Tuesday, 24 July 2012

Address to the Munk School of Global Affairs

I am honoured to be able to address this distinguished School of Global Affairs at this most distinguished Canadian University.

The University of Toronto was established some years before the establishment of the University of Sydney – Australia’s oldest university.

This University has produced generations of Canada’s political, corporate and community leadership from the inception of the Canadian federation.

The standing of our academic institutions, the quality of their pedagogy and their engagement with the contemporary challenges of the international community are great assets for us all.

Both Canada and Australia face many common challenges as we seek to negotiate the great change drivers of the twenty-first century.

But as we do so, we bring to bear a profound tradition of common and continuing values.

We are among the oldest continuing democracies in the world.

We have a long-standing commitment to individual liberty, political freedom and human rights anchored in the Universal Declaration and the international covenants.

We are both committed to open economies.

We are equally committed to open, diverse and tolerant societies.

As peoples we are also animated by the principles of opportunity for all and justice for all.

We are also both proud of the fact that we are nations of immigrants – immigrant communities from whom we continue to draw political energy and economic dynamism for the future.

We have both wrestled with the challenges of injustice to our Indigenous peoples as most recently our respective Parliaments have sought to advance the cause of reconciliation by apologies to our respective first peoples.

As nations, we have exhibited great strength at being proud of our achievements, and honest about our failings.

These are the values which have shaped our respective engagements with the world at large.

Our national experiences have been deeply seared by the two World Wars of the twentieth century.

Our diplomats joined together at San Francisco in 1945 to help shape a post-war order anchored in the principles of the United Nations.

We are both founding members of the UN.

We are both active in every single agency of the UN.

We have both given significantly to the cause of international development through our respective aid agencies which continue to collaborate closely.

Our strategic pathways diverged over the last half century as Canada became fully integrated in NATO and the Atlantic relationships which underpin that engagement.

Australia, for its part, became comprehensively engaged in the affairs of the Asia-Pacific – the region that has shaped much of our past and one which is likely to shape most of our future.

Of course, both these national engagements have been anchored in our common strategic relationship with the United States.

And through the medium of our common alliance we have found ourselves more recently engaged in Afghanistan, and the wider global campaign against terrorism in all its forms.

We are also now equally engaged in the great challenge of global cyber security which presents us with new and fundamental challenges to both our national and economic security.

Canada and Australia in the World Today

I believe as we confront the new challenges and opportunities of the twenty-first century, Canada and Australia will find themselves working together more closely than ever before.

You are a country of both the Atlantic and the Pacific and both your politics and your economics throughout your history have felt the impact of different gravitational forces from Eastern Canada and Western Canada.

Australia is a country of both the Pacific and the Indian Oceans. And we too from time to time have felt the pull from different gravitational forces from our Eastern states and Western Australia.

The truth is that today we are both in the midst of a profound global geo-strategic, geo-political and geo-economic transformation from what is fast becoming the century of Asia and the Pacific.

Inevitably and inexorably, the gravitational pull of the underlying dynamics of this century will bring Canada and Australia closer together in confronting the common challenges and opportunities of the future.

I also believe that a closer Canada-Australia collaboration will be driven by the dynamics of globalisation itself.

Our respective national destinies are being driven by two of the great change-drivers of our age – the rise of the Asia Pacific together with the relentless impact of globalisation and the contraction of the time and space taken for individual political, security and economic transactions and the parallel expansion of non-state actors.

Both these change-drivers are likely to see us working together more intimately in multiple domains than has ever been the case in the past.
Australia, as the twelfth largest economy in the world and the fourth largest in Asia, sees itself as a middle power, animated by enduring values and activated by both global and regional interests.

The globalisation of security, the economy, and environmental challenges such as climate change and sustainable development, leaves us with no option but to be globally engaged – as one of my distinguished predecessor’s Gareth Evans described, “in the tradition of good international citizenship”.

Just as the dynamics of the Asia Pacific century require us to be comprehensively engaged in the affairs of Asia.

For Australia, these are not alternatives.

Current global and regional realities require us to do both.
Globally, we are active in the G20, the UN, the Bretton-Woods institutions, and now with new treaty relationships with the European Union, new military cooperation agreements with NATO and new institutional engagements with the African Union, the Gulf states, the Indian Ocean states, and MERCOSUR, SICA and CARICOM in Southern and Central America and the Caribbean.

