 One is aware that the rise of China is generally seen as a defining feature of the geopolitical landscape of the 21st century and I know particularly those of you who are our master students are well aware of that but I think in the general media everybody is well aware of the rise of China as the defining feature of this century. That those of you who follow the debate more closely will know that in Australia mae'n cychwyn i wneud ychydig o darllen cymrydau ac mae gennym holl mewn o'r cerdd mewn, yn oed y llwyffyr peir. Pen yw'r ffugidd a chủaiwch o'r ddechrau a'r unig yn meddwl y Cymru, ac mae'n meddwl i chi angen i chi ch representingon ac mae'n meddwl i chi ychydig y Prymysgur i chi allaeth ddiddordeb o'r adwygol y Uneddaeth. Mae'r ddweud yma yn unig amser, ond mae'n dwi'n gweithio'r sîm, a dweud yn y presau a'r ddweud yn gweithio'r ddweud. Mae'n ddweud yma, ond Ostraliadau hi'n gweithio ddigonio'r cyfwledig yma, o'r arm o'r Chino, ac rwy'n gwasanaethu ddweud i'r cyfel y gallu'r llogau sy'n gyfer ddiolch o'r unig o'r ddweud o'r hanes. Mae'r drwyfod o'r ddweud o'r cyfwledig oherwydd i'r cyfwledig o'r ddweud o'r llogau chinoedd. Well, you know, really easy, isn't it? It's only a country of 1.2 billion people, piece of cake. Dangerous points of view. I have a different view. I see a China with serious weaknesses and there are people here who know a lot more about China than I do and I stand here to be contradicted. But I think we're in the danger and the American colleagues are in the danger of seeing China as the next Soviet Union and demonstrably it is not in terms of military power. I'm also of the view and this may surprise you given America's current economic crisis, which is not to be dismissed. I think the United States is enormously innovative and inventive and dynamic society and I think it has enormous and tremendous reservoirs of power to bounce back. But again, you could well challenge me on that issue. That's the sort of theme I'm taking. I think it is time for a more measured and robust debate. I'm going to explore three things with you. First and very briefly and very crudely and I know many of you will be across the literature on this and that is what are the competing theories about the rise and fall of great powers and the theories of what happens when great powers collide. Secondly, let's again very crudely look at some of the strengths and weaknesses of both the United States and China. Finally, I want to talk a bit about a pet topic of mine and that is what sort of regional security architecture will be best to moderate these two giants and can we envisage a regional security architecture that helps them to avoid conflict and confrontation. So that's the outline of what I'm about. So as to the first one, the theory is about the rise and fall of great powers. You all know that the traditional view about a rising new power like China competing against a status quo established power like the United States historically the historical record shows that such powers, a rising power confronting a established power, go to conflict. The obvious model of course is Germany in the Second World War and Imperial Japan also in the Second World War. You can think of many other examples but like all examples in international relations there are exceptions and of course the exception that the historians often raise is that the United Kingdom did not go to war as the established power with the rising power of the United States. The explanation for that is often while they were both democracies and that the track record of authoritarian powers is not so good at all. Some of you will have read the book over 20 years ago by Paul Kennedy very famous book The Rise and Fall of the Great Powers. It was published in the late 80s. His final chapter was called the coming decline of the United States and here we are over 20 years later and it hasn't yet happened. By the way his penultimate chapter in which he footnoted the book I wrote on the Soviet Union extensively he did not even see the limits to the Soviet Union that I saw. The essence of Kennedy's thesis as I recall it was that the absolute call of great power power is economic power. That gives you military power and it gives you all sorts of other associated powers to do with your economy and its strength. Again you see whilst one is attracted to that explanatory variable whether it was the rise of Germany and Japan or the current rise of Japan in the 60s and 70s in China now that economics explains it all and you need a big successful economy. Let me put it to the Soviet Union did not have a big successful economy. It had a fragile central planned economy that poured 20% of its gross domestic product into the military. So you know that the exceptions always challenge the rule. Some of you may have read a book by Amy Chua she's professor of law at the Yale Law School. It's called The Day of Empire. How hyperpowers rise to global dominance and how they fall and she has a particular definition of hyperpowers and she includes the Roman Empire, the Persian Empire particular aspects of the Chinese Empire I think in the Tang Dynasty. Anyway she has a interesting and quite difficult concept in which her explanatory variable is not economics. It's what she calls Tolerance and Intolerance that successful hyperpowers are tolerant on the way up and intolerant on the way down. Well you know I might put it to you that China right now is not one of the most tolerant of powers and neither is the United States so we've got a slight problem. Some of you will have read the works by Niall Ferguson in his 2010-19 lecture Empires on the Edge of Chaos the Naskie Fiscal Arithmetic of Imperial Decline. He argues that Imperial falls are nearly always associated with fiscal crises with sharp imbalance between revenues and expenditures and above all with the mounting cost of servicing wait for it a huge and rising public debt. Now here we have America right in that situation and he makes the point that the Spanish Empire declined after the Bill on its debt reached 100% of its annual ordinary revenue in 1598. Imperial France fell after interest payments reached 62% of annual revenue in 1788. Ottoman Turkey began its decline after interest payments on its public debt hit 50% in 1877 and now here comes Niall Ferguson's real point. The current United States debt is set to reach 146% of GDP by 2020 unless there is radical surgery. The figure I hold in mind is I think some of you know the United States defence budget is about 700 billion US dollars a non-trivial figure and that the interest on America's public debt will exceed the absolute figure of the American defence budget by about 2015 unless something serious is done. You see already there are some minor cuts in the American defence budget being talked about. Then we have some rather silly views. One of in Subramanian in the current September-October edition of Foreign Affairs who argues that one day, sometime soon, China will control so much of American Treasury bonds that it will demand that an IMF bailout is necessary as a precondition for the withdrawal of the American Pacific Fleet. Well I don't know what areas of government he's ever worked in but great powers even on the way down don't destroy their Pacific Fleet. It's called going to war I'm afraid but these are some of the sillier viewers we're getting. My view is that the 21st century will obviously economics, GDP, geography, population, elements of power but I think one of the defining variables will be high technology and innovation things like nanotechnology, biotechnology and quantum computing and in that area the Americans are so far ahead of China right now it's not funny and the same applies in the military area by and large. So let's move secondly to the strengths and weaknesses of China and the United States and I say there are people in this room know much