US-China Conflict is Solvable

the Asia Society Policy Institute. Okay so. As of this year, the United States has the world's largest economy and China has the second largest, but most economists estimate that China will overtake the United States as the largest economy in around ten to fifteen years. As China grows. The increasing rivalry between the two countries has led to an increasingly

rocky relationship. While President Trump has said that he and the Chinese leader, shi Jing Ping will always be friends, the US administer stration has been expressing serious concerns about China. In June, the Secretary of State Mike Pompeo said to a news conference, China wants to be the dominant economic and military power of the world, spreading its authoritarian vision

for society and its corrupt practices worldwide. The tensions between the two countries are playing out through the economy and through national security. In the United States, there are concerns about Chinese ownership of US infrastructure and the potential for Chinese made products to be used to spy on or damage the US, and the two countries remain in dispute

over territorial issues in the South China Sea. Looking at the economy, last year, the US imposed three rounds of tariffs on more than two hundred and fifty billion dollars worth of Chinese goods, on everything from handbags to railway equipment. China hit back by imposing tariffs on US products including chemicals, coal,

and medical equipment. But while officially Washington and Beijing have agreed to a truce in their escalating trade war, experts including Kevin Rudd, who spent much of his career as a diplomat and China expert, are really concerned about the potential for this relationship, which has the power to affect basically everyone in the world, and to become an armed conflict. The Asia Society Policy Institute, which Kevin Rudd leads, is

a think tank with a problem solving mandate. Kevin Rudd's job is to tackle policy challenges confronting the Asia Pacific insecurity, prosperity and sustainability, basically working to avoid war between the world's two biggest powers. He's so calm and steady as he discusses this job with Jacob Weissberg, You'd be forgiven for thinking this huge task is an easy one. As you'll hear, it's not. But he has a solvable What is the problem of potential or conflict between China and

the United States? That is why are we worried about it? If you spend enough time in Beijing and Washington these days, you know that both countries war plans are alive and well and are being modernized and modernized around two sets of scenarios, a collision between military assets and the South China Sea or over future political and military contingencies on

the future of Taiwan. These have now become sharper, much sharper, because of the fundamental deterioration in the political relationship between the two countries, which right now is in its worst condition really since the end of tenement. Yeavin, why is it europe problem? Why is this the problem you've dealt on? Because there's no such thing as a bilateral armed conflict

between China and the United States. It automatically involves America's friends and allies around the region, by which I mean the Asia Pacific region and the world meaning the Europeans as well, whether they like it or not. And for those of us in the world who also believe that we can walk and chew gum at the same time, which has had a productive relationship with China while still being a friend and ally of the United States, this

is more than a passing academic interest. So there is this idea of the inevitability of conflict military conflict between US and China, this notion of the facilities trap, that great powers end up in conflict with each other. Like it or not, you why is that? Why is that theory wrong in this case? I don't believe the theory is of itself wrong in terms of it being predictive

of certain forms of political and ultimate armed conflict. However, I do not think it's determinist That is, history also tells us that there are ways out of facidities trap. For me, the most alive set of precedents we're looking at in the current environment are those not of the Second World War, but the first in the First World War, we saw two sets of fundamental dynamics underway. Britain concerned about the rise of Germany and Germany surpassing Britain in

terms of naval power and aggregate economic power. And simultaneously, Germany concerned about the industrialization of Russia and what therefore a future Russian Empire could look like given its larger population, as a strategic threat to Germany. And then we had the incendiary event, which was an assassination in obscure place in Serbia of Archduke Ferdinand, who nobody had ever heard of, but it was capable of igniting a much more fundamental

geopolitical and geostrategic conflict. Was war inevitable? No, it was the most avoidable war in history, a comprehensive failure of diplomacy. Therefore, when we apply that logic to the events of US China relations in the twenty first century, many of these dynamics remain alive. A rising power, an established power triggering events in the South China Sea and or Taiwan. But my judgment is diplomacy always is capable of finding a

way through. We simply need to be focused on the seriousness of the threat and the credible nature of the alternative off ramps. We're in at least the early stage as if not the fourth rittled version of a US China trade war. Is the scenario you worry most about, a trade war or economic conflict escalating into military conflict, or do you think it will come. If it comes,

that the risk comes from something else Entirely. In the history of political relationships and diplomatic relationships, it is never a neat binary of one thing or the other. It's a multiplicity of contributing factors. What we see with the trade war, however, is one articular elation of a much broader American strategic rethink against China, which began frankly with the election of the Trump administration, but was in part in train before that as well. And how do we