And as current Chair of the Commonwealth, we are also seeking to enhance its global effectiveness as well.

Within Asia, we are now fully engaged with APEC, the ARF, the East Asia Summit, a Free Trade Agreement with ASEAN, the Trans-Pacific partnership – together with our long standing central role in the Pacific Island Forum.

In advancing our engagement both globally and regionally, we seek to do so through what I have called creative middle power diplomacy for a range of current challenges.

Canada, of course, has a rich tradition in this respect.

We have sought to apply these principles - including the work of the G20, the expansion of the EAS to include the United States, leading global advocacy for a no-fly zone in Libya when that country’s future was in the balance and, through early foreign ministerial engagement with Burma in our efforts to help bring that country in from the cold.

The Rise of China

However, I believe a central question of our age, and one of the core considerations of many developments I have just referred to, is the rise of China.
And it is on this central question that our two countries will once again find an increasingly common focus between us.

In the last week I have been in the United States in discussions with the UN Secretary General, Vice President Biden, former Secretary of State Henry Kissinger and Chicago Mayor Rahm Emanuel.

China has been the constant theme for us all – whether it’s globally, nationally or locally.

This was also the case when I sat down with the Canadian Foreign Minister and corporate leaders here in Ottawa this morning. In fact, China has been the subject of multiple discussions between us in the many times we have met since John Baird was appointed Minister.

This is no coincidence.
A central question for the first half of the twenty-first century will be whether we have the collective wisdom and common resolve to manage the rise of China in a manner which preserves the peace, security and prosperity of us all.

And to do so within the framework of a liberal international rules-based order anchored in the principles of common security, open economies and open societies.

As someone who has spent the last 35 years of his life engaging with China - as a student, businessman, diplomat, Foreign Minister and Prime Minister, my argument to you today is that on balance I believe we can successfully embrace the rise of China in a manner which is good for China, good for the US, good for the West, and good for the rest.

My argument is not based on a starry-eyed view of the Middle Kingdom.
I have lived and worked in China during the best and worst of times including having stood in Tiananmen Square just prior to the events of the 4th of June, 1989.

I am, therefore, very much a realist.

Just as I am realistic that if we are to manage the peaceful rise of China, it will require sustained intellectual effort, unprecedented diplomacy and great statesmanship from us all.

I am also sufficiently a realist to be fully aware of the price that will be paid by us all if we fail in this mission.

Allowing political, ideological or foreign policy confrontation to drift into armed conflict or worse, to degenerate into full-scale war in the Pacific between China and the United States, would simply be unconscionable for us all, in terms of the human and economic cost for the peoples of the world.

Therefore I believe all women and men of good mind and goodwill must apply themselves to this central task.

In my remarks today (which will draw extensively from an article I published just two weeks ago in the United Kingdom and from my address just last week to the Chicago Council on Global Affairs) I want to explore five specific questions:

     Will China become the dominant global economy and what will this mean for the broader projection of Chinese influence in the region and the world;

     Will China seek to use this influence to change the rules of the international system, if so, what would that look like;

     Who will we be dealing with in the Chinese leadership in the decade that lies ahead;

     How should the rest of us engage the Chinese leadership on these questions against what I describe as the Mae West theory of international relations that it really does take two to tango;

·         How do we imagine, conceptualise and give linguistic expression to a vision of common security, common prosperity and common responsibility that will encourage China, the US and the rest to co-operate in a common foreign policy project, rather than one driven by competition and conflict.

Finally, I will offer some remarks on how we might approach the immediate challenge that lies before us in Sino-South-East Asian relations in the South China Sea.

China as the Dominant Global Economy

It is now commonplace that China will emerge as the world’s largest economy (either by purchasing power parity or GDP measures) at some point over the next two decades.

I believe it is likely to come sooner rather than later because of the compounding effects of an economy that has grown at an average annual rate of more than 8 per cent for the past 30 years.

On the sustainability of high levels of growth for the future, the Chinese are fully aware of the need to change their development model to one based on higher levels of household consumption, lower levels of savings, a greater role for the services sector, and the incorporation of principles of sustainable development in overall economic policy (this last point not through fashionable choice, but rather because of the dictate of national economic survival).

But the overall point is this: very soon we will find ourselves at a point in history when, for the first time since George III, a non-Western, non-democratic state will be the largest economy in the world.

China has become the embodiment of the great East Asian transformation.