more about China domestic situation than me. China and the United States are two great continental powers large land area large population both of them in different ways historically have seen themselves as exceptional if not God given. You're all well aware of America's description of itself as the exceptional country the light on the hill. China the mandate of heaven the central kingdom and so on. Moving to China you will well know that it's only in the last 200 or so years a little bit more that China has not had the world's largest economy the historical record that we have shows that before the era of European conquest of Asia in the 1500s that China and India had the world's first and second largest economies and it's only been since the European industrial revolution and the rise of America that that situation has been displaced so for China it's a short period of the hiccup of the period of 3,000 years as a unified state. The strength of China's economy is quite remarkable the first time I went to China was in 1978 as Deputy Head of Defence Intelligence I was a guest of the PLA at the Foreign Affairs Bureau so-called and I remember going to Shanghai that wonderful city on the Bund and at Pudong there was nothing and I was the first Westerner to go on board a Chinese submarine and visit the submarine building yard in Shanghai and you may well ask why it was the beginning three years after the Cultural Revolution of opening up and some frankly military transparency in those days that is better than it is not now in China. The Chinese economy recently is overtaken by Japan as you well know the second largest economy in the world it's still a long way behind the United States when the Chinese economy in gross terms will overtake that of the United States depends upon whether you use exchange rates or what's called purchasing power equivalent what you get for your dollar and some people are saying 2018 some people are saying 2025 or 2030 it doesn't mean to say of course the standard of living and the R&D and if you like economic throw weight will be the same but we're living through you're living through a period in which the most remarkable transformation in the geopolitical balance is taking place based on this incredible openness of the Chinese economy since Deng Xiaoping started it in 1978 compared with some other great powers China is relatively homogenous in terms of its cultural make up it has a powerful vision of itself unlike the former Soviet Union my personal view is you can't accuse the Chinese of not having a work ethic demonstrably they do Henry Kissinger in his most recent book published just a few weeks ago called On China it's marvellous isn't it when you get to Kissinger's status you produce a book called one word diplomacy you produce a book in which his name is bigger than the title of the book on China I wish he talks in his first chapter about the singularity of China and for me not being a China expert it is an awkward chapter he tries to explain the difference between the western concept of chess conflict and winning and the game which I can't remember in Chinese but which in Japanese is called not go and that the concept of winning and losing is much more sophisticated Kissinger argues in this first chapter that unlike other historical empires that have come and gone China boasts a unique history of cultural and political continuity and that secondly the foundation of this remarkable continuity lies not in violence or the use of force but rather in an exceptional cultural heritage the Confucian value system which is aimed at domestic and global harmony rather than conflict well that's an interesting proposition and I find I've not fully read or finished the book but there are things where Kissinger is so pro-Chinese that based on the evidence it's not accurate and I can speak from personal experience his chapter on when China taught Vietnam a lesson that's an interesting phrase from a country that doesn't use force and isn't a hegemonic power when China taught a fellow communist country a lesson and there are people in this audience who were with me in defence intelligence at the time Kissinger argues that China won no it didn't we watched the four Chinese divisions come across we watched them in detail and we watched them try and beat a Vietnamese division and they did not win Kissinger has the same problem with the division and size battle on the Osuri river in Soviet Siberia in which he claims the Chinese one and I'm afraid the intelligence evidence that he surely has access to it shows the opposite well no book is perfect the issue of China's economy when I talk to economic friends I've got a particular friend called John Lee some of you know in the centre for independent studies he wrote an article I think the financial review recently in which he talked about the structural imbalances the danger of a housing bubble boom that would burst he talked about the over investment in fixed investment for no particular purposes some people are arguing that rather than the Chinese economy just slowing from a mere 10% per annum which it has grown by give or take for each year of the last 30 years that it will slow to 7% which is what is in the current Chinese five year plan some people are arguing that it may peak and begin to slow or even stall if it stalls as a result of the second round of the western capitalist world global financial crisis that we will all suffer and by the way not peace this country my information is that China's demographic situation is not brilliant by 2015 the workforce in China will peak and start to contract because of the one child policy and by 2050 fully 450 million Chinese will be over the age of 60 don't tell me that there aren't geopolitical implications of that and I won't go on about corruption in China which Hu Jintao knows as a problem environmental issues and so on but I will go on about something I know particularly well and that's China's military we're in danger of drumming up China as the next Soviet Union and let me repeat once again China now is nowhere near what the Soviet Union was at the same period from its revolution this is the 62nd year of the Chinese Revolution in the 62nd year of the Bolshevik Revolution in 1979 the Soviet Union had 12,000 strategic warheads nuclear warheads how many does China have? 200 the Soviet Union had nearly 300 submarines how many does China have? 60 27 of those are obsolete and one could go on at length it is not in the same ball game but there is a danger including the United States for the self-serving purposes of the Pentagon there is an inclination to drum up China as the next military power I think China does have some capabilities that wouldn't surprise me having suffered a century of humiliation having now got economic power the amazing thing is that China didn't develop military power earlier it was the fourth of the four modernisations until recently and even now the figures show that China spends more on domestic security marginally than on defence let's say the following things about China currently in my view it is a second rate military power it is nowhere near the American military power so why should America accommodate it in terms of there is no primacy it has no experience of modern combat whatsoever let's not pretend that the Korean War and teaching Vietnam were lessons in modern combat year after year of modern combat experience and whether you like it or not Iraq, Afghanistan the first Gulf War, Libya the Pentagon report acknowledges that substantial parts of the Chinese military equipment is obsolescent old Russian equipment it still reverses engineers much at Russian equipment that after 30 years of trying China can't even develop after 30 years it relies on the Russian military jet engines which those of us who specialised in that subject knew only too well were high rate of