 So ladies and gentlemen we're going to start in a minute the conversation with Kevin Rudd He is To my knowledge Can you hear me world to my knowledge? He's in New York Kevin I don't hear you We need your voice in Washington so Apparently can everybody see Kevin yes, so I was told that you were in your car So that means that you have a beautiful car Obviously it is a very big car Tia fee This is the ambassador's car It is the biggest car you have ever seen. That's for my house So, how are you? You look I'm good my friend. I'm adapting to my new job as ambassador, you know Well, it is not the right place to ask you Why it is better to be ambassador of Australia? to the United States being a former prime minister and president of the Institute of the Asia That's it. Yeah, the agency did not use the Institute of the social society Yes, but we will not discuss personal matters. So tonight, of course Kevin. We are going to talk about China And my first question is quite easy Your last book was published I think about a year ago or so and and you were a little more pessimistic about the evolution of the US-China Relations that you were earlier In other words, you no longer excluded entirely the two-city this trap So has your analysis changed in the last few months? Well, first of all, thank you Thierry for inviting me to World Quality Conference and all of our friends and colleagues meeting in On the US-China relations, I continue to be a realist There are certain structural things which have not changed number one China is more powerful militarily economically and technologically than it was 10 20 30 years and Number two Xi Jinping is just that the China will no longer be a status quo power But we'll seek to change the Regional and global order in a direction which is more compatible with Chinese interests and values And thirdly since 2017-18 the United States has founded With its doctrine of strategic competition Those three things are the fundamentals driving the state of the US Right now as the two leaders prepare for a summit in California in two weeks time Nothing has really changed from what I just described. I Think the Chinese interest as we approach the summit However, is to try and stabilise the relationship at a political and economic level and their interest in doing that to try and re-normalise economic relation both with the United States and US allies Europe and Indonesia But at the same time China at this stage has no real interest in normalising or Relationship because China is to go its plans So I think that's where we're up to at the most moment here It's good that the leaders are meeting that we should be very cautious about our expectations And what comes out the other end? How how would you? Describe the domestic political situation and the The the degree of seriousness of the economic difficulties Well as in all our countries, whether it's the United States China France Australia our foreign policy and our security policy sometimes is shaped significantly by our domestic fences In the case of China as I've been writing for the last five years China's growth model is And we've seen the evidence that in the most recent economic data Including the October economic data which is negative Manufacturing down services static Housing still in a state of collapse and that represents 28% of GDP So the overall economic climate in China is bad Whatever the Chinese system makes Secondly it therefore produced it one of the impetus behind China's interest in the summit theory in order to as I said before Create a great a sense of normality in geopolitics in order to encourage domestic and foreign investors to rediscover their confidence in China And to try and renormalize trade flows Because if you have declining trade and you have finding primary investment and less portfolio investment Then all this contributes China's poor economic growth So I think that's the connection right now some analysts Say that The goal of catching up of becoming equal To the United States are possibly the number one power Around the middle of the century is now no longer achievable Would you agree with that? well, I think We paraphrase but German lies Supposed to have said in the 1950s about the significance of the French Revolution When asked what the significance of the French Revolution was in 1789 Joan lies response in 1902 was it's too early to tell So I think it's a little like that when people make predictions about the final landing point of Chinese economic growth It's too early to tell I think the significant factor here is that the pace of economic growth Which the Chinese had assumed would be around about six percent of the debt ahead Is now likely to be as low as two to three percent And if you start to have to three percent Real growth whatever the official statistics say And if the US economy is currently growing at five And let's just say reverse render three Then of course the gap doesn't close very much Between China and the United States so therefore I Notice the Goldman Sachs have continued with just their prediction points from when the two Economies will achieve comparable size in gross domestic product measured by market exchange rates The original projections had that occurring in the late 20s Goldman have now pushed that off to the late 30s and so When you and I are gathered at this conference in the 2040s, we may still be having this conversation And if we focus on the technological aspects of Development, how do you assess today the capabilities of China are they strengthening their technological Capabilities and how would you compare those to those of the United States? I think it's fair to say that China has achieved enormous progress in most of the 10 critical