As a result, it is becoming the embodiment of the great global transformation, as the centre of political, economic and strategic gravity moves from the Atlantic to the Pacific, from Europe to Asia, from the US to China.

The China we are contending with is also a dynamic phenomenon.

It is like the English Industrial Revolution and the global information revolution combusting simultaneously and compressed into not 300 years, but 30.

For the Chinese leadership, none of this will be plain sailing.

If you are sitting in the nine member standing committee of the Politburo of the Communist Party of China, contemplating the future, the tasks are indeed daunting:

     Sustaining 8 per cent plus economic growth in the midst of a faltering global economy;
     Managing a rising middle class with greater and greater aspirations for individual freedoms;
     A restive Chinese media complemented by an explosive social media which increasingly defies central political control;
     The politics of inequality in a communist state;
     The capacity for environmental destruction (including climate change) of itself to derail the economic development process;
     Not to mention maintaining the internal stability of a Communist party of 87 million members beset by challenges to its ideological, political and moral authority because of widespread corruption;
     And on top of that, to do so for a country that hosts between a quarter and a fifth of all of humankind.

In other words, the Politburo’s in-tray is fairly full.

China successes over the last 30 years are as great as the challenges it will face over the next 30.

A number of analysts have expressed reservations about whether the Chinese leadership will be able to successfully implement the transformation in China’s economic growth model that I referred to earlier and that is outlined systemically in the twelfth five-year plan of 2011-15.
Essentially the argument is as follows: on the one hand, for the Chinese leadership to continue to guarantee 8% growth, guarantee sufficient employment to satisfy China’s growing legion of college graduates, and those from inefficient state-owned industries, and to guarantee increasing living standards for those seeking liberation from poverty, this new tranche of fundamental economic reforms are necessary.

The argument continues that the institutional implications of these fundamental reforms are profound: an expanding role for the private sector which has slowed in recent years; reining in the state-owned sector by taxing them more, by greater dividend payments and with less access to easy finance driven by administrative decisions; and financial sector reforms that can enable SME’s to grow, for a corporate bond market to emerge and for China’s long-suffering depositors to be paid decent interest rates rather than having their deposits cross-subsidise an inefficient state banking sector.
On the other hand, the argument continues that the common denominator to all these reforms is a diminution in the state’s capacity to administratively direct the economy through both SOE’s and the state banking sector.

Of course that means a diminution in the power of the Party as well.

Not to mention the loss of financial privileges associated with a feather-bedded state-owned sector.

The same analysts conclude therefore, that the Party leadership finds itself between the devil and the deep blue sea.

The Faustian contract between the Party and the people is threatened if the Party fails to deliver the continued economic growth that only these reforms can deliver.
Whereas if the Party proceeds to implement these reforms, it is also signing its own political death warrant, albeit over a longer period of time.

Therefore, the conclusion these analysts reach is that the current Chinese leadership is likely to baulk at taking the hard decisions.

On balance, I do not subscribe to this analysis.

I believe it underestimates the political personality of China’s incoming president Xi Jinping.

Furthermore, it ignores the fact that over the last thirty years, China has been through a series of so-called “policy crises” and on each occasion they have, by and large, defied the pundits, proceeded down the reform path, against the simple proposition that to effectively sustain national political unity and stability there is no alternative course.

Therefore, I believe any complacency on the part of the US, the West and the rest about the likelihood of China’s faltering is badly misplaced.

The only proper assumption we should have, based on China’s experience of the last 30 years, is that it will continue creatively to overcome the obstacles that it faces.

And, as a consequence, continue to entrench its credentials as a global power.

China’s Influence on the Global Order

If this is the case, how will China exercise its power in the future international order? Will it accept the culture, norms and structure of the post-war order? Or will China seek to change it?

Importantly, some might say disturbingly, this matter remains unresolved among the Chinese political elite themselves. The internal debate continues to unfold.

Hence the Chinese academy, in close co-operation with the policy agencies and research departments of the state, is searching the past for legitimate, non-threatening forms to explain their future regional and global role and to define, more fundamentally, what that role should be.

At present, there is no centrally agreed grand design.

In other words, on this great question of our age, the jury is still out.

One of the best books on this subject in recent times is Henry Kissinger’s tour de force On China, published in 2011.

I believe this might be regarded in time as Kissinger’s greatest work, not as an interesting diplomatic reflection, but as an active guide to the various Chinese “futures” that might unfold.