characterize that. The Trump administration in December of twenty seventeen announced a new national security strategy where it proclaimed the end formally of forty years of strategic engagement with China and the commencement of a new period of strategic competition against China. At the same time, China, since the election of Shijinping as president and party secretary in twenty twelve thirteen has embarked upon a consciously more assertive Chinese strategy

in the economy and foreign policy and security policy. And so we now have these two new dynamic forces interacting with each other, for which the current as it were, flashpoint, as the trade war, it is, if you like, simply the icing on the cake of a much broader, unfolding American strategy involving rolling back against China on the rest of the economy, investment, capital markets, technology markets, talent markets, as well as classical foreign policy and security policy, as

well as the continuing unresolved dilemma of human rights between China, the US, and the rest. So what we don't know is if and when the trade war is resolved or at least brought to an uneasy piece, whether the rest of the American roll back against Chinese power will then unfold. The administration remains divided on that, just as the Chinese administration remains divided about how now to proceed. That's why

we are currently in a dangerous environment. So you see signs that there is military build up, more preparation for a potential war. It's in the last couple of years. But what points that towards conflict as opposed to a

balance of power and detroits. Well. Again, if we look at the precedence of the First World War, the operating principle applying in the minds and the chanceriies of Europe prior to the guns of August of nineteen fourteen was a balance of power central alliance of German in the Austro Hungarian Empire versus Britain, France and Russia in those days the Russian Empire. Unfortunately, balances of power, because they are balancers, are inherently unstable and they can be triggered

by underlying incendury political events. So while balances of power are one thing, the bottom line is much of the reaction in Washington is being generated by a political conclusion and a national security policy conclusion, and that the balance is moving more decisively in China's direction. We see that already manifest in the classical instruments of economic power. China is already the largest economic partner of practically every country in Asia. That was not the case ten or twenty

years ago. And if you look at the force modernization, the PLA and it's naval assets, it's air assets, but in particular it's capacity to use its onshore rocket forces to create a much more effective airc denial strategy against US armed forces in the West Pacific. These are new, These were not there ten years ago. That's why we

are in a volatile environment. I think the assumption has been the most likely triggering a vent to military conflict would be over Taiwan, that China would act take power in Taiwan, and that the United States would react might react. Now, the American policy historically been strategic ambiguity, so it's not we don't have a stated policy about whether we would

defend Taiwan or not. How has that changed you think the risk there has increased or the risk has simply shifted to other potential theaters of military coamflet The classical scenario concerning Taiwan still remains the most incendiary because there

are three moving parts within it. Now Chinese nationalism under Shi Jinping, where his statements over the last five years have become progressively sharper on the future of Taiwan and the point at which China would wish to see Taiwan returned by peaceful or non peaceful means to the Motherland's

tender embrace. Secondly, in Taiwan itself, a DPP administration in this rambunctious Taiwanese democracy which is fun to watch but it's sometimes scary to analyze, and the predisposition of the Democratic Progress Party not just under Taiying one but the rest of her party supporters to resist any form of embrace from the motherland, to move more decisively in an

independentist direction, which is China's internal redline. And Thirdly, under the Trump administration, let's say less strategic ambiguity than we've seen on the part of previous American administrations. For example, not just the most recent American Taiwanese arms deal, but the fact that you now have open meetings between Taiwanese national security officials and the National Security Adviser of the

United States in the White House. These are new and different instruments of US policy, backed up by a new and fresh congressional level of support for Taiwan as well. How does this admixture produce a future Taiwan crisis? I can't predict, but the possibilities are no longer remote and they don't become probable, but they are still becoming increasingly quantifiable.

We've recently seen China back down something I wouldn't have expected, in the faith of massive public protests, and Hong Kong over an extradition law that was one of a number of incremental steps limiting some of the democratic prerogatives of

Hong Kong. That surprised you, not entirely because if we look at the history of Hong Kong since to handover in nineteen ninety seven, and I'm old enough and ugly enough to have been around for the handover and in fact began my diplomatic career at the time when Thatcher signed a joint declaration with Dungsaping back in nineteen eighty four. The dynamics of Hong Kong PRC politics have always been

on the volatile side. There are massive public protests, for example by the Hong Kong As in two thousand and two, which also brought about a u turn in Chinese policy on a proposed set of changes. Back then, they failed.