technology categories that they would define as being strategic Starting with semiconductors moving through a different intelligent Moving through quantum computing and then new materials research and then the rest including in biotechnology These have been the priorities of the Chinese system since the 2015 Technology strategy Which Xi Jinping announced? But China to become dominant or near dominant in these technology categories by 2030 so China has made significant progress But so too is the United States and so to have American allies around the world And so if we look at each of these It is difficult to point to a single one of them where we would say definitively China is ahead of you On semiconductors for example, which is fundamental to everything because it's all to do with the speed of computing and Intensity We do not see evidence as China has fundamentally closed the gap with the United States It's still somewhere between three five and seven years behind And when the US ecosystem is able to draw Relatively easily on what's happening in Taiwan with TSMC In Korea with Samsung with the Japanese and with the Dutch and others There is some reason for confidence that the US and the democratic world Are likely to hold on to their advantage at least for a while yet if we stay in the the issue of Economic Technological issues There are a lot of discussions of course about the car Industry or industries Do you think that the The Chinese will eliminate Some of the largest car companies Including for instance in Europe if I want to be a little provocative Mercedes for instance or a BMW not to speak of her no and others is How do you see this? Major competition and how do you relate that to the issue of trade war? Which is more or less going on Well, as you know, Terry, I've always been somewhat crank of fire on the boys preferred my renters over my BMWs but That's just your personal information China's strategy on automobiles is pretty clear It's to take control over the EV revolution globally and to Become the dominant global factory for all EV production for the world Which places there for the US the Germans the French and the other 12 countries around the world who manufacture Classical motor vehicles using internal combustion engines Many of them have been late to the conversion Secondly, I Think because the Chinese have taken such a strategic position with their access to critical minerals battery production And of course their ability to manipulate price through domestic subsidy they are now in a dominant position and I know In Brussels the European Union is deeply concerned About the impact that this will have on all European auto manufacturers the same view here in the United States by the way So what does this lead? I think Knowing a little bit about European politics that I do and not just in La Belle France, but also in Germany It's not hard to imagine combined action being now taken out of Brussels Against a fear of Chinese dumping Cheap subsidized electronic vehicles onto the European market Of course, European consumers may have a different view Because they'll be a lot cheaper But that may be only short-term industrial policy practice has been to eliminate opposition and competition Monopolize the market and then increase their prices afterwards But this will be a huge challenge for European trade policy and industrial policy as well and If we take a look at the aircraft industry, do you think that In 10 years from now, for instance, they will compete with Boeing and Airbus and of course if we get to three major aircraft companies One of the three will be eliminated. So who will remain? Well, to read this beyond my pay grade I Can't make that prediction, but I can say to you this That the Chinese have been much slower at mastering Largo get passenger aircraft than they have been with electronic vehicles On the ground, that's not to say they won't get there But I know that it's taken a long time Chinese prototypes to be produced And the Chinese is still very large customers of Airbus and Boeing not because they love Airbus, not because they love Boeing But at present they judge they still have a problem So if we can switch it's not very easy, you know when you When we discuss like that to take questions from the from the floor But so so I will continue to ask a question myself And let us switch perhaps to international Issues to foreign policy issues, what is your most? Important concern today is it today when I say today I mean today is it is it time one or Another issue Because I now live and work here in Washington and I know the American system quite well And I was on a panel just last week with the new French ambassador To the United States as well. La Hongbinou. Who knows China? Well, he was most recently France's ambassador in Beijing. I Think the analytical view we have here is United States through its own strategic lens Sees It's number one strategic challenge 21st century as China's rise and Challenge to the existing regional and global rules based order, not just in Indo-Pacific Number two, of course is Russia's current challenge to the European security order through the invasion of Ukraine and this is of Fundamental interest not just to Europeans, but to all of us One of the reasons why even a country is distant from Ukraine is Australia He's now contributing billions in direct military aid to the Ukrainians because we see this as a global issue And not just a regional issue But this is comes in the second in the US list of priorities And third of course is the rolling Crisis in the Middle East, which as you know always draws us back into the vortex of not just Gaza not just Israel, not just Palestine But the absence of a two-state solution to underpin