 Ladies and gentlemen, welcome. I'm John Blacksland from the Strategic and Defence Study Centre. I'd like to begin by acknowledging and celebrating the first Australians on whose traditional lands we meet and pay respects to their elders, past and present. Well, what an evening. Here we are at the John Curtin School who told us free of pangs of association of ties with Britain pointed us towards ties with the United States. Tonight we have Professor Bates Gill, Professor at the Strategic and Defence Study Centre. Great colleague, just touch on the Strategic and Defence Study Centre. I mention here the Strategic and Defence Study Centre because it is a unique institution that deals with strategic studies, but deals with Australia's defence, military affairs and Asia Pacific security. And a more suitable speaker for tonight, it would be hard, would be hard pressed to find. Professor Bates Gill was the Chief Executive Officer of the United States Study Centre in Sydney from 2012 to 2015. He was Director and Chief Executive of the Stockholm International Peace Research Institute, SIPRI before that. He's been the Freeman Chair in China Studies at CSIS in Washington from 2002 to 2007. He has been a prolific writer, but particularly what we, within Australia, we think about him as a US studies scholar, but really his expertise is very much about China. And we are very privileged to have him here with us tonight. He's written Asia's New Multilateralism with Columbia University Press, Rising Star, China's New Security Diplomacy, Chinese Arms Acquisitions from Abroad, Arms Trade Transparency in South East Asia, Chinese Arms Transfers and his new book, Fourth Coming in 2017, is currently titled China, Getting It Right for Australia. How appropriate is that for us tonight, ladies and gentlemen? We are very privileged to have with us Professor Bates Gill. Without further ado, let me hand over to Bates now. Bates, thank you. Thank you very much, John, and thank you to everyone for coming out this evening. It's been an exciting day, I can tell you, as an American, and I suppose there's still a sliver of hope that my hope for a presidential candidate would emerge victorious. But it's looking less and less the case, and I'm sure many of you may well prefer to have your eyes glued to the television this evening and try to follow just what the outcomes of that election will be. But I hope to offer you something at least equally interesting, and I hope even more important as we talk about our long-term future here in Australia. I want to thank especially my colleagues at the Strategic and Defense Studies Center here, the Coral Bell School of Australian National University, most of all for the opportunity to be working here. As John noted, it's a world-renowned institution having celebrated its 50th anniversary just this year, and stands out really in the pantheon of globally recognized centers for strategic defense and security-related studies, especially with regard to the Asia-Pacific region, and I might even argue it ranks right up there in the very best of those centers that work on those issues. So it's a great privilege and honor for me to join such a distinguished faculty, and I was very pleased then when it was suggested that I might want to talk a little bit about the relationship that Australia has with China and what the future of China might look like. Now, as I was thinking about that, I wanted to organize it in a way that might be a little bit more compelling, a little bit more engaging, and even connected to personalities in that regard, and of course, in China there probably has not been in certainly recent decades a leader with quite the same character, quite the same personality, quite the same ambition as we see in the current leader of China, Xi Jinping. So tonight I want to talk a little bit about him and about his challenges that he faces going forward with China and what that might mean for the rest of us in the world. The paramount leader of China, Xi Jinping, has been in this office now for four years, and he's just passed one-third of his expected ten-year term. Now, in the view of many Western analysts and not to mention many in China, she has achieved a quasi-cult-like standing within China reminiscent of the 1960s when the great helmsman Mao Zedong lorded over the Chinese masses. According to relatively reliable polling, Xi is enormously popular amongst the Lao Baixing, the common folks on the street, and he's the subject of dozens and dozens of laudatory videos and other social messaging cranked out by the Chinese propaganda machine. His declared Chinese dream of 中華民族伟大复兴 or realizing the great rejuvenation of the Chinese nation, the China Dream, resonates across all sectors of a proud and ambitious society. Writing on this popularity, he's overseen a far-reaching anti-corruption campaign bagging extremely well-connected political, military, and business figures as well as potential political rivals and put himself in charge of numerous leading small groups which direct policy on sensitive issues such as internal security, economic reform, and foreign affairs. Casting his eyes abroad, Xi has visited nearly 50 different countries in just these four years and has set out an ambitious foreign policy agenda. He has overseen China's massive land reclamation activities in the South China Sea, expanding China's military footprint thousands of kilometers offshore. So it seems he's had a remarkable run, a remarkable run, or, or has he? It's worthwhile asking just how powerful is Xi Jinping? What do we know about his