wear engines Chinese anti-submarine warfare is not in the same category as ours in the west and you know I could go on a lot more it is true that in cyber warfare China has made important advances it is true that in the capacity to target American aircraft carrier battle groups with ballistic missiles remarkable progress and you may want to raise in question time how America would react to being targeted by such a weapon system America certainly would not sit back and fold its arms so my view is that China still is a second rate military power make it important progress in carriers like ballistic missiles and cyber but it is not and demonstrably is not in the Soviet Union the Pentagon report says that by 2020 it may be that China has a modern regionally focused military capability but of course it makes no measures against what the United States and its allies will have it does acknowledge that China will be unlikely to project substantial military forces distance from China in the foreseeable future however in strategic affairs there is no doubt and this has to be acknowledged as a result of the global financial crisis America's reputation for leadership as a result of the wars in Iraq and Afghanistan and by the way America on and off has been in the Middle East now longer than it was in both the first and second world wars longer and that the inability to decisively win Afghanistan and most particularly the global financial crisis who would have believed 20 years after defeating Soviet communism that the United States would be now in this pickle of rampant capitalism out of control and I think as a result of that there is a perception that China is on the rise and we've seen in the last 18 months to 2 years China take some military related advantage of this growing power it's threats to Japan in the Senkaku Dailu islands it's threats with regard to it's core interest of owning the entirety of the South China Sea it's most recent challenge only a few weeks ago of an Indian amphibious ship leaving Vietnam so there are some issues here about the rules of the game and norms of international behaviour on the high seas and I think there is a risk of an incident on the high seas and if there is one by the way I know who will lose and it won't be the United States what about China's strengths and weaknesses in Asia it has enormous strengths unlike America's located in Asia it has 5,000 years of history in Asia it has the sort of soft power influence that the former Soviet Union for instance never had a diaspora of other seas Chinese who it looks to in terms of influence and money in a way that the Soviet Union never had and important context in Asia over many centuries some of those are context like it's 1,000 year dominance of Vietnam that leads to difficult relations when you look at however at America's at China's important friends and allies who are they well they are a country called North Korea which is hardly one of the most brilliant successful countries in the world a liability rather than something that you would like to have then it has Myanmar well a country of no particular importance in Southeast Asia run by the military and then it has Pakistan which has been aided by China with regard to its nuclear capacity and that's about it isn't it that is about it so no experience of modern combat a second rate military capability that is developing and a bunch of allies that frankly don't amount too much there's a slight exaggeration here but I think you get the general point but as our white paper of 2009 says and I don't agree with everything that's in it by any means as you'll hear me say in a minute the Rudd white paper argues that in 2030 China will be the strongest military power in Asia and by a considerable margin it then goes on to say that in the event that a major power adversary operates militarily against us in our northern approaches we shall develop the military capability to impose substantial military costs on that power there's another dangerous ambitious capability that has not been thought through let's turn to the United States you remember how I said this is a country that sees itself as the exceptional power the light on the hill I think we Australians often don't understand the Americans just because they speak a quaint form of English they're an entirely different country in scale and origins from us the pilgrim fathers, the role of religion all those things that never occurred here in this society but they do see themselves as exception you saw that in the Monroe Doctrine and the Western Hemisphere you saw that how when they threw their weight eventually and late into the First World War and more importantly late and eventually into the Second World War they won when we talk about democracies being careful about the use of military force who dropped two nuclear weapons on Japan that's been done never underrate democracies when they get their temper up and China should think about that I don't agree with those in America who say that they saw the Soviet Union off the Soviet Union saw itself off and I'm going to talk about that in another public lecture on the 7th of November but look at the strengths of the American economy still the largest economy in the world accounting for about 25% of world GDP it accounts for half of world military expenditure let me repeat that it accounts for half of world military expenditure about 700 billion US dollars China's expenditure by the way it claims is 90 billion dollars I've yet to meet any communist country that tells the truth about its defence budget and let me tell you what the Chinese defence budget does not include doesn't include military procurement doesn't include military pensions it doesn't include the armed militia and police doesn't include a whole bunch of things so what do we think what does the Pentagon think and the IWS in London think that China spends on military about 150 billion that's a long way behind the United States if you want to figure that's my guesstimate when you're looking at advanced military research and development and I don't mean ordinary things I mean the real high technology cutting edge stuff do you know what percentage of world advanced military research and development America accounts for how about 90% who are the others well it ain't China and it ain't the former Soviet Union there's a bit in the UK and there's a bit in France and there's not a lot else it's demographics unlike that of China it's not one of an ageing population due to the one child policy it's a dynamic youthful grain population largely due to Latino immigration and growth and it's like that of no other great power except that of India it too like China has an incredible work ethic and I've stressed the issue of American innovation ask yourself which have been the major successful world companies in the last three decades they're all American how about Apple Microsoft, Google Facebook and you go on and on Apple recently momentarily was the biggest capitalised company in the world when you talk about the things I mentioned like biotechnology, nanotechnology and quantum computing the Americans are really seriously in front in my view its weaknesses are obvious who would have believed they would have brought in a self fulfilling wish onto themselves the collapse of larger elements of the economy due to what I can only call cowboy capitalism the indulgence with regard to banks and financial institutions things I don't understand like derivatives and so on and they brought that on themselves and I think the concern is is America going to pull itself out of this what we call the GFC the global financial crisis or are we bordring on another one and if that happens there will be some very serious geopolitical issues which I'll come to at the very end the question is whether these issues are enduring and abiding in the American economy