Transcripts For CSPAN3 East Asia Summit Preview Security Panel 20141104

The carbon green coal technologies. My question is on the shortterm energies and Contingency Planning for an Oil Supply Disruption. The questions are the region prepared in terms of Strategic Oil stocks or oil sharing plans for an Oil Supply Disruption. Is the institutional architecture of the region the various International Forum such as the iea, asean, asean plus 3, as well as the east asia summit. Are they up to the task in terms of the regions institutional framework in dealing with shortterm Energy Crisis such as an Oil Supply Disruption using tools such as oil stocks or oil sharing plants . If not, what can be done . That is a great question and it kind of brings out the reality that simultaneously we all together have to do two things. One is manage the situation in which one exists now and the other is put in place the tools and the institutional and tec technological that can help us to move forward. I would say from the u. S. Perspective, we think that this issue that you raised is a very important one. And one where there has been very, very promising collaborations that have gone on, but i would not for a moment say that it is sufficient. In some regards to highlight a couple of examples of collaboration that has already been underway you can look at the work that the International Energy agency has done with a number of east asian partners looking at preparedness, responses, what Strategic Reserves are in place, what one would do, how industry could meet its requirements and continue to provide for the population. Thailand has been a very active participant with iea and has done a couple of Emergency Response exercises and has hosted a region wide engagement. China, of course, is another important east asia partner in this regard as the Worlds Largest importer. There to be candid we hope to find deeper collaboration Going Forward with china. China is building its own Strategic Reserves which is an important step to happen. We think that there is a great deal of scope for technical and policy and other interactions so that china, which has this enormous stake in the functioning of todays Global Oil Markets can provide the kind of transparency that is the necessity for all global participants including china to make informed decisions. And we welcome the steps that the Chinese National Energy Agency administration has taken together with the department of energy to deepen collaboration in this area. We think it is a really, really important thing. Institutional framework, good start, much more needed. Thanks for the question. Actually, you are the one who really understands more on this issue. Actually, asean talk, we try to come up with similar kinds of requirements of 90day strategy that i think in terms of stock pilings and gas could be included in some of the country. This is just for oil. As you know not many countries meet the 90day requirement because most of the stock hold inventories so all countries like thailand and others step up and commit to 90 days to 60 days except japan is having almost 200 days, i guess. I think in that regard we understand that building this kind of facility would cost investment. One time i have provided comment during this [ inaudible ] that with support from iea it is important that when you build this it has to be closely in terms of economy. It doesnt mean for asean country to hold stock for 90 days. There are many practices in the region you can exchange a swap kind of thing. It is important to look closely in terms of structure or economy. The reserve itself just to prevail if there is disruption within seven days or two weeks. It could hit the economy of that particular country. So some countries are small in terms of structure or economy it does not have to step up into building that reserve. Regional it becomes more significant or important. Asean will look at the requirement but also will pursue in the way how it will cost effectively implement this reserve. Thank you. In the case of japan we see the importance of the corroboration of Asian Countries to respond to such crisis. So thats why recent years we have talked under the framework of japan to how we can tackle this issue. The discussion is still in a very early stage. It will take time until more concrete solution will be decided or agreed. Im mark wall, former u. S. State department, more recently university of wyoming. My question concerns Nuclear Power. We had some comments on that, but would the panelists care to dment further on the future of Nuclear Power in the energy mix, particularly in japan and elsewhere in asia. At this moment as you know there is no Nuclear Power plants in operation. And in the past three years ago the portion of the Nuclear Power plants in total power supply were 32 . But at this moment there is 0. Now restarts of Nuclear Power plants is ongoing and as to the initial two Nuclear Power plants the Nuclear Regulatory authority approved the safetiness to those two Nuclear Power plants. Now we are in the process of persuading the local people. We are hoping early next year to have restart of those Nuclear Power plants. Earlier 20 Nuclear Power plants have already presented the plan to ask for the approval to the Nuclear Regulatory authority. One by one those applications will be examined. And during this time some more Nuclear Power plants will be restarted. At this moment it is very difficult to expect to what percentage we can lead up on Nuclear Power plants. The clear direction is that the japanese government needs to decrease the dependency on Nuclear Power plants for long time period. Thanks. I just want to say that for asean perspective so you can understand that we do not deny any Nuclear Power. It is always the option of the energy mix but that requires a lot of Human Capital and also capital costs itself. It is very expensive. Currently the construction of those Nuclear Power plants but