In twenty fourteen, that is, public protests in twenty nineteen, they've succeeded the PARC leadership while always seeking incrementally to reduce Hong Kong's aggregate political autonomy within the framework of one country two systems has never been shall I say so doctrinaire that it can't accept political reality when it

sees it. I think the parallel resolve, however, will be in China itself, where it fears Chinese protests could emulate those undertaken in Hong Kong, will be an even a more vicious crackdown against any evidence of descent within the PRC proper. So let's talk about the salvable aspect of this. You point to the escalating consions, you point to some of the potential flashpoints. Yeah, you think the war is avoidable and the risk can be reduced. How are we

going to do that? Well, the degree of difficulty, given what we face at present in US China relations is hard. And I say that as a preliminary comment because both in Washington and Beijing at the moment, standing up and giving a speech and holding an olive branch is a good way to get shot down. At the moment, in Washington, increasing the question which has asked if people like me is well, Kevin, who side are you on? There's are ours?

And the question I get asked in Beijing increasingly is much the same Kevin Old, friend of China, speaker of Chinese language, person who's visited our country for one hundred and fifty times over at last thirty five years. Are you with the Americans? Are you with us? And the bottom line is my response to both those questions is not as some unpeace envoy. It's simply saying, from a perspective of constructive realism, how do we navigate a way through this unless either of you actually want to go

to war? And when I ask that question there's usually a long pause. But on the practical question of how then to proceed, my argument would be this that a rational analysis by both countries of their fundamental national interests and their fundamental national values which are at play here, leads to you to kind of three conclusions. Category one is those questions of national interest to national values where there is no solution, for example Taiwan, for example, over

the country's fundamentally different political systems. One's authoritarian capitalist system China, and the other is America, which is there's rolling rambunctious some would say two rambunctious political democracy and equally rambunctious capitalist system which from time to time through is out to the rest of US things like the global financial crisis,

but we forgive you for that. It was going to thank eving the one country has an authoritarian capitalist system and the other has a president who wants an authoritarian capitalist world. You could say that I couldn't possibly comment because you're an American and I'm not, so I'm just a guess. You've always had impactable manners the diplomat. It's never been said at we Australians. We've often said we have no manners at all. We try so I think you know, can't agree. One here is what's the stuff

you can never agree on? And being very blunt about that. And there's precedence for this in the relationship between Breshn of Soviet Union and the United States. There came a point after the Cuban missile crisis where detante was seen as not a dirty word, but something which could actually be done managing the fundamental differences between the two countries, differences which could not be reconciled, but which in the inclusion of both countries, do not warrant an underlying view

that war was inevitable. Category two in the US China relations is what stuff between the two countries is hard, really hard, but nonetheless manageable and capable of producing mutually acceptable solutions which don't violate each country's fundamental interest. Now there, I'd just give you two examples. One is North Korean nuclear denuclearization, where the differences between Beijing and Washington are significant but ultimately not irreconcilable, given that both Beijing and

Washington would arguably want a more stable Korean peninsula. Another example would be China changing it's global economic practices, both on trade and investment questions, to open the Chinese economy in a much more fundamental way than Chinese decision makers have been prepared to allow in the last decade or so, so that the underlying nature of the American current critique of Chinese economic policy is dealt with by changes in Beijing.

Are both those things really hard? Yes? Are they doable? Yeah,

but with absolute diplomatic and political determination. And finally, in the way in which I argue this principle of constructive realism, there's a category of policy engagement between Beijing and Washington which should be easier and doable on a daily basis, for example on challenges of global climate change action, and for example on challenges of financial and economic governance, through institutions such as the G twenty, and frankly, through common

endeavor in dealing with global or regional humanitarian crises. The reason I argue for this way of viewing the relationship is that when we get locked into what the Chinese would describe as a silly a way of thinking about each other, in this case China the United States, which heavy loads category one, which is it's all doom, gloom and despair without regard to category two and category three, then we can end up in self fulfilling prophecies about

the way in which this relationship evolves. By contrast, if you adopt what I have argued as being a framework of constructive realism, which is being realist about the stuff you can never agree upon and constructive about the rest of it, and if you are constructive about the rest of it incrementally building greater strategic trust over time, then you can navigate these changing fundamental geopolitical dynamics between the two and the balance of power between the two over

time in a peaceful way. We've only seen glimpses so far of Chinese nationalism rallying against the United States, as an enemy. It hasn't. Really, It seems that Si Jinping hasn't pulled out that weapon yet. He hasn't brought people. We haven't seen people in the streets in China burning the US flag. Is there a risk that happens over the trade war or that something else unleashes this public

demand for more of a reaction against the United States. Well, his studios China relationships kind of an interesting beast, and those of us who've studied this over the years still find it interesting and not just interesting, but troubling without boring your listeners. The sixty second Summaries a bit like this. Twenty years plus of strategic animosity forty nine to seventy two, not just the Korean War where you killed each other in large numbers, but the Taiwan Straits crises of that period,

which almost brought you to war on multiple occasions. President Eisenhower threatening nuclear obliteration of China on a number of occasions, then Nixon and Kissinger and day tomed Mao and Joe and Lye taking us from seventy two really until the collapse of the Soviet Union in ninety one. But the organizing principle there was a common strategic enemy, namely the