or whether as in the past they will bounce out of it as they did in the Great Depression we will need to ask whether it will have a serious impact on the American military at present I don't as a former defence planner think that knocking 300 billion dollars over 10 years is a big impost for America that's the current issue works out of 5% of the defence budget waste in all defence budgets blind Freddy can say 5% the question will become if the budget cuts cut harder Kim Beasley my former boss who's now our ambassador in Washington as you know was chancellor of this evident university was in the financial review last week in typical Kim fashion saying never mind this closing gap between China and American military capability says Kim Bo, the bomber the gap is widening America is racing ahead and frankly given his long security clearances at the highest level that he and I shared for many years he should know what's going on but I haven't talked to him about it what about America's strengths and weaknesses in Asia we mentioned China America sees itself and always has since at least the wars with Spain and when it dies let's remember the Philippines as an Asian power but it is not of Asia it's not in Asia in that sense but it has a web of alliances and friends the like of which China simply does not have and you remember I reeled off North Korea Myanmar and Pakistan well on the other side of the ledger we have some of the world's other greatest successful economies Japan going through a long period of stagnation a very vibrant economy with a significant military Japan, South Korea the ASEAN countries to a greater or less extent theory that allies or friends of of the United States there is in addition from America's point of view great concern in some of those countries I've mentioned about growing Chinese assertiveness the sort of things China has been doing in the Yellow Sea, the East China Sea so what has happened Japan, contrary to views that when a left-wing government came into Japan it would move away from their lines, it is moving closer and things like for Temba on Okinawa and the marine base have been settled South Korea is also in my view move closer to the United States because of China's casual attitude to what its great ally North Korea did sink in a South Korean warship and then shell in a South Korean island by the way in my book sink in a warship is an act of war that demands response I think South Korea has been enormously restrained even the ASEAN countries of Southeast Asia some in particular like Vietnam are offering America use of facilities and bases they are buying Russian submarines kilo class very quiet relatively speaking and they obviously decide in response to China and you've seen that in other acquisitions in our region the weaknesses of America we all know its distractions in the last 10 years 10 years since so called 9 11 a phrase I hate by the way its distraction fighting the so called war on terror its wars in Iraq and Afghanistan I've distracted it from the rise of China and the shift in the geopolitical balance and what I now want to see is America re-focusing it, like us is doing a force posture review which will have another look at the American bases at Futenma and Yokosuka in Japan but there will be no pull out there will be some reinvigoration of capabilities in Guam and I expect you will soon hear some announcement concerning greater American use of facilities in Australia my view of the United States by 2030 is that it's still going to be the world's dominant power the only power that has global military capability but if they continue to get their economy wrong Paul Bibb is wrong I suppose no matter what you think about my very rough hand description my conclusion is that whether it's China the rise and rise and rise like no other power has ever seen or whether it's the United States the decline, decline, decline that keeps being predicted and never happens beware straight line extrapolations we did it on the former Soviet Union we did it on Japan and we're doing it again on both China and the United States so thirdly what sort of regional security architectures could we conceive of and that might be best to moderate these two giants China and the United States so they can live together in peace and harmony or as the Chinese quaintly say a harmonious country and a harmonious region and a harmonious world the big question of our time particularly the younger ones here who will be around to see what China looks like in 2050 or 2060 is and it's a big question of our time and not least for us in Australia we're not parked off in Europe or across the Pacific in the United States we're a small country with a small defence force located in Asia and we've never in the past in our short 200 year history been faced with our major economic partner not being our major ally think about it from 1788 when the first fleet settled this country through to when Japan attacked Australian forces in Singapore we depended upon the United States for our military protection and it was our greatest trade and investment by the way the United Kingdom is still the second largest accumulative investor in Australia after the United States and from 1942 when John Curtin said that he would not regret that he turned now to the United States we depended on the United States which until a few years ago was our biggest economic overall trade partner in ports plus exports now we've got this by vocation and some are arguing that we will not be able to manage both things together that is the crucial alliance with the United States and a growing and expanding economic relationship with China so I guess to use an old farming expression we'll have to straddle the barbed wire fence and see if we can make it work without hurting too much but it's going to be very difficult I think the question of our time is will there be a collision between these two powers you remember the rising ambitious power that naturally needs its place in the sun given the sad history of China in the 19th century and later and the United States that has now been accustomed for a long time that had been the world dominant power you remember I said that history tells us yes there is a high risk of conflict but perhaps I should not be so pessimistic so what moderated mechanisms geopolitically can we envisage so there are three that I'm going to talk about and there's one other that I should talk about but I won't and again I'll be very crude first of all there's a traditional balance of power the sort of thing that was successful in 19th century Europe under the Congress of Vienna which by the way Henry Kissinger wrote his PhD about until he wrote the book on China he was a German geopolitical realist he's now either lost the plot because of advancing years or he's been bought the balance of power in which power is balanced between the powers we had it in the cold war it was quite simple but dangerous between two powers the Soviet Union and the United States Warsaw Pact and NATO all the sort of power we might be moving towards a multi-polar balance of power particularly predominant with China and the United States but with other major powers playing a substantial role obviously a rise in India although it's a fair way behind China to say the least a Japan that is damaged we say still has strong innovation and a significant military capability that we in Australia now are Japan's second most military relationship and we're going to do more and there are other elements in the balance you can talk about Russia although I don't much these days a power that's busted which has a long history of bouncing back but it's going to take a long time it has some very serious deficiencies which I won't go into but you can ask about balances of power work if there is a common understanding about the risks and limits of power and importantly if