thailand, malaysia also considering. I think there are public opponents to those kind in asia. It is very strong. Since the accident there is concern about Nuclear Power. More Emergency Response and preparedness in terms of the support in terms of accident, how operated in terms of data and information and so in that regard. The infrastructure needs to be added to the grid. You cant just put a nuclear plant. The system itself has to be wired in. It is not just the up front cost of the plant but the infrastructure that comes with it. Elsewhere in asia the chinese ambitions for nuclear are startling i think in the order of 50 giga watts over the next 10 or 12 years. In india we have been encouraged with recent news requirements signaling willingness to relook at the Nuclear Liability law which is a major obstacle to development of nuclear there. I just jump in to take advantage of this question and link back to the frame of the panel which is about Energy Security by its title. From our perspective in the u. S. We feel very, very strongly that Energy Security derives first and foremost from a high degree of diversification and good systems including institutional systems around the energy economy. We certainly will see nuclear being continuing to be a part of the fuel mix in the United States. Obviously other countries need to make their own choices but we do see a real value particularly in a world looking for low and no Carbon Energy solutions. We see a real value in the Civil Nuclear sector and see this as being an area that is full of potential for important collaborations also. To move the frontier, the Technology Frontier and when they are talking about small modular things over the horizon. We are almost out of time. We have two or three minutes standing between us and lunch. This question is addressed to can you identify yourself . Im nina and i work for the Childrens National medical health system. This question is suggested to the doctor. You mentioned population as one of the things that you would have to face eventually down the road. Has it partnered with Health Agencies either regional, local, or National Level to address this. With the hope it would reduce the number of consumers and the demand for energy consumption. Thank you very much. Its hard for me to address this. Besides china, they have clear policies on the population. Asean does not have any population policy in terms of the restrictions. I am aware of the issue and think there is a lot of Public Health programs in terms of providing more safe and in terms of maternal mortalities and children and adults. Its not really controlled population growth in itself. Asean, there is a sector in asia and not really a particular type of the issue. Im aware that there no policies that is controlled into the population for asean itself. Next a conference on asia featuring Business Leaders and policymakers from asia and the u. S. Former australian Prime Minister talks about u. S. Relations with china and what he sees as the false perceptions each country has towards the other. The conference previews issues on the agenda. And the Asia Pacific Economic cooperation meetings. The center for strategic and International Studies hosted this discussion in october. You know, in my professional live ive been around politicians for 40 years. Ive been around analysts for now 15 years in this sort of environment, but ive never been in this kind of a experience before. You know, for someone who can walk you into a new space intellectually and help you understand the significance of that space and also its political importance, this is this is rare. Ive been with politicians who when explained the significance of something will figure out the politics, you know, and ive been with analysts who understand the significance and dont have a clue how to think about it politically, you know . But very, very rarely the only other person frankly whose experience was like this was bill clinton. Bill clinton had that capacity to walk you into an intellectual place youve never been before and help you perceive its enormous significance and its political import. And kevin rudd can do that brilliantly. And so i when we asked him if he would come and join us today, it was an extra hope and were very grateful that he was willing to do it. Of course, the topic is something that he focuses on personally all the time. Prime minister rudd is currently hes affiliated with csis. Were very proud of that. Hes a distinguished statesman here at csis. Hes also at harvard where they get more of his time than i wish. Because im jealous. But he is willing to come here and has been very, very helpful and supportive of us in thinking through these complex issues. He is going to give all of you that opportunity today because youre going to have a rich opportunity for something thats unique. So would you with your applause please welcome kevin rudd. And thank you for being here. Well, thank you, john, for that great exercise in expectation management. I will not produce magic this morning and there will be no song and dance show. But i do appreciate the hospitality of csis and i acknowledge the work which it does, not just on behalf of the United States but by all individuals around the world who take the disciplines of Foreign Policy, International Relations and Strategic Policy seriously. It is a first Class Institute and it brings together first class minds which i presume is why all you folks are here this morning. Secondly, you made reference, john, to my time at the Harvard Kennedy school. After i came second in the National Elections in australia last september, which is a polite way of saying that i lost, the harvard guys kind of picked up the telephone and asked me to go to the Kennedy School to think. Having been in politics for are 15 years, thats not really been my business for the last 15 years. But to think. And to think about alternative futures for u. S. China relations. And in