Kissinger’s analysis of Chinese “exceptionalism” (yes, that’s right, Chinese, not American, “exceptionalism”) is superb. He calls it “the singularity of China”.

Take the following:

“The Chinese approach to world order was thus vastly different from the system that took hold in the west.

The modern western conception of international relations emerged in the 16th and 17th centuries, when the medieval structure of Europe dissolved into a group of states of approximately equal strength, and the Catholic Church split into various denominations. Balance-of-power diplomacy was less a choice than an inevitability.

No state was strong enough to impose its will; no religion retained sufficient authority to sustain universality. The concept of sovereignty and the legal equality of states became the basis of international law and diplomacy.

China, by contrast, was never engaged in sustained contact with another country on the basis of equality for the simple reason that it never encountered societies of comparable culture or magnitude.

That the Chinese Empire should tower over its geographical sphere was taken virtually as a law of nature, an expression of the Mandate of Heaven. For Chinese Emperors the mandate did not necessarily imply an adversarial relationship with neighbouring peoples; preferably it did not. Like the United States, China thought of itself as playing a special role.

But it never espoused the American notion of universalism to spread its values around the world. It confined itself to controlling the barbarians immediately at its doorstep . . . China did not export its ideas but let others come to seek them.”

A parallel set of considerations is alive in relation to China’s role within the Asia-Pacific region.

China is already the largest economy in Asia.

Its foreign policy footprint across the region is already formidable.

As is its strategic presence through the changing structure and operational capabilities of the People’s Liberation Army, Navy and Air Force.

China is active in all the principal institutions in Asia and the Pacific.

And China does not like being crossed in any of these institutions on issues which it believes to be core to its national interests, including the South China Sea.
Once again, however, there is an open debate within Chinese elites as how best to conceptualise and operationalise China’s future role in what might best be described as the East Asia hemisphere.

Once again, there are signs of an emerging opportunity to engage the Chinese intelligently on how to craft regional norms and rules of behaviour for this region for the future.

The truth is, at present, the East Asia hemisphere is comprised of a large number of rapidly developing twenty-first century economies in the midst of a decidedly nineteenth century set of strategic realities – that is multiple, unresolved territorial disputes, long-standing historical animosities and fundamentally brittle security policy relationships based on profound mistrust.

That is why we are witnessing an explosion in East Asian military expenditure – what might be called the East Asian arms bazaar.

The uncomfortable reality is that economic integration does not of itself ameliorate long-standing strategic tensions, as attested by the economic and political history of pre-1914 Europe. Unprecedented European economic integration at the end of the Edwardian age did nothing to prevent catastrophe. In fact, catastrophe brought about by profound strategic miscalculation.

Given the fluidity of the current intellectual and policy debate within Beijing on the question of China’s future international role, and given impending leadership changes later this year in China's presidency, premiership and general secretaryship of the party, I argue that there is a great opportunity to work with our Chinese friends on how we might collectively shape our regional and global futures together.

But Who are we Dealing with on the Chinese Side?

If it does take two to tango, we also need to ask: who are we really dealing with on the Chinese side? China, though a one-party state, does not represent a monolithic political culture.

Chinese politics is made up of many competing forces. First there are the liberal internationalists who have pioneered, implemented and seen the great harvest that has come from China’s decision in 1979 to bring about market reforms in its domestic economy and to liberalise its economic engagement with the world.

The benefits are there for all to see in the great Chinese political debate. Living standards have risen rapidly, and not just in the great cities of Beijing, Shanghai and Guangzhou, but also for hundreds of millions of people living in provincial centres and the countryside.

Nonetheless, the country’s liberal internationalists do not have it all their own way. Their formidable achievements notwithstanding, there is a growing internal debate about the sharpening of income inequality, as well as widening regional and subregional disparities.
Furthermore, the environmental dimensions of China’s industrial explosion are not only a problem for the world they are a problem for China, too.

It follows from this that another big competing force in the Chinese political debate today is one more critical of the social impact of economic liberalisation, and one that is more conservative in its policy conclusions.

This group argues that the reform process has already gone far enough. It contends that any pretence of “socialism”, in what formally remains a “communist” system, has long disappeared.
Elements of this conservative group argue that to take the economic reform process much further would endanger the interests of the still significant state-owned sector of the economy.

They say that, when push comes to shove, it remains important for the Chinese state to be able to pull the levers of the national economy, not just through the classical forms of fiscal and monetary policy as we have in the west, but by actively directing state-owned corporations and financial institutions to expand or contract their economic and financial activity in direct response to government decisions.