one power doesn't have peace some would say accommodate the other is there a concept in which the United States and its allies including Australia, Japan and South Korea which are essentially maritime countries maritime allies in which we're used to operating on the high seas and in which we have very advanced capabilities both above and under the water so could you conceive of in this balance the United States and its allies as maritime allies and on the other hand and that's if you like the Washington consensus what's called the democratic free enterprise model of capitalism of democracy what's called the Beijing consensus the authoritarian state capitalism model which has been very successful and that might include China and Russia who are members by the way of the Shanghai cooperation agreement which in my view doesn't amount to much it includes those two countries and the stans of Central Asia Kazakhstan, Uzbekistan Kyrgystaf and so on makes a very neat job political model a bunch of maritime countries and a bunch of continental countries I wouldn't push that model very far because I think there are enormous hidden tensions between China and Russia that will not that relationship will not that's very long are we already seen alignments as China's power rises and as in recent couple of years it started to use power more and as people are getting more concerned are we seen already shifting alignments where countries such as Australia are taking a hedge against the risk of China's growing power and I refer you to our defence white paper and what it said and why do you think we might get under this government and I don't know about the opposition because they don't have a defence policy why do you think we're going to double our submarine force to 12 as distinct from 6 why do you think we would be building the world's biggest conventional submarines at closer to 5,000 tonnes than the Collins class 3000 and why would it have air independent propulsion and why would it have tomahawk land attack cruise missile capable of targeting hardened targets at great distance in a moderate way well there's adding one answer is Japan doing more in terms of its military capabilities yes it is it certainly was until the earthquake and tsunami when I was in Japan talking to people there about their military capabilities why do you think Japan is developing an anti submarine warfare capability to detect Chinese submarines in the island chain in the Okinawa rail que island chain well I think the answer is fairly obvious what about other powers such as South Korea why is it acquiring submarines and air warfare destroyers with the Aegis air combat system on board the world's most advanced American system for shooting down aircraft when you're on a ship but it sure as hell isn't to fight some country called North Korea in my view so I say that we're already seen alignment shift hopefully if we are subject to a competitive balance of power two things might ameliorate that that we haven't seen before the first one is nuclear weapons and the risk of the use of them and I'm perfectly convinced that the Chinese like the Soviets before them perfectly understand the risks of nuclear war and that will be a limitation hopefully on any military competition or more dangerously escalation the second concept is one of my colleagues in favour of a concert of power in Asia let me remind you a concert of power in Europe was what happened at the congress of Vienna in 1815 it arose out of the defeat of Napoleon's France it brought all the major powers together it did not humiliate France and the boast is that the concert of Europe brought about peace for a hundred years until 1914 in the first world war no it didn't I mean if you care to put to one side the Franco-Prussian war between France and Prussia in 1870 more seriously if you want to put to one side the Crimean war in which if you please High Protestant England Catholic France and Islamic Turkey fought Orthodox Russia and it wasn't a side war 750,000 dead 500,000 Russians and despite the agreement of the concert of Europe to not humiliate powers after battle Russia was very much humiliated the Black Sea Feat was ordered to be destroyed and as a result Russia expanded into Central Asia and knocked on the door of Afghanistan familiar and grabbed Chinese territory in the Siberia Russian Far East there were geopolitical implications of the breakdown as far as I'm concerned of the concert of Europe the Congress of Vienna also was able to be formed because there was a common European culture a common European understanding do I see a combination culture a combination understanding including in security matters no I do not and what I do see in our region is rising nationalisms edgyterritorial claims and interests and frankly in my colleague Professor Desmond Ball has written about this and Desmond is always careful on these issues he now sees elements of arms racing in North Asia particularly in the maritime that is naval and air warfare capability I'm going to go on to the third one but before I do I would acknowledge that many of my colleagues and particularly in international relations would say there is a fourth model and that's called the economic interdependence model here we are in this globalised economic interdependence world not least in Asia not least with America and China where are iPods assembled not made, where are iPods assembled where are iPads assembled in China where it's almost everything assembled in China but because of this it would be disastrous if America went to war with China and there's obviously some truth in that but those of you who know your history will know that we heard that argument before in 1911 a man called Norman 1909 a man called Norman Angel wrote a book called The Great Illusion that said it would be disastrous for Germany that was so interdependent in economics, in trade in immigration, in the royal family connections in tourism it would be disastrous for Germany to go to war with Britain and guess what happened but it is a legitimate argument that needs to be considered the final one I want to discuss is my favourite a new regional security architecture well we've got the alphabet soup of security architecture in Asia my god don't we have it we have APEC, we have ASEAN we have ASEAN plus three we have the ASEAN regional forum we have the East Asia summit we have the six party talks on you might ask how much progress has been made well let me tell you Gareth Evans when he was foreign minister he and I wrote a document called confidence building measures for the ASEAN regional forum and Gareth told me in that typical way of Gareth I couldn't use intelligence sharing that was a naughty word I had to talk about information sharing I couldn't use the word transparency and we proposed all sorts of things for confidence building that was 18 years ago ASEAN regional forum now is in its 18 years and it's still talking about it I know because I'm a member of the ASEAN regional forum so called expert and eminent persons forum and I've been on five of these meetings over five years and in each of those meetings I've proposed that we have an avoidance of naval incidents at sea agreement can I repeat that there was an accident in Coeysa in 1972 there was arch enemies the Soviet Union and the United States had such an agreement you shall not point your missiles at proximate warship you shall not train your guns you should not point laser beams and blind the people on the bridge as a aircraft carrier or any ship with aircraft is steaming in a line that is crucial for the takeoff and landing So, for five years in the Asian regional forum expert member persons group, I propose that on each single occasion the Chinese have knocked it back. Do you want the response of the Chinese representative is? That's not our priority, Paul. China's priority is piracy, international