particular, whether in fact there is a way through some of what we who have professional followed this for many years regard as some of the intractables in that relationship. And Harvard Kennedy schools been very supportive of my work on that. I spent a lot of time talking to think tanks in washington, think tanks in beijing, think tanks in tokyo, and think tanks in delhi and singapore and moscow on these questions, as well as officials from those governments as well. Of course, given the topic that weve set this morning, which is about questions of future regional architecture, china does not constitute the totality of that picture, nor does the chinau. S. Relationship constitute the totality of that picture. So in my remarks here this morning, having been invited to do this only two days ago, let me seek to stand back and look at the trends at work as i see them across the asia pacific region. Secondly, whats going well. Thirdly, whats not going so well. Fourthly, where does the china u. S. Relationship fit within that for the future. And some final remarks on questions of architecture. If you stand back and try and look at the events in the asiapacific region, we tend to think that we are unique in terms of those factors, which are affecting the Global Business of International Relations. We are not unique. The factors at work in the international community, in my view, are largely comprised of two deep Underlying Forces which we in the policymaking business or the policy advising business need to be conscious of. One is this overwhelming dynamic of what we call globalization. We use the term a lot. We often use it glibly, but the sheer manifestation of it in what we say and do everything today and perceive one another is profound. Of course, the general turbo charging of globalization as we define it by the new technologies are simply compounding and quadrupling and mutating, whether it is in Financial Markets or economic exchanges, or, frankly, in the Resources Available to terrorist organizations. And so the varieties we started talking about a decade or so ago are now actually intensifying in their scope. And the overall dynamics of globalization at the economic level and at the social level, and to some extent at the cultural level, has been over the last 20 years or so since the end of the cold war in particular to draw peoples cultures, countries, nations, and even governments some are closer together simply as a product of the dynamic. This is a virtually unprecedented phenomenon in global history in terms of its intensity, its density, its complexity. But overall, a force for the good. Then pitched against it, of course, is a second set of forces which simultaneously acts in reaction to it and seeks to pull nations apart, either internally or between one another. These i could broadly describe as the forces of ethno nationalism or simply nationalism. Anyone who thinks that we have somehow mysteriously extinguished the forces of nationalism as a consequence of rational economic man ruling the world or rational economic woman ruling the world is simply deluding themselves. You have to understand politics in your own country to know thats not the case. But as you travel extensively across asia, the nationalist agenda in each country is palpable, real, visible and tangible, and it actually shapes deeply the thinking of most political elites. Of course, if you dig into that deeper, what is this ethno nationalist reaction, whether it is what we see in europe, whether it is what we see in various extreme forms in the new phenomenon we observe in the middle east or in some of the emerging and intensifying security challenges in east asia. Ethno nationalism often is a deep reaction to the phenomenon of globalization and the deep personalizing dimensions of globalization. What actually happens in response to that is those who dont win from the globalization project economically or lose who lose their identity as a consequence of the globalization project obviously feel threatened, alienated and threatened, and they therefore congregate around concepts and ideas and political movements which are about identity, locality an ethnicity. It is palpable and real. And doesnt matter which country or which society youre talking about. The talks, therefore, of National Regional and International Leadership at present is to navigate the shoals, which are constructed by those two underpinning, deep geoeconomic and deep geopolitical forces. And they animate the fundamentals of the what i describe as the technical Foreign Policy debates which we have on a daytoday basis in the Foreign Policy community. Secondly, when we turn to how this great drama of globalization on the one hand pulling countries and cultures together versus ethno nationalism simultaneously tearing them apart, or threatening to tear them apart, the central question for the politics of europe and the politics of asia and the politics of the middle east is who will win the forces of globalization or the forces of ethno nationalism. How this grand debate is resolved globally and regionally is a profound significance for the future of the 21st century. When we look at the european project up until now we can only be but in admiration of what theyve achieved coming out of the ashes of the second world war. Mind you, and without getting under the fence with europeans here today, theyre slow learners. Having torn each other apart in three major conflagrations, from franco prussian war to second world war. They finally concluded there are better ways of doing business. The political architecture of emerging europe, first the market, then the community, then the union, was very much a political construct seeking to deal with the Underlying Forces of ethno nationalism which have effectively destroyed the continent over that scope of time. Come to our part of the world in the asiapacific region, in the period since the fall of saigon in 1975, really through until