roadmap should include a trans-Pacific partnership that should seek to include Japan, and in time, China and India.  A genuine free trade area in the Pacific would help harness all the positive forces of economic globalisation that has helped change much of the region for the better so far.

APEC has made extraordinary progress over the last 25 years.  Nonetheless APEC does not include India.  We now need to go to the next stage with regional economic integration.  Here the East Asia Summit may also be useful because it includes India and also has a political, security and economic agenda.  This would also provide a further, proactive positive agenda of work for the US-China relationship to focus on.

Finally, a new US-China strategic roadmap should also be consolidated into a new “Shanghai Communique” between China and the United States. It is now almost a third of a century since the last communique was produced.  This occurred at the very beginning on Deng Xiaoping’s program of reform and opening.  China’s economic and strategic circumstances have changed significantly since then.  The Cold War that underpinned US and Chinese strategic collaboration in the 1970s and 1980s is now over.  Therefore, the time has come to frame a new communique which deals with the new economic and strategic circumstances of the 21st century.


Foreign policy priorities are always a choice between the urgent and the important.  The challenge of China-US relations represents both.

I have recently been reading a book by Christopher Clark entitled The Sleepwalkers – How Europe Went to War in 1914.  It is a cautionary tale of how the Europeans drifted into a conflict that slaughtered millions, brought down empires and destroyed an entire civilisation.  The book chronicles how the leaders of Europe, “who prided themselves on their modernity and rationalism, in fact behaved like sleepwalkers, stumbling through crisis after crisis and finally convincing themselves that war was the only answer”.

I sometimes wonder whether we in Asia have properly reflected on the centuries of large-scale killing that Europe endured.  And on Europe’s conclusion 1945 that enough was enough and that it was time for a new European and global order.  I for one do not believe there is anything determinist about history.

What we now need is unprecedented foreign policy creativity.  The purpose of this foreign policy creativity is to place the China-US relationship in a new strategic framework.  We need to reconceptualise problems we face into opportunities which will benefit us all.  And then develop a concrete program of policy action to give these ideas practical effect.

The reengineering of strategic mindsets is arguably our core challenge.  If we and our friends in America just simply conclude that conflict is somehow inevitable in the long-term, then the prospects are grim indeed.  If, however, we are capable of engineering an alternative mindset which is neither utopian nor delusional, but instead seeks to maximise cooperation and minimise conflict, within the overall principles of an agreed strategic framework, then we are capable of changing the course of history.

Australia is a country whose most important economic partner is China and a country whose oldest continuing ally is the United States.  As former Prime Minister and Foreign Minister of Australia, my purpose today is to leave these proposals with you in the hope that the United States, China and Australia, in partnership with the other countries of our wider region, can in fact build a truly Pacific century together.