crime and my language, hugging trees. My response to the Chinese excellence is, so can you tell me why you're developing nuclear power attack submarines? Is that to do with piracy or international crime? You get no answer. So, you know, the problem is that we're going nowhere with this one. And as my colleague Des Ball says, we've got an arms race on our hands. Let me tell you what we've got. Unlike Europe in the Cold War, where there were arms control agreements, intrusive counting rules for ballistic missiles, including the factory gates, Americans at Soviet factory gates counting the ballistic missiles, intrusive rules for counting tanks, artillery, submarines, warships, we have no such agreements at all. We have no open skies agreement, no avoidance of naval incidents at sea agreement. And that's happening, as Kevin Rudd pointed out in one of his first speeches as Prime Minister, this time he was right. That's happening while the arms race is building up. And it is not a very nice picture. It's one fraught with dangers and difficulties. I'm going to finish now, but before I do, while I'm talking about this concept of a regional security organisation, Henry Kissinger, in this book of his on China, 535 pages beautifully written, beautifully written, he, in the last two and a half pages, he comes up with the idea of a Pacific community. So out of 535 pages we get two and a half pages. Brilliant. Very well thought through. Not. And what's he talking about? Well, it's not very clear in two and a half pages, but that there would be a common enterprise between China and the United States with shared purposes. It would not be a block, but it would be joint endeavours. What the hell does that mean? I mean, if we're not getting anywhere with all these things I and others have been involved in in 17 years, when we can't even get to first base about an avoidance of naval interests and sea agreement, when there's nasty things going on the South China Sea, the East China Sea and the Yellow Sea, then we've got a slight problem, Henry. But, you know, he floats it. Two and a half pages out of 535. Good read. Not. OK. In conclusion, you can see I'm more optimistic about challenging the rise and rise of China. I think it has some weaknesses. And this might be the wishes the father of the four. I'm more optimistic about America bouncing back, but I recognize I'm challengeable and may well be in the minority. But I am pessimistic, not optimistic, as you can see, about tempering what could be a dangerous competition between the rising power and the status quo power. And they're both ambitious, self-centred, strong powers. So if I had a wish list, it would be to rapidly advance confidence-building measures and arms control measures, including intrusive inspections to build up mutual transparency and conflict avoidance measures. However, we have been discussing for 11 years in the ASEAN Regional Forum, not just military confidence-building measures, preventive diplomacy. And we now, after 11 years, have a work plan, a modest work plan for preventive diplomacy. And so, you see, the risk is that the arms build up and the lack of transparency and arms control measures is going to run out of time. So if we run out of time, we'll be left with, I'm afraid, the dangerous alternative, from my point of view, of the balance of power. Some will say it will be moderated by economic interdependence. I hope that's the case. Some, like me, will say that in the end it will be moderated by the fear of using nuclear weapons. Now, in case you think I've been very pessimistic, here's a really pessimistic note on which to end. I was at a conference two weekends ago called the Australian Davos Leadership Retreat. It's not Davos. And I can't give you the names of who said what, but I can give you the gist of what our concerns were. There were very serious discussions in that meeting, but mainly businessmen and women and economists, and a few of us security walks, very serious discussions about the state of the American economy, even more serious discussions about the state of the European Union economy. Unbalanced people were optimistic, but there wasn't a huge difference, you know, 64, the optimism, pessimism. And I pointed out to the meeting if Western democratic capitalism is in crisis, if it is. And we discussed, we had sessions, by the way, on is there a crisis of capitalism? If the West is in that crisis, when I hope it's not, then what I've said, you've got to really add very substantially to why. Because the last time in history that I recall, where there was a serious global crisis in Western capitalism, at the same time as there was a tectonic shift in the balance of power, was in the 1930s. And we all know how that ended up. Thank you. Well, this is our question, seeking reassurance. I suppose I was on Vietnamese, seeking reassurance from you, that Vietnam sitting next to China will not go the same way as Mexico sitting next to America. Why is it that Australia won't become like Ecuador, or we should buy more equilarships than others? Economic leverage is all. Can you give us the optimistic, perhaps counterintuitive answer to that? No, good. Look, Vietnam, a thousand years under Chinese suzerennate, as you well know, they've never forgotten that. And I can't remember whether you were here, Doug, but I was criticising Kissinger's book, in which the chapter which you should read on the Vietnam when China was teaching Vietnam lesson. Kissinger claims China won. No, it didn't. I think Vietnam, I've been there a few times and helped develop what was called one-and-a-half tracks for foreign affairs there in 1996. It is a proud nationalist, successful country that has saw off the French and the Americans and how. I think the way they're buying Russian military equipment, not least submarines, Doug tells us something, the way they're encouraging ship visits and maybe port rights by the Americans and certainly the Indians. It's as significant of this shifting alignment that countries are reacting to what China's done in the last couple of years. As to Australia, well, we were the banana republic, weren't we? I don't know whether we're Ecuador or Cuba or something, but I must say I don't buy the argument of some of my colleagues, Doug, say so carefully, that, A, that America and its allies should accommodate China. Accommodate starts to smack a bit and I reluctantly use this word at peace. And secondly, I think we will have to run a dual policy which will be enormously difficult, given that China is, and will be more so, our dominant economic power and that America will remain our ally. We will never have an alliance with China unless China becomes a democracy. I mean, for once, I actually agree with John Howard who last week on TV said, it's values that separate us. It is values. But I think a dual policy on Australia's part, which is carefully modulated, which is engagement with China along with the whole range of economic, trade, military, intelligence, cultural, human rights issues, but in which much more carefully than we said in the white paper, we have an element of hedging along with our American ally is probably the way it's going to go. I think. Bill, did you have your hand up? I did. I'm interested in your read on the flashlights of the Asian Pacific. The open is starting in World War I, Poland or whatever it is. In Taiwan and the Korean Peninsula, in particular, a lot of strategists were saying, well, China is actually being fairly concentrated in its development of the human capabilities in terms of moving towards a position where it can contest American power and some type of future showdown in Taiwan. In terms of the Korean Peninsula, it's problematic as an ally of what China is saying to them. It's problematic as an ally as North Korea might be. Nevertheless, it seemed to me to be pretty hard to envision China standing