very recently, if you were to look at a 35year sweep, the globalization project in, lets call it the asian hemisphere, has proceed remarkably successfully. Weve had no major conflicts within the hemisphere. We have produced phenomenal economic growth. We have produced extraordinary increases in living standards. Unparalleled in Human History and the numbers of people that have been drawn out of poverty. As a consequence, a dynamism to the intraregional discourse within wider asia that we hadnt seen before either. Those westerners looking on to the phenomenon called asia, which is a european construct in itself when you think of the term, asia, meaning the east. East of where . Presumably london, paris or berlin or rome. But if you look at what is unfolded in asia itself, its the internal dynamics which have generated so much of the wealth, the prosperity and the success. And the external dynamics with the extra regional partners has also been important, particularly the relationship with this country and its massive market, the United States. But the intraregional dynamics have been extraordinary to unfold and overwhelmingly positive. To the Mutual Benefit of all countries within the region. And that has been i think so much the story over the last 35 years. Again, to simply sound the alarm, to conclude from that that the forces of nationalism and ethno nationalism or religious nationalism in certain cases have simply evaporated and died is simply a false analysis. The Battle Royale within the region and for its future will again center around how these two conflicting forces are contended with. Forces of globalization. Intensely drawing this region together and forces of nationalism seeking always to tear the region apart and sometimes tear nation states apart. So the report card for the last 35 years has been quite reasonable. Then in the last several years we begin to scratch our heads and ask what is happening. And it is a complex and variable picture across the region. We often forget the ancient lessons of International Relations history that mutually agreed territorial boundaries help in the business of International Relations. This is often seen to be an old concept of old realisms belonging to the verities of ancient International Relations and not really relevant to the borderless world of the 21st century, to which i would respond to the great observation of australian philosophy, pigs might fly. Its alive. Its well. And its a driving factor in the analysis of these questions to this very day in the asiapacific region. You know the fault lines within the region as well as i do. But if you go simply on a mental map tour of the region, starting with the korean peninsula, dividing the state since 1963 east through to the east china sea, senkaku, and you look at the unresolved questions which still remain between china and korea and between japan and korea, if you look at the complexity of what constitutes the South China Sea and all of the dimensions of the conflicting territorial claims involving seven different entities, before you then flip around and head through the straits of malacca on to the unresolved questions of india, pakistan and kashmir, and then further afield to what is now unfolding in terms of militant islamism not far to the northwest of there. All of these factors exist not just in theory and on paper, but are capable of in fact bringing about a conflagration at any given point through poor isu management and normal politics and dynamics of escalation which unfold as a result. So in the last three years or so we have seen these unresolved issues come much more sharply to the surface. Which brings me to my fourth point about how, in fact, this is to be dealt with in the future and whether or not the u. S. china relationship is central to most of it. I know enough about the politics of Southeast Asia to know that the chinau. S. Relationship is not central to everything. It is an important dynamic but what occurs within Southeast Asia is primarily conducted intraregionally. To any folks from the aseans here today, i would simply commend the aseans on how theyve managed their own regional evolution over the last 40 years. Its been an extraordinary development, and i think a lesson to the wider region. But when we then extend the map more broadly across the east asia itself, and its very difficult to escape the central organizing dynamic of the china u. S. Relationship in its current state and where it may evolve in the future, which is why ive taken a year out at the Harvard Kennedy school to look at it more closely. So lets look for a moment at its dynamics. If you were to take an objective measure about u. S. china relations over the last 35 years since normalization in 1979 and look at the ebbs and flows of that relationship since, on any objective analysis, if you arrive from the moon, you would have to conclude the relationship isnt in a bad state. There is no immediate palpable sense of crisis in any particular element of the relationship. However, when you look at the perceptions which are emerging within both the chinese leadership and within parts of the american Foreign Policy establishment, it is much less settling than that. Let me speak about the chinese perceptions first. The best i can describe chinas current perceptions of the United States at the most Senior Leadership level is that they have concluded internally that it is virtually impossible to develop a longterm strategic relationship with the United States based on mutual trust, mutual Strategic Trust. And i believe that they articulate this in a number of ways. They articulate this by saying that they believe that the United States is in the business of isolating china. The United States is in the business of containing china. The United States is in the business of diminishing china. The United States is in the business of delegitimizing china. The United States is in the business of ultimately seeking by