Soviet Union. Period three was really from ninety one through until I would say the rise of Shijinping in two thousand and twelve thirteen, with a common mission statement between the two countries. No longer strategic collaboration, the common enemy

had gone. It was common economic engagement and how can we each benefit each other's economies With an implied American assumption the Chinese would fully open their economy and in America's utopian dreams, China ultimately transforming itself into a democracy

of Singaporean type characteristics. Then we come to the present, a more assertive China since twenty twelve thirteen under shi Jingping, Belton Road Initiative of South China see Island Reclamation China twenty twenty five, high technology strategies, as well as she Jingping abolishing term limits. And we now are where we are with Trump taking us perhaps into this current period

of a strategic competitive doubling down against China. In the period since seventeen, so against all of that, you've had vastly evolving Chinese sentiments towards the United States. I spent the three of the last six weeks in China, and I've seen something of a turn to some of the nationalist rhetoric against the United States that we haven't seen for at least thirty years, reruns of old Korean War movies, revisiting of the spirit of the Long March of thirty four.

We Chinese can be resilient despite the American bully. This language I really haven't seen since the pos Postaleman period. It can be turned on and it can be turned off. So I think the jury is still out. Did that trip Kevin leave you more concerned or more optimestic about the possibility for a day time and you were before he went. It left me frankly, modestly schizophrenic on the question, which is, on the one hand, the economic needs of

China and the United States. When you strip back all the political rhetoric for a trade deal to be done in order to restore business confidence in both economies going into twenty, in fact becomes clearer that is the economic rationale for the two leaders to do a deal and to resolve the trade war and get that off the political agenda, but also the agenda of markets is as

strong and as real as it's ever been. At the same time, there has been a strategic conclusion I believe in China that President Trump cannot be trusted, and more fundamentally, a view in China that whether it's Republicans and Democrats that the new American resolved doubled down against a rising China is now bipartisan, and that therefore the fundamental strategic assumptions which have governed the US China relationship since the

beginning of strategic engagement under Nixon and Kissinger are now fundamentally changing. And my conclusion coming out of Beijing and speaking to multiple Chinese political leaders and those who advise them, as well as Chinese entrepreneurs and others only peripherally engage in Chinese politics, is that we have now embarked upon a period of deep strategic review in Beijing about what its response to the new American strategy should be, and the jury in Beijing is still out on where that

will go. The US China relationship plays itself out at the commanding heights of military relations, economic relations, diplomatic relations. People like you have access to it, but listeners to this show, I think, want to know if they think this situation is as dangerous and high stakes as you say, what can they do? Are there things that ordinary people can do to reduce tensions reduce the risk of conflict

with China? Well, if the audience of this program is sort of a wider public opinion the United States and let's call it friends and Allies of America, as I'm assuming this may not achieve a wide broadcast reach into China itself, then I suppose my thoughts would be as follows. And what I say to American policy leaders, whether they

are Republican or a Democrat, is much the same. Number one is, think through very carefully what actual political or policy change you want to see broad about in China, as opposed to what just sounds good in terms of American domestic political sound bites for either a primary in the Democrats case or President Trump's rolling reelect on the other. In other words, what's going to work, what's going to

be effective in changing concrete Chinese economic practices? And therefore, to think through very carefully what can deliver those outcomes as opposed to that which actually compounds the problem in

Chinese actual behaviors. What do I mean by that? I think there is always a danger with an American rhetorical overreach in response to China, that you create circumstances within Beijing itself which enable political leaders to simply circle the wagons, haul up the nationalist flag, and unite the country against the American threat, as opposed to a dynamic which actually does exist or has existed most recently in China, which

actually itself internally asks the question have our political leaders in China begun to overreach? Have we gone too far with ireland reclamation in the South China Sea? Have we gone far too far with bri Is it affordable? Is it in fact sustainable? Can we Chinese do this without attracting massive foreign policy reaction? Is China twenty twenty five as a high technology strategy which declares that we will overtake every other Western country in high tech and AI

in the next decade? Is that vastly too provocative? Is it realizable? And was it smart to abolish term limits for the presidency of our country? These are the sorts of shall I say, doubts and anxieties within the Chinese domestic politic which American policy leaders should be mindful of in how they deploy their policy. In other words, to be more granular in their response to China, rather than simply taking the grand political sledge hammer, which can induce

instead a much cruder nationalist response. You're talking in a way about trying to win over a Chinese people as opposed to affecting government policy directly. But can that work in a country without democratic accountability, where the opinion of the public, first of all, if it's based on information and genuine information at all, doesn't have any obvious impact. I think the beginning of the analysis of what makes