by if there was an implosion of the North. You had the same issue with the Americans of the Yalu or whatever. So I'm just wondering, I'd be very interested in your read of how the flashlights of the problem figures in the overall power balance that you anticipate in the absence of confidence through the measures? I mean, I think the ones that we've been a very high profile recently in the South China Sea, the incident side mentioned, in the East China Sea, the incident side mentioned. And even in the Yellow Sea, when China tried to stop America deploying the aircraft carrier battlegroup George Washington, I mean it's if a great power's going to avoid doing that. By the way, I might mention, because I haven't mentioned this, there is an interesting law of the sea difference between China and the United States. Remember that America is not a signatory to the law of the sea. Is that right, Bill? Yeah, they've not ratified it, whereas me. The Western interpretation of law of the sea, and of course it's a Western model, not a Chinese one, is that countries have sovereignty in the 12 nautical mile territorial sea, but in the 200 mile exclusive economic zone, we, the Americans and Allies, reserve the right to push our warships through without permission. The Chinese do not accept that, and that is going to be, and is being, I think, a big issue, particularly given their claims for the, as far as we can see, the entirety of the South China Sea and the islands in any case, and that generate 200 mile exclusive economic zones. To Taiwan, the latest Pentagon document released a few weeks ago points to the buildup of the Chinese forces, particularly, you know, deluge of intermediate-range ballistic missiles, which are, as I understand it, getting increasingly accurate, and common aircraft. But its bottom line is that China still lacks the capability, credibly, to mount a full-scale assault on Taiwan, and it makes the very interesting point, which I underlined, Bill, that China does not have the ability to mount a blockade of Taiwan's ports against a major power against the United States. Again, you see it, it tells you about the difference in the power situation. I mean, Taiwan is the issue that none of us want to face up to, frankly. I mean, we support the two-China policy. We don't want to crucify relationships with China on the, it's mood-lighting, you know, on the relationship that we have with Taiwan. You know, better than me, the increase in it seems to me, the Chinese are, to be fair, have been very patient about Taiwan, they no longer rattling the weapon system all the time. How many time when these are working in China is it a couple of million? You know, just across the straits in factories that, you know, do all this high-tech stuff and so on. So, you know, that's perhaps one where even I, Bill, would agree with economic interdependence being an inhibitor. The Korean Peninsula, I mean, you just wish that North Korea would go away, but for China, you alluded to it. If North Korea should collapse like East Germany, by the way, the Western part of Germany is still getting over the costs, as I understand it, of incorporating the Eastern part and the Korean thing would be much more expensive and the lack of interchange and so on. It's a totally different thing altogether compared with East Germany. That if you were Chinese, what you don't want is a North Korea that becomes part of South Korea and don't tell me the South Koreans wouldn't love to have nuclear weapons. Yes, they would. We all know which the target would be, a place called Japan. And that China does not want to see it, the risk of American troops, as you said, on the Yellow River. So the status quo in many ways is as difficult as North Korea is, sort of works. A collapse of North Korea would be hell-let-less. Just coming back to Taiwan, I've often argued this in private that, you know, if China attacks Taiwan, not because of a Taiwanese declaration of independence, because China's had enough patients right now to attack Taiwan, an American troops in and around Taiwan are being killed and America invokes the ANZUS Treaty. Believe you in me, the ANZUS Treaty says, in the event of an attack on either of the high contracting parties, their territories, their troops, their aircraft and vessels in the Pacific area, we shall immediately consult. Doesn't say we shall necessarily do it. My concern has always been that we would be the only country that America could even look to to give assistance, because the following countries would not be in a war between China and Taiwan. Japan, South Korea, all the ASEAN countries lined up together are not worth much in military terms in any case. Germany, I don't think so. France, I don't think so. Italy, I don't think so. And even the country I was born in who loves a war, any war. Remember the Falkland Islands? I think the ponds might say no. Thanks. Where would that leave us on the barbed wire fence yet again? It was always equal. I've got three questions lined up. One, two, three. Please. Yoko Igramawa, spending this year's visiting fellow here originally from Tokyo. As a Japanese, I found it difficult to digest the first part of your presentation, all of it I found very fascinating, but it was about the danger of estimating China. Yes, that's right. The second part was about the importance of balancing China. Now, and your analogy of 1930s was also not very helpful. What should have, I guess we're in that sort of position of Great Britain seeing Germany rising, but we are aging and declining power, although we do hold a very important international position still. So what should have UK done? Was Munich wrong? Should they have confronted Germany already in Rhineland? And our resources are limited. Out in Japan? Yes. Where should we put it in? That's going to be a very difficult choice, because we are aging, and all these cost of rebuilding after the tsunami. Where should we put our resources? What's more difficult? How should we balance the overestimation of commitment and underestimation? This is a question for you, Professor. Dead easy. You've got three minutes. Thank you. I think it's very difficult for Japan, as you say, aging population, two decades of stagnation. So you've got two options. You can accommodate and appease China, which is effectively what Britain, and particularly France did with the Rhineland in the Second World War. Or you can join a balance of power with your great powerful allies, which is, in fact, what you're doing. I mean, you look at what you're doing with us. We now have with you a military logistics resupply arrangement. We're now discussing with your officials in Tokyo an intelligence sharing arrangement, if we can trust your politicians, by the way. For the first time in your history, we've had our F-18 combat aircraft using an airbase, I forget its name, in your country. We've worked alongside you in Cambodia, East Timor, and we guarded your troops building a railway in Iraq. So I think we've come a long way. I don't underestimate the difficulties you face. I was in Japan, as my family knows, the afternoon of the earthquake in Tokyo. Do you know what was fantastic was the dignity of which your people are conducting themselves. There was no panic, none of that. The only thing that broke down was the mobile phone system, which was overloaded. I think that's going to divert you. It's going to cost US $300 billion, or whatever it is. By the way, it's a proportion of GDP that's less than the cost for New Zealand. You know that one. Certainly when I was talking at Vice Foreign Minister level, I think even with this left-wing government of yours, there is a desire to increase your military capabilities. You remember I mentioned the submarine detection capability, the Soviet's Array, and the other things you're discussing. I think for you it's important. I think the Patriot 3 and