This group is particularly wary of the calls for democratic reforms arising from the burgeoning economic freedoms that already have been created, because it recognises these as significant medium to long-term threats to the continued political monopoly of the Communist Party itself.

One last group that will be central to the question of China’s future place in the world is the military. Even as someone who began studying China 35 years ago, I still find the country’s armed forces one of the most opaque institutions in the world. That is also the conclusion of most China scholars and analysts around the world.

Like most militaries, the People’s Liberation Army (PLA) is a conservative institution in terms of values, traditions and its intrinsic nationalism. However, under the Chinese system, the military in many respects operates as a structure separate from the Chinese government.

Usually the PLA’s policy perspectives on the region and the world are brought together with those of the government only at the most senior echelons of the party itself – through the Central Military Commission and the Standing Committee of the Politburo.

The problem with opacity is that it often induces “worst-case scenario” planning on the part of China’s neighbours, and those who share the country’s broader strategic environment.
Naturally, the PLA would argue that US and allied contingency planning in relation to China leaves it with little option other than to engage in worst-case scenario planning itself.

And so the self-perpetuating cycle of strategic mistrust and military countermeasures continues. The problem with risk management of this order of magnitude, however, is that it runs an even greater risk of becoming a self-fulfilling prophecy.

Planning for the worst tomorrow often shapes the political behaviour of today.

How this internal Chinese debate is resolved (between liberal internationalists, political conservatives and the military) is critical for all of us. Because the core question remains – once China becomes the world’s largest economy and as its diplomatic footprint and its strategic power expand accordingly, will China seek to change the rules, customs and culture of the post-war international order? And if so, how?

It is relatively clear that Xi Jinping will emerge as China’s President, General Secretary of the Party and over the next two years, Chairman of the Central Military Commission.

The precise composition of the rest of the seven to nine member standing committee of the Politburo remains uncertain.

My own conclusion, although not shared by all analysts, is that Xi Jinping, after an initial period of political consolidation, will emerge not simply as China’s primus inter pares – but as a more substantial political personality in his own right. Because of his political pedigree, Xi is likely to have more influence on China’s future policy direction than any other individual political leader since Deng.

I would also argue that on the assumption that Xi Jinping serves two full terms of five years each, beginning late this year, by the time he concludes his term he would have done everything possible to implement the broad thrust of the reform program outlined in the twelfth five year plan.

Again the argument underpinning this logic is that China’s political and policy apparatus, despite formidable coordination problems internally, is ultimately rational about what China must do in order to maintain its long-term unity and stability.
Nonetheless, the core question remains: what impact will the continued rise of China have on the norms, values and institutions of the current global and regional order.

Whether we like it or not, the answers to these questions will affect all our futures: the future of economic integration in Europe, given the rolling European debt crisis and China’s emerging status as the global creditor nation; the emerging security order in Asia, where China’s military influence is already significant; as well as future prospects for global humanitarian intervention (in Libya or Syria, for instance) under the auspices of the UN Security Council, given Beijing’s ability to wield the power of veto.

A Strategic Response for the US, the West and the Rest

I noted earlier that the debate about China’s future in the world is not just the sound of one hand clapping.
The attitude and the actions of the rest of us can also have a profound effect, for good or ill.

Regrettably, however, it is a debate for which most of the collective west is ill-prepared, particularly given individual country’s domestic preoccupations with their respective economic futures and, as a result, the increasing political insularity of both Europe and the United States.

Policy elites in these countries on both sides of the Atlantic (with the exception of the British and some sections of the Obama administration) are largely disengaged from this most critical conversation of the century – the rise of China.

However, that is not the case in Asia, where, because of proximity, the policy debate on China is more sophisticated, nuanced and acute.
There is, nonetheless, a real danger that a new global and regional order begins to emerge by default, in the absence of significant diplomatic engagement from the West, and one that may turn out to be deeply inimical to Western values and interests.

So, what then is to be done? Is it possible for the West (and, for that matter, the rest) to embrace a central organising principle as we engage China over the future of the inter­national order? I believe it is.

But it will require collective intellectual effort, diplomatic co-ordination, sustained political will and, most critically, continued, open and candid engagement with the Chinese political elite.

So, what might the core elements of such an engagement look like?
First, the international community must accept that it is entirely legitimate for China to have a louder voice at the global negotiating table.