Chinese politics tick is along these lines. First of all, there are eighty six million members of the Chinese Communist Party, and there are one point four billion Chinese people, and both the members of the party and the wider public now, whether we like it or not, and with the Beijing likes it a lot, have multiple sources of information. Despite

the firewall. For example, these Hong Kong protests have spread like wildfire within China itself because there's just a limit to how much you can shut down within a two hour period. It's like playing whack a mole in Chinese social media. You shut down one here and bombed bumps up there. That's the first piece. I think the second piece in the analysis is this Within the Chinese Communist Party,

It's not monolithic eighty six million members. There are a bunch of different views, as there are within a twenty five member polyp Ero and even a seven member committee, the Politburo, which functions effectively as the Chinese cabinet. They all have multiple sources of information. The danger for American strategy is this has reflected in a conversation I had recently with a friend of mine in b Junior I've known for twenty five years and is someone who's quite

politically literate. He said, you know President Trump's strategy towards China, there's doubling down against China, and the way in which he has conducted the trade war as an expression of US national interests only has fundamentally eroded the pro American constituency within China itself. Why because in the past, American presidents have acted almost as a representative of two forces

in the world. City on the Hill that is representing a much wider universal set of values as well as obviously being president of the national interests of the United States itself. But previous American presidents have sought to, as it were, represent both. Now we see an American nationalist president who, frankly, in China's domestic view, is no more

principled than Vladimir Putin or any other leader. And bringing up well, if you look carefully at what President Trump has said since he became president, he doesn't talk about democracy in the world. It doesn't talk about human rights in the world. In fact, he often begrudgingly speaks about allied interests in the world when he says, maga, make

America great again, and let's put America first. And if you looked at his most recent presidential political rally on launching formerly his reelect about the first interest of every American president being to look after American citizens, but to the exclusion of the interests and values which unite the family of Nations, which have by and large supported American global leadership since Narting forty one, not forty five forty one, then the critique are here in Beijing on the part

of those who are more objective observers of these things in the Chinese domestic politic, I think has some foundation. In other words, is President Trump trashing the global democratic brand? That is global democracy brand? And is he trashing also at the same time, the American brand within China. More broadly, hence my question about the way in which American strategy towards China is pursued. I'm not arguing for some sort of Namby Pamby kind of hand holding. Isn't China great?

It's a wonderful civilization that never does anything wrong. Approach. That's never been my approach. If you look at my own period as Prime Minister of Australia, we had many, many, many fundamental disagreements with the Chinese, but without fundamentally imploding the Australia China relationship. It's that sort of granularity which I would recommend to our American friends, while recognizing the

fact that Americas are superpower. Australia obviously is not. But there's a way in which you conduct your strategy towards the Chinese which should be mindful of the breadth of opinions within China itself, rather than simply assuming it's one monolithic block determined to, as it were, destroy the United States. Well that and Kevin Rod, thank you for joining us. Unsolvable. Good to be with you and maybe solve more things together. I can already hear me self repeating some of what

Kevin Rudd said at party. So I sound like smart and informed, Like, guys, listen up. We need to be mindful of the breath of opinions within China itself, rather than simply assuming it's one monolithic block. Everyone would be like, yeah,

maybe that's so true. But seriously, when tensions appear to be rising inexorably, it's easy to lose sight of the diversity of opinions within all sides of a dispute, and to remember that this means there can be room to find common ground when things heat up between the US and Iran or the US and North Korea. It's good to know that in the background there are diplomats with experience and goodwill in countries like China and Australia and the UK working to resolve issues with China before they

get as dangerous as that. As we've heard in other episodes of Solvable, peace between nations is fragile and takes work and courage, arguably even more courage than war. Solvable is a collaboration between Pushkin Industries and the Rockefeller Foundation, with production by Laura Hyde, Hester Kant, Laura Sheeter, and Ruth Barnes. From Chalk and Blade. Pushkin's executive producer is Neil LaBelle. Research by sher Vincent, Engineering by Jason Gambrel

and the great folks at GSI Studios. Original music composed by Pascal Wise and special thanks to Maggie Taylor, Heather Fine, Julia Barton, Carli Mgliori, Jacob Weisberg, and Malcolm Gladwell. You can learn more about solving today's biggest problems at Rockefeller Foundation dot org slash solvable. I'm Mave Higgins. Now go solve it six