leadership style and his vision for China's future? More importantly, for China and for the rest of us, will he be able to deliver on the China dream or is he in fact far more constrained and vulnerable than he may seem? And what will this mean then for his or for China's neighbors in the future? So why don't we begin a little bit at the beginning, as it were, and review a little bit about what we know about Xi's background, or at least as the Chinese party state would want us to understand that background. In the country, in the country that was China in 1953, June 1953, he was born to great privilege less than four years after the founding of the People's Republic as the son of a vice premier and revolutionary hero Xi Zhongshun and the relative comforts, or that Xi Zhongshun pictured there, the relative comforts of his early life inside the walls of Zhongnanhai, the Communist leader's compound adjacent to the Forbidden City, came to a precipitous end in 1962 when his father was purged from his leadership positions accused by Mao of being an anti-party rightist. At first held in detention at the start of the Cultural Revolution in 1966, he was sent to safer conditions in the countryside in 1968, living near relatives in Yan'an, in Shanxi Province, and working alongside the local peasantry. He did not leave Yan'an until 1975, seven formative years of his life between the ages of 15 and 22. In 1975, he entered Tsinghua University and studied chemical engineering, but as a worker peasant soldier student prior to the full opening of Chinese universities at the time, he spent considerable amounts of his time studying Marxist-Leninist Mao Zedong thought and the virtues of the People's Liberation Army, as well as doing a fair bit of farm work on the Beijing University campus. From 1979, at the age of 26, and with his father rehabilitated, he began a rapid ascent through party and government ranks, serving in regional leadership roles in the more prosperous and growing eastern provinces of China, eventually becoming the party chief of Shanghai in 2007. But he was only in that post for a mere seven months, before being further elevated to the Politburo Standing Committee in October of 2007, making him one of the most nine powerful men in China at the time. Five years later, in November 2012, four years ago, he became general secretary of the Chinese Communist Party and head of the Communist Party Central Military Commission. And then several months later, in early 2013, he assumed the title of president, thus fully confirming his status as the paramount Chinese leader just shy of his 60th birthday. On the personal side, he's been married for nearly 30 years to Peng Liyuan, his second married wife, who is nine years his junior. She is today a major general in the People's Liberation Army and a well-known singer and celebrity entertainer, who for most of their married life was more famous in China than her husband. They have one child together, Xi Mingzhe, a girl who graduated in 2014 from Harvard University. She and his wife are a true Chinese power couple and are wildly popular by all accounts. This life experience as a party princely, as a survivor, and as a resolute devotee to the party adds up in a way that makes him more confident, decisive, insistent on ideological adherence and focused on pursuing Chinese interests than his most recent predecessors. Now in office for just over, just four years, she has used this time to consolidate his power and remove potential rivals, generate popular support for his leadership and take control of the policy apparatus across a broad spectrum of domestic and foreign policy issues. He's done this by launching an intensive anti-corruption and party discipline campaign, reviving ideological zeal, stepping up propaganda, stifling nearly all dissent, and strongly discouraging even mildly contrary thinking. In contrast to his two most immediate predecessors, Jiang Zemin and Hu Jintao, he has put forward a number of bold initiatives and visionary ideas, both at home and abroad. At home, his vision is probably best encapsulated in the concept of the Chinese dream. This phrase, probably more than any other to date, has come to define Xi's leadership, particularly at home, and has become ubiquitous in China, in the media, billboards, advertising, peppered throughout party pronouncements, in school textbooks, nearly everywhere you look on the streets of China. You will see a reference to the China dream. As part of the China dream, official statements point to the goal of China becoming, quote, a moderately well-off society by 2021. That will be the 100th anniversary of the Chinese Communist Party, and second, becoming a fully developed country by 2049, which would be the 100th anniversary of the founding of the PRC. So those two so-called centenary goals, maybe in a nutshell, best spell out what the ambitions, certainly, are of the China dream. Now, this very hopeful and optimistic vision, which Xi Jinping stands for, has been accompanied by the toughest crackdown on dissension since the Tiananmen crisis of 1989, and accompanied by the official stoking of nationalist sentiments. Under Xi Jinping, China has had a growing incidence of harassment, detentions, and disappearances of activists, lawyers, journalists, lawyers, intellectuals, and publishers, and others who might differ in their view about the China dream and about Chinese Communist Party leadership generally. This trend has been reinforced by the passage of new, tougher security and surveillance laws in China, stepped up monitoring of foreign