Not only is China a great civilisation, it has become, once again, a great power. The international system should not be seen to be exclusively the expression of western interests.

The history of European colonisation has done much to diminish the moral authority of the colonisers in the eyes of those in the previously colonised world.

Europeans in particular are often blind to this reality.

It is critical that the future international system be based on universal values, as expressed in the various normative codes of the United Nations system, rather than the narrow interests of a particular group of states.
And within this framework, Chinese, Indian, Latin American and African voices should be able to play a more important role, including making contributions from their own civilisational traditions.

Second, we should argue clearly with the Chinese political elite that the current liberal internationalist order, which has preserved the global peace and enhanced prosperity for two-thirds of a century, must be sustained.

This will entail enhanced co-operation with China on the world’s security, macroeconomic, macrofinancial, trade, investment, social, environmental and humanitarian challenges, based on the agreed norms of the present global rules-based order.

Any recourse by any member state to uni­lateralist, nationalist or mercantilist behaviour should be deemed unacceptable.

This principle must be applied rigorously to all of us, including China.

It also means that China should be encouraged to enhance the existing order through its own policy actions, even when its national interests are not at stake, but whenever the integrity of the order is worth defending in its own right.

Such an approach is very much in keeping with the advocacy by Robert Zoellick, the former president of the World Bank, of the principle of China as a responsible global stakeholder.

Third, if, for whatever reason in the future, China steps beyond these agreed norms, the rest of the international community should be prepared not only to say no resolutely, but also to act accordingly.

Understandably, the international community will hedge to some extent against this possibility.

Fourth, the crucible for China’s rising role in the world is of course the Asia-Pacific region.

This is where the new regional institutions underpinned by shared international values will be needed to craft principles and practices of common security and common property for the future.

In the past, Asia has had no such institutions with either the mandate or the membership to discharge this function.

But with the expansion of the East Asia Summit last November to include the US (and Russia), we now have all the major powers of this region around a single table at summit level with an open mandate on political, economic and security issues.
And this for the first time in Asia’s history.

Confidence-building and security-building measures, greater military transparency, common responses to natural disaster management (the greatest scourge for the peoples of the region) as well as common regional commitments to open economies and sustainable development are now possible.

For the first time, we have it within our grasp to fashion a credible, new Pax Pacifica – a multilateral, regional, rules-based order, anchored in the principles of the broader international system.

And given China’s expanding international role, the new Pax Pacifica may ultimately be translatable into a wider peace, should Washington’s relative global power continue to decline.

Importantly, at present, no one in Asia is seeking to replace Pax Americana with a Pax Sinica.

Workable multilateral, rules-based orders are in a different category altogether, in which all legitimate stakeholders share responsibility for upholding the order.

Fifth, there is real work to be done on a conceptual level, finding common language, common frameworks, and common discourses between China and the collective West on how best to describe the future global and regional rules-based order.

Some may regard this as an academic abstraction – something on which international relations scholars can engage in permanent seminars, but of limited practical utility.

Once again, I disagree with this approach.

My reason for doing so is that in China, political language and philosophical concepts matter.

The Chinese have a three thousand year old national discourse on statecraft.

And in contemporary China, given the Communist Party has 87 million members, common conceptual frameworks are important simply to communicate to China elites what direction the leadership intends to take the country in its engagement with the world at large.

Because of this, and because our own Western political and foreign policy traditions also have a significant longevity of themselves, there is a grave danger of things simply being lost in translation in exchange between two long-established political cultures – i.e. China and the West.

For example, as noted earlier, Bob Zoellick has argued that China should act as a responsible global stakeholder.

It is generally agreed that this concept does not readily translate into Chinese in a manner that is useful to convey the concept to Chinese political elites.

Another example of the Chinese expression “taoguang yanghui.”

The Chinese translated this as “hide your strengths, bide your time” to describe China’s current strategy of taking a measured approach to their current global engagement.

Unfortunately, the translation chosen tends to infer a level of Chinese deception about what their long-term plans might be once they’ve consolidated their national economic and strategic power.
To be fair to the Chinese, this deception is not alive in the original Chinese formulation – one which was handed down by Deng Xiaoping himself.

There is therefore, a grave danger that underlying objective tensions between China and the United States are exacerbated by two political and foreign policy cultures simply talking past each other.

That is why there is profitable work to be done in this domain.