indirect means to limit the chinese relationship. These things are never said in polite conversation, which is presumably why theyve asked an australian to speak to you this morning. Weve never majored in politeness. But i think at this stage of this very important relationship, china and the United States, its important we have some very clear baseline reality checks about where things actually lie in chinas perceptions. So let me flip the table in terms of american perceptions of china. I think this is very important, because the level of misperception is profound and i believe growing. I think the american perception of china i dont seek to describe any official here. It is simply my observation to the general Foreign Policy establishment is that china, for the american and global interests is important economically, that the chinese political system, however, is inherently unstable and unsustainable, and the american perception is that china is pursuing an assertive form of nationalism to mask its own internal political vulnerabilities and is seeking therefore to change the status quo across the rest of east asia over time. Firstly, by means of the economy, to economically overwhelm the rest of asia, and then in time diplomatically, and then militarily. And furthermore, deep american perceptions which raise this question about whether chinese diplomacy is in fact simply pitted at buying time while the overall correlation of forces moves more profoundly in the direction of one which economically and militarily advantages china before china more overtly and directly acts to exert its position of preeminence in the region. Again, thats never said in Polite Society either because these things are not the business of daytoday diplomacy. But if you get around think tank land a lot and you get around governments a lot, you pick up tonalities in capitals and i dont think those generalizations that i have just made are wide of the mark, that is, represent wide departures from reality. Of course, others seek to try and be objective about all this. Anyone who claims to be perfectly objective is engaged in complete selfdelusion as well. We all see reality through our own prisms whether were conscious of that or not. And we australians are no different. The only advantage we australians have, i think, is that at our best, which is not always the case, is that we are both the west and the east and the east in the west, that is, we are longstanding and deep allies of the United States for which we make absolutely no apology. At the same time, all the countries of east asia, and including the peoples republic of china, weve had a deep, comprehensive, profound, longstanding relationship. And if you look at Public Attitude surveys in australia, United States is very well liked. China is quite well liked. So theres actually a deep attitudinal basis to this in my country as well. We cannot pretend to be objective because were u. S. Allies on the one hand, but at the same time, strong and Close Friends with our counterparts in beijing on the other. What ive concluded about these different sets of perceptions is that a large proportion of them, but not in their entirety, do not reflect the objective reality. To give one example in both directions. On the containment question, if we define containment as that which is used by the United States against the soviet union during the period of the cold war, what we see in terms of americas current operational policy toward the peoples republic of china cannot be faintly described as containment. It has none of the characteristics of classic containment. That might be a useful political rhetorical line to be used in the debate, but in the days of containment there was virtually no Economic Engagement between america and the soviet union, and any soviet action anywhere in the strategic regions of the world of relevance to the United States, which was everywhere, was met with an equal and opposite reaction in one form or another by overt or covert means. That is not the case in the u. S. china relationship. It is of a vastly different character. And so we need a more textured understanding in beijing as to what the nature of u. S. Operational policy is. But the term containment is not accurate, and in my judgment can lead to erroneous policy conclusions in beijing. Now, let me flip the tables, again, in terms of what i think is erroneous american perceptions of china. When china in its tradition and its current leadership constantly say, we, as a civilized nation, have never been in the business of establishing overseas colonies when we had the National Capacity to do so, and therefore we have no such interest again in the future, other than to engage the world commercially, i think thats about right. When you look at chinas history from the ming dynasty to the present, so many of the animating forces in chinese history have been how to deal with its profound domestic agenda which have almost overwhelmed every successive generation of chinese leaders. How do you feed a quarter of humanity. How do you manage the politics of a quarter of humanity. How do you deal with its current manifestations in terms of the impact on air pollution, water quality, and the rest. My overall point, therefore, being that in the case of the perception that our chinese friends are in the business of incrementally seeking to create a form of chinese neocolonialism in parts of the world i think is profoundly wrong. It is not consistent with the tradition, it is not consistent with the characterization of actual chinese behavior on the ground. So where do we go from here. Ill conclude on these remarks. Given the centrality of this relationship, i believe both governments and the region more broadly because of the centrality of the relationship to the regions wider stability, and frankly, the rest of the world as well, as we move in to the unfolding decades of the you this century, the chinau. S. Relationship is