the Egypt system, the SAM-6s are important, and SM-6s, and you should go ahead with that. I think it's very difficult for you, because the instinct could be, you know, just roll over and let it happen, and we'll know what happens to countries that do that. We will finish on time, because we will have business and things to get to. It's almost time to turn up here. Dr John Wax on this, DSC. Professor Diff, thank you for your excellent presentation. Thank you, neighbour. Always entertaining, I would say. Always you have some compelling arguments to make. I made an interesting observation about Haman's article on the foreign affairs, the latest edition, which, a new criticism of his conclusions, I think I've heard a reasonable, but he didn't address his argument in the body of his article, which I found recently compelling. He talked about the projection of Chinese growth that perhaps reducing from 10% to 7%, and US economic growth, optimistically going from 2.5%, to maybe, if we're lucky, 3.5%, and even if that is the case, out of our 2030, China will still outpace the United States. That concerns me, obviously concerns a lot of us, and in your presentation you talked about issues that you wouldn't consider, or that we might have to reconsider if things change. I wonder if you could just, for a couple of minutes, talk us on how we might have to reconsider. Those figures, again, are based on, you know, an optimistic view of China's growth, and he claims they're moderate. Well, they're not moderate, because they're the same as the Central Planning Agency, the Pollock Bureau in China, which is based on 7%. My concern is that people like John Lee and others I know, David Hale in the United States, are saying there is a real risk of a dramatic slowdown, much more than 10% to 7%, if not some sort of explosion in the housing boom and so on. The answer to the people who do these extrapolations is how good were we 10 years ago making judgments, you know? It's a useful discipline, by the way, including for intelligence people. When we're looking forward in defence planning terms, 20 or 30 years into the future, go back 20 or 30 years and see how many things we got wrong, you know, with the end of the Cold War, with 9.11, with Iraq and Afghanistan. I mean, I do accept who would have believed that with the end of world history, as Francis Fukuyama called it, in which, you know, the only successful model was western democratic capitalism that would be in this sort of, not just economic, but economic and political crisis in the West, leadership crisis. I think the issues of what we would face if he was right, you remember his measures of the success of the great power were very crude economic ones. They were GDP, trade and debt. Well, it shows debt because it's suited, you know? I mean, as long as America is a reserve currency, yeah, there's a problem with that sort of debt they've got, but they can actually just keep printing the currency. So, we can speculate on, if he's right, then would everything that I've said be a lot worse to which the answer probably is, like with the answer to Japan, yes? My name is Albert Lee. I'm from the Department of Liberal Physics in England. Department of? Department of Liberal Physics. Ah! I just want to make a comment. Well, we all know that the forward, forward measures of ancient China's compass, paper printing, and again, if you want to look at the parallels of those measures in the wrong world, so I think the forward measures of the wrong world are yellow plain. They're computer, they're internet, and a little bit more. And I think if, unless a country can't take these four areas of attention to the next level, I don't think we can see our next place for now. I'll take that as a comment. Why are you doing things that we need to know about? What? The dean used to that? That's another dean that has to worry about. This will be a final question for me. Thank you very much, Professor Buchan. I've been going out from the University of Stin for two years. I was in the first study centre six years in the fourth floor. I'm from Vietnam. I'm very impressed by the presentations. I have a question from a smaller country's perspective because why do we love history and Vietnamese history that competition of powers is not good? Because anyone can have to choose side and it's happening in Vietnam that the proxy war happened there and yesterday happened. And not even after like, you know, had your big power as, you know, a hundred thousand years before, in the Vietnam War III, we have the Chinese, the German power. And Vietnamese people would live by the way that they were different in one way that they recognized the status of China as a big power, big labour power, but then they tried to keep autonomy inside. But the situation now is quite, you know, it's very hard for the policy makers to decide whether they decide to, you know, be free but to sign up with China or the US or whether they have to sign up with, I mean, this sign up with ASEAN for a long time that couldn't prevent China from assisting with the South China Sea. I mean, if you live just here in China, it's also a big puzzle for the policy makers all the time. So not only the pressures on the sea, but also pressure from different directions. It's not because just with the big power and so the economic relations and all type of relations can actually depend on that. Is there any way out of that? Is there any way out of your political competitions? And if you're a Vietnamese leader, what do you choose? You'd have to pay me a lot of money. I think it's very hard if I might say so and I don't mean this in a... I think it's very hard if I might say so for people like me who grew up, I grew up in England, an island. I've lived here 45 years more. Anglo-Saxon countries in their origins are island countries. Britain, Australia, New Zealand. And even, you know, when you look at America, I mean, it's an island really. I mean, is Canada a threat? I don't think so. Is Mexico? I don't think so. And we've never had a history, certainly not Britain, Australia, New Zealand have been invaded. I mean, the last time Britain was was 1066. By the way, the last time the Americans was when we British set fire to the White House in 1812. So we don't share long common land borders where wars occurred. I mean, when I talk to Russians, they absolutely understand that. When I talk to Germans, they absolutely understand that. You understand it. A thousand years of Chinese suzerainity and despite being fraternal communist countries in 1978, China decides to teach you a lesson. So I think the issue for you and your survival is the issue of middle powers. And I've mentioned, you know, South Korea. I've mentioned Vietnam. I've mentioned Australia. And by the way, I think in ASEAN, I'm glad to see after almost an absence of 10 years for reasons I understand with Indonesia preoccupied with building democracy, which it's doing in a way that Russia in the same period has absolutely not done, that in my impression at ASEAN meetings in the last two years, I'm seeing a more confident Indonesia. And I think that's good. We Australians certainly want to see the world's largest, Muslim country, fourth largest democracy just off our northern shore have been more confident. And if I were you in ASEAN, although I know there are substantial weaknesses in ASEAN, I'd be doing more together, that is you in the north and Indonesia in the south, to try and get some more backbone into ASEAN. ASEAN talks a lot and doesn't do much. Finally, on South China Sea, there's not much you can do except do what you're doing with your kilo-class submarines and other military equipment. And frankly, prevail on the Americans, you need to prevail on them to ensure that freedom of the high seas, including through the South China Sea, is an American interest. Because you can't do that by yourself.