For example, the current Chinese leadership describe their national mission as developing “a harmonious society at home and a harmonious world abroad” (hexie shehui, hexie shijie).

These in turn derive in part from classical Chinese philosophical concepts concerning the great harmony (Da Tong) and the Golden Mean (Zhong Yong).
Many will ask: what on Earth is the use of all of that to the current challenges we face with China’s rise?

I believe there is a possible bridge to be built between these modern and classical Chinese concepts and the type of role China could play in a multilateral rules-based order – both global and regional.

The whole point of a multilateral rules-based order is to “harmonise” the various interests of the participating parties around common principles and common courses of action.

This therefore is the point at which common conceptual work needs to be done: to reconcile Chinese concepts of a harmonious world with Western concepts of a multilateral rules-based order, shaping common security and common prosperity for us all.

This is not a substitute for strategic action by the collective West and in the other areas I have already referred to. Nor is it a substitute for fundamental decisions by the United States to remain militarily and diplomatically fully engaged in the Asian Pacific in the current century, whatever contraction may occur elsewhere.

Nevertheless, this work on establishing common strategic norms which are both meaningful within our own respective political traditions on the one hand, and capable of accurate translation between these traditions on the other, represents one part of a wide program of work. Let’s never forget that we all have a common interest in reducing unnecessary linguistic lethality.  

South China Sea

Of course all this could be rendered null and void if current tensions arising from one issue in particular escalate into a full blown crisis.

Here I refer to tensions between China and various states of South-East Asia over conflicting territorial, maritime and freedom of navigation claims in the South China Sea.

Last week’s East Asia Summit Foreign Ministers meeting resulted in an impasse on this matter.

Tensions have been running high.

This is not the time or the place to rehearse the detailed claims and counterclaims of the contending parties, nor the plethora of diplomatic processes which have been deployed both bilaterally and regionally to arrive at a common approach.

It is nonetheless important, however, to note clearly that recent naval and other surface deployments within the South China Sea by various states and around various incidents are incrementally increasing the overall levels of tension.

And beyond elite politics, there are multiple nationalisms also at play, in China, the Philippines, Vietnam and other states which make it even more difficult for governments to have sufficient freedom of manoeuvre in accommodating flexible postures for negotiation.

These various factors are creating increasing concern in all capitals.
My purpose today is not to attempt to foreshadow any detailed course of diplomatic action.

Nonetheless, I am sufficiently concerned about unfolding events in the South China Sea to flag the fact the time has come for all parties to take a deep breath, step back a little, thereby enabling all of us to take stock.

Negotiations around so-called declarations of conduct and codes of conduct will continue between the Aseans and China.

Negotiations may also be possible (as China has recommended) for common resource exploration and extraction regimes which place unresolved territorial claims semi-permanently on the political back burner.

Just as the Aseans may consider other international diplomatic mechanisms for the long term resolution of these issues including the United Nations Law of the Sea Tribunal and even the International Court of Justice.

It is important that additional creative minds be brought to bear sooner rather than later around these various negotiating possibilities.

The current trajectory is not a good one for any of the parties directly involved, nor for the wider region.

Again my reason for raising the South China Sea in the context of my broader remarks on how to negotiate a long-term Pax Pacifica for us all, is that left unattended, the South China Sea has the capacity to derail the entire process.

And that could be potentially catastrophic for us all.


It remains an open question whether China will democratise and whether it will in time respect relevant international covenants and their application to domestic human rights practice.

All who are familiar with the country’s development are equally familiar with the arguments for and against the likelihood of this coming to pass.

In the meantime, the challenge we all face (China included) is managing the rise of a non-democratic China as a great power within the framework of the international order.

I believe there is sufficient common sense, common interest and, therefore, common purpose for these difficult decades ahead to be negotiated peacefully.
It will require great statesmanship – statesmanship that must be based on rational engagement and not predicated on any form of appeasement.

Success can never be guaranteed.

It will require the highest levels of political engagement and thoughtful diplomacy that the world has seen since the end of the Cold War.

And then, should China through its own national means choose to become a democracy, all the better.

However, to predicate our diplomacy in the immediate period ahead on such an assumption would be foolish indeed.

If we in the west can continue to work with liberalising elements within the Chinese system – to cause the country’s leadership to conclude that their people’s long-term interests lie within the current liberal, rules-based order, one that has served the international community reasonably well since the carnage of the Second World War – then we can succeed and, indeed, craft a truly Pacific century for us all.


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