in deep need of a new narrative. A common narrative. And here i dont simply speak in terms of some form of Foreign Policy utopianism or some sort of academic seminar. Thats not helpful. I think you need a framework which somehow, in some way responds to the idea xi jinping put forward with a great new type of power of relationship. I think why president xi put that forward, it was how do you construct a relationship between china and the United States which doesnt replicate the inevitability of conflict as weve seen in the history of great powers before. Beyond that, i think president xis concept is basically a headline waiting to be populated. It is an idea. It is a line. It is a sentence. But if you go to chinese think tank land, as i do very often, the actual internal content of this proposition is very fluid indeed. So what could a possible common narrative look like. Well, this is a very complex question. But, i would leave you with two or three thoughts. A common narrative between china and the United States is important for the reasons i just mentioned. At present i think both countries have narratives about each other but not a common narrative for both of them. Chinese have many narratives about the United States, most of them not publicly articulated, and the same in the reverse direction. So what, given all of that, is possible in terms of a common narrative for the future. I think it requires what i have described most recently as a concept of constructive realism. And a concept of constructive realism which builds towards a concept of a common future. A word about each of those words. Realism, if you spend enough time in this town, and youve studied u. S. Foreign policy in its 20th century history, this is a deeply realist Foreign Policy establishment. For entirely understandable reasons. When you look at the school as its evolved here at the theoretical level, it is rich, deep and reflected in the behavior of practitioners. In china, realism called by various Different Things is equally apparent, equally part of the chinese tradition of understanding Foreign Policy engagement, so there is a deep realist foundation to the way in which both countries view each other which has all sorts of potential difficulties arising from that of itself in terms of the expiration of mutual trust before a chance is even given in the first place. But given this is such a profound reality in both conceptual hemispheres in washington and beijing, it has to be acknowledged. There are real and objective continuing conflicting interests and conflicting values between china and the United States of which the territorial issues that ive just mentioned in the east and South China Seas about one manifestation. These need to be accepted, explicitly recognized but critically managed in a manner which concludes that allowing any one of these matters to escalate into crisis conflict of war is mutually unacceptable. Thats the realist part. Whats the constructive part. The constructive part is this. If you look at the possibility of constructing genuine public goods between china and the u. S. , both bilaterally, regionally and globally, the scope is quite wide. If you believe bilaterally and i do for a simple reason that is the more the two economies become enmeshed through investment, rather than just through trade, then, frankly, the more inseparable they become and the more their mutual interests in each others progress and advance becomes an indelible imprint within each country. So causing that investment treaty to come into being i think is a genuine public good. Because in the long term it will transform many elements of the relationship. Regionally i will touch on this in my concluding remarks there is i think a value to be had in both governments to get with those of the region beginning to evolve further the regions existing architecture. The existing architecture has served the region reasonably well but it is thin. Apec has opened a valuable role in opening economies internally and to one another across the region. If you look at the tentative moves in terms of a more geopolitical and or National Security related discussions, theres been some contribution by the asean regional forum, a nascent contribution by the east asia summit, but frankly this needs to be taken further. Why would both countries be interested in that. I dont think either beijing or the United States want to trip casually by accident or poor incident management into crisis conflict or war. Therefore, what you need is an institution such as those weve seen evolve in europe over a long period of time. I emphasize evolve. Which begin to create basic confidence and securing measures between those in the region and other participants and over time to begin to evolve through that sort of head of government level regional discourse a nascent sense of Common Security rather than divided security. This does not replace the Alliance Structure. It supplements the Alliance Structure. Of course, International Models such as those offered by the European Union are not readily applicable. But the idea and the concept and, frankly, the achievements which we can contribute to the europeans should be born in mind. This would constitute in my view a general regional public good and final a Global Public good. The postures on Climate Change is to me one of the great unwritten positive stories of the last few years. Having been a participant in the copenhagen summit on Climate Change in 2009, having not slept for two days and seeing that particular attempt to get a global Climate Change treaty advanced, with much intransigence from the governments i just mentioned, was i believe a tragedy. But whats fundamentally changed since then is a 180degree shift in chinese policy. The ability therefore for president obama and president xi to advance the Global Commons or Global Public good by making new National Commitments on Climate Change i believe is a real element in the