long-term security in that part of the world So that would comes in as third the challenge of being the American superpower is to manage these three simultaneous things and And our Prime Minister within this city last week for a four-day state visit He spent a lot of time with President Biden and with the Secretary of State and National Security Advisor and the Secretary of Defense Our conclusion United States despite all these challenges Is managing effectively the walk-and-shoot gun at the same time They are managing these three challenges simultaneously reasonably well Given all the pressures on them domestically as well They would be my top three apart from fundamental technological disruption of everything Led by artificial intelligence Which of course reaches over all domains Not just military Not just economic But also very societies The way in which we live and operate So human beings That comes in over and above all of the three optimistic theories On Ukraine Do you think that China has very clear-minded objectives? Yes, China is a strategic culture of deep realism And when they look at Ukraine that through the lens of the fundamental importance of their relationship with Russia And the fact that China now has a benign order with Russia Given that in the history of Russia trying to go back 400 years Including during the Soviet period Most of that history is not being benign That's point number one Number two, if you've got a benign border with Russia You can concentrate all your strategic assets on the ultimate strategic competition with the United States For the future of the regional and global order Number three, I think from Beijing's lens Is that Russia in Ukraine provides rolling strategic distraction for the United States And its allies And four, Russia provides a readily available source of energy and raw materials To help meet some of its own domestic economic needs So the Chinese are very clear-eyed about this theory I think as things move towards perhaps great military stalemate in the battlefields in Ukraine Depending on what happens in Donetsk, Lohansk and elsewhere The Chinese may seek to become next year's sometime more active diplomatically To be seen to be drawing this conflict towards a conclusion But it will not do so in any way Which we've got across the deep personal relationship between Beijing and Vladimir Putin Or the deep realpolitik of the Russia-China relationship that I referred to before But apart from personalities, would you agree with the idea that Russia has become The so-called junior partner of China? Apart from personalities Absolute Sorry? Absolute Absolute more You're sorry, not No, no, absolutely, that's what I'm saying Absolutely Against any measure, the Russian economy by the way today is about the same size as the Australian economy That's put this into context It just happens to have one of the world's largest nuclear assaults So it's very much the junior partner And that's been consolidated and solidified Through the processes of, frankly, the last decade Beginning with the first Russian invasion of Crimea in 2014 and March that year Through until now, as Russia has progressively isolated itself from the international community through its actions And as a consequence, China has occupied that strategic vacuum Whereas the Russian people and the Russian political class may not welcome that Any empirical observer would conclude that that is now the case Russia is now very much the junior partner And my dear friend Terry, I'll need to leave you soon, I'm afraid Because my friends in Etasuny are waiting for me elsewhere So I'll head off soon Yes, so I will just take one last I'm aware that time is up But one last question you spoke about strategic destruction Strategic destruction, I like this concept But would you say also that the new war, the Middle East war Israel Hamas Would you say that it is a strategic destruction From the viewpoint of the Chinese Certainly it's not a strategic distraction if you're Israeli Not the strategic distraction if you're Palestinian Or in the wider Middle East, it has its own tragic and human dimensions Which you're familiar with and which I'm familiar with And we both have many friends in both communities From the Chinese perspective, when they look at it It is always a double-edged sword, Terry On the one hand, yes, they will conclude that the United States If you like, has done it on three significant fronts at once In the Middle East, Ukraine and of course the Indo-Pacific But on the other hand, China's interests are not served By the Iranians overreaching The Iranians unleashing their proxy organizations in Hezbollah And elsewhere across the Arab world To escalate this from being Israel, Palestine, Gaza Into a pan-regional conflict And the reason for that is that China has spent a lot of time Seeking to normalize its relations with the Emirates Where you are at present in Abu Dhabi With the Kingdom of Saudi Arabia and with the other Gulf monarchies And as soon as you have a binary conflict involving Iran And or Iranian proxies and Israel and by extension the United States You automatically create a binary again In the strategic policy calculus in Abu Dhabi and in Riyadh And that is not in China's interests That would be my thought Well, the best moments have to come to an end I think we all of us are very happy to see you in very good shape It seems that the Australian embassy in Washington is a nice place to be Maybe someday you will welcome the delegation of the World Policy Conference In your quarters But anyway, Kevin, thank you very, very much And I hope that you will always be with us Thank you Thank you, Teri Always welcome here in Washington I look forward to seeing you soon Goodbye