trust building exercise. Which brings me to the final element of the equation. First, the foundation is realist. Secondly, if you like, the super structure is constructive due together in areas where the interests are sufficiently overlapping or the values are sufficiently overlapping. The third element is over time having a concept that you can harness the political and diplomatic capital from these areas of common cooperation to in fact deal with the underlying fundamental objective realist problems that i referred to at the outset which constitute the constant source of friction. At present theres not a whole lot of diplomatic and Political Capital to draw upon in terms of dealing with the hard issues. But by virtue of a process which deals with things like investment treaties, things like a new evolution of the regions architecture, things like global advances on Climate Change driven by the two largest emitters in the world. But in time also on intractable questions like north korea and Cyber Security and also the rise of militant islamism. There is a basis to construct a new element of evolving Strategic Trust between the two which provides a platform for dealing with the unresolved challenges of the future. I conclude my remarks here how i concluded two night ago. Dunn had this great saying about the chinese domestic reform process. What dunn said was this is way back in the late 70s if youre going to reform this thing called china in the great openings of new policy, economic reform, domestically opening to the outside World International ly. Then its going to be a long process. So he used his marvelous analogy which is you cross the river steps feeling the stones step by step. I think we also need to have that concept alive in our minds about how you can possibly engineer that incremental trust building exercise between china and the United States as well. Step by step but knowing in fact that there is a destination called a common future. For our chinese friends here in the audience today, if you talk about realism, means something in the context. If you talk about a constructive approach [ speaking chinese ] is a positive term in the chinese context. [ speaking chinese ] international or Global Public goods. It means something in the chinese discourse. So, to frame a common vision, to frame a common concept, but not to leave it at a level of political theory but to have an operational dimension which can be put into practice by regular similar t symmetry between the two countries. That i think provides us a way to navigate our way through. If we dont, then i fear that the tendency will be towards inertia, drift, and drift becoming current, and perhaps in a direction in which none of us would want to see for the future. I thank you. [ applause ] thank you very much, mr. Rudd. I would like to open the floor to some questions that, if i could, maybe i could start with one. The question is this do you think that american or chinese Economic Strategy is sufficient given the broad scope of the region that you describe to us . What advice would you have for both countries in that area . Well, the wisdom of Foreign Policy is never provide public advice to any government. Its usually likely to be unwelcome. Private advice is usually of a different nature. But let me make some broad observations. And thats looking from the region out rather than from america or china in. Theres some basic metrics here. Metrics, while boring, are important. You know, china as of 2000 the last couple of years has become the Worlds Largest trading power. Its become the Worlds Largest exporter. Its the worlds second largest importer. And if you were to put together simply on trade metrics, china today is the number one trading partner. About 127 countries around the world. The United States about 73. Depending on who you believe, the world bank, the imf or whichever journalist just wrote an interesting story, and again, the measures of the relative size of the chinese and american economies, purchasing priority, pricing, Market Exchange rates, calculations and what the price assumptions are of ppp, the chinese economy is projected by a combination of the bank, the imf and or the oecd, to be larger in size than the american economy, somewhere between 2015, 20242025. The metrics are really important here. If you look at it from the region out, the Economic Significance of china both in terms of trade, fdi, and prospectively, depending what happens with the liberalization of the rmb in the future, capital flows becomes a much more dominant factor in the economic reality of east asia than america. I dont think people have quite thought that through in terms of where it all leads. But if you take as your primary assumption that from economic power, other forms of power proceed, there is a fundamental underlying shift occurring across the asian hemisphere. That in turn, of course, in terms of its forward trajectory, goes to questions like the sustainability of chinese growth over time, goes to the questions of will the growth rate be 7. 5 , 6. 5 or the most negative projectio projections of averaging over the next decade averaging down to something 4 or north of 3 . But the projections both by the bank and the fund and the oecd do not assume linear projections. All im saying is a question of basic economic metrics, china is now more relevant to the economies of east asia than the United States. Thats a very thin margin at present, but as you see investment flows unfold and you see capital flows unfold depending on regulatory changes in beijing, that equation is going to change even more profoundly. Its up to the United States to respond to that as they so choose. But that is an unfolding reality in our part of the world. Hugh white is here with us from australia. If you took the china trade out of the australian gdp, hugh, i presume the china trade would represent imports exports about 7 of australian gdp . Thats quite a lot of cash for any economy. Ed we are a 1 1. 7, 1. 6 trillio economy. Replicate that across smaller economies of asia and were the fourth largest economy in asia after china, japan and india. This equation is unfolding. So part of the american response is the Transpacific Partnership and the Diplomacy Associated with that. And for which there is a chinese counter narrative as well. I wont go into the probabilities and relative merits of both proposals. Let me open it up for one or two questions. Andre . Straight here in the middle, please. Thank you. Im the chief representative in vietnam for the intrastate traveler company. It was a wonderful address. Thank you so much. So comprehensive. I just was taking notes from your remarks, sir. Only thing that i have a question on is, in working towards this constructive realism, great term. You defined it well. But it seems like a fly in the ointment, so to speak seems like a what . A main obstacle to working towards constructive engagement with all to variables, is that of all the parties to the equation, only china, only china, continues to violate using violence to intrude into the exclusive Economic Zones of, you know, the philippines and vietnam and other countries. And deny that theyre doing it. And ive been on business trips, ive seen them come right into the exclusive Economic Zone using violence. So what i think the truth of all this is just to paraphrase because im conscious youve got the rest of the program to attend to and ive got to be out the door in a minute but i get the question. I think if you were to go through the analysis of each of the disputes from north to south, each has its own internal characteristics. If i was an International Lawyer sitting at the International Court of justice on each of these disputes and where the territorial lines lay, i would probably have different resolutions on each of them. And having spent some time looking at the underpinning legal cases concerning senkaku, concerning Spratly Islands and the intervening seas and the claimant positions of all seven parties, this is a highly variable feast. Its not just that we as an Australian Government have traditionally chosen to be neutral on this. There is a reason to be neutral, and that is that the underpinning legal cases are, if they overcame the jurisdiction, are so complex. So if we had another hour we could go through each of these individually, but i think that would be tiresome for people in this gathering. So rather than have an adjudication which says whos right and whos wrong in each one of these disputes, i simply point to the fact that china now has a more, and deliberately more, activist, proactive Foreign Policy in direct pursuit of its interest and has been the case for the last year or so for those who follow these closely. It proceeds from a series of perceptions within the chinese leadership about the United States which i sought to articulate before. Therefore, the concrete policy challenges is what do we do in response . Thats what i have sought to articulate today. Im sure in the rest of your conference youll have an opportunity to dissect each element of each dispute. But that is not possible right now. Take one more question. Gentlemen right here, the yellow tie. Andre, associate professor at catholic university. You mentioned which university . Catholic university. Okay. East d. C. As in Holy Mother Church . That catholic . Okay. You mentioned the rhetoric of containment is a misnomer, a misperception of the chinese. How would you persuade to the chinese that the strategic the u. S. Strategic rebalance to asia is not a form of hard containment . Well, again, it goes down to the whole question of definitions of containment. I mean, the Alliance Structure in asia has existed, as you know, since the 40s and the 50s. And was primarily constructed in those days with principle reference to, firstly, a resurgent japan. In the case of the australian alliance. And then laterally in terms of the soviet union. So the Alliance Structures have long existed. Theres often a long discourse about more marines going to darwin. Well, you know, there used to be 1,500 marines coming each year for three months. Weve got 2,500 marines coming each year for six months. I would say hold the next addition of the strategic balance put out by the iiss in london because that fundamental alters the global strategic equation. It doesnt. Its kind of a normal evolution of alliance, which has multiple definitions. So again i go back to definitions of containment. It doesnt actually fit the term. There are probably other terms which are better used in the International Discourse to describe u. S. Strategic responses to china but containment is not one of them. If you are looking at the classic definition of it, as framed by cannon and the others in this town in the late 40s. Ladies and gentlemen, please join me in thanking mr. Kevin rudd. [ applause ] another panel from the asia conference previewing some of the issues facing leaders at next weeks east asia summit in burma. U. S. And asia policy specialists look at cooperation on Security Issues on the asian peninsula and tensions in the South China Sea. Youll hear from john john mccains Foreign Policy adviser. Ladies and gentlemen, were going to reconvene. I hope you had a chance to grab a coffee and a cookie and absorb senior director madiras speech. I thought that was excellent. Were back were back on the record, by the way, so you can turn the cameras back on and any recording device you might have. Im ernie bower, again. Im the chair of the Southeast Asia program here at csis. And its a real pleasure for me to be introducing our third and last panel today on as we talk about asian architecture ahead of the three summits in november, the apec, eas and g20 summits. And weve got a terrific panel with us today. I really appreciate these gentlemen sharing thir time away from very busy schedules to join us. On my right, we have the newly newly