organizations working in China, and much more extensive policing of the internet and social media. The issuance by the party of a document entitled, concerning the situation in the ideological sphere, sometimes called document number nine in 2013, gives us an idea of the aim of these policies under Xi Jinping. Document number nine listed seven dangerous forces which threaten Chinese Communist Party authority. More recently, the Ministry of Education has issued similar restrictions on classroom teaching in Chinese universities. And in both document number nine and in the Ministry of Education declarations, among the problem issues and challenges for China were such things as Western constitutional democracy and other Western ideas, such as universal values, civil society, constitutional democracy, and press freedoms. We should note that this crackdown has not only unfolded in mainland China, but has extended abroad to encompass Hong Kong, for example, and even further afield, in some instances, even including Australia, to encourage loyalty and through outreach and at times intimidation aimed at persons of Chinese descent living abroad, both Chinese citizens and otherwise. In many respects, it seems these campaigns of tighter oversight are working. Last year, for example, reporters without borders ranked China 175th out of 180 countries in its world press freedom index, ahead of only Somalia, Syria, Turkmenistan, North Korea, and Eritrea. We've seen also an expanding military footprint for China under Xi Jinping, most obviously in China's island building and construction of military facilities in the South China Sea and the Chinese takeover of Scarborough shawl from the Philippines in 2012. In another interesting advance for China's military presence abroad, it was announced earlier this year that China would build a naval logistics base in Djibouti, primarily intended to service China's contribution to international anti-piracy operations in the Gulf of Aden and to help support significant numbers of Chinese international peacekeepers under the UN flag operating in Africa. On the foreign policy front, Xi Jinping has initiated new plans such as the Asian Infrastructure Investment Bank, or AIIB, and the Silk Road Economic Belt and the 21st Century Maritime Silk Road, the latter two known more familiarly as One Belt, One Road. These initiatives look to invest some 1.4 trillion dollars to build roads, railways, airports, harbors, energy plants, telecommunications networks, and other critical infrastructure, which will link China to inland and littoral markets across Asia, to the African East Coast, and even on to Europe. But in spite of these personal political successes for Xi Jinping at home and abroad, he nevertheless faces a range of challenges, many of which are reflective of his own leadership and which could undermine his vision for the China Dream and the rejuvenation of the Chinese nation. So I'd like to spend the rest of the evening having a look at some of those challenges that we have to as analysts contrapoise against what has also been a relatively successful run for Xi Jinping as well. Let's first look at the domestic front and then we'll turn to China's foreign relations. So on the domestic front, Xi Jinping and all of China face greater economic uncertainty today than at any time since the introduction of Deng Xiaoping's transformational strategy of Gaiguo Kaifeng, which has been a long or reform and opening more than three decades ago. According to Arthur Krober, one of the world's leading analysts of the Chinese economy, this uncertainty is most clearly in evidence by the following. First, we know that the pace of China's economic growth is slowing, but importantly, the slowdown is structural in nature and not merely cyclical. Third, this slowdown reflects difficult transitions that other fast-growing economies failed to navigate in the past. And perhaps most importantly, it is entirely unclear whether Beijing's policies are able to adequately deal with the fundamental economic challenges China now faces. At its core, the slowdown comes as a result of a downturn in the long-utilized platform for Chinese growth, investment in its capital stock. Put that another way, China's remarkable growth over the past three decades has relied primarily on its great success and efficiency in constructing the building blocks of a modern, export-led, industrial economy, freeways, railroads, harbors, airports, urban agglomeration, housing, manufacturing facilities, et cetera. But this period of booming capital investment or resource mobilization is coming to an end. Building yet one more high-speed train or yet one more airport or yet one more new urban center will add marginally less value to China's growth than in the past. And we know that China is increasingly facing the problem of overcapacity as the economy slows. Too much heavy industry, too much housing, too much underutilized capital stock. The challenge for Xi Jinping's economic future will be to rely less on resource mobilization and capital investment and more on extracting efficiencies from those resources already in place and shift towards a greater consumption-led growth model. But we know this, and so does he, but this is a very, very difficult transition, fraught with economic and political risk. Whereas the past growth model could benefit from state-led and state-owned investments and decision-making and with less concern about efficient uses of capital, China's future growth model needs to get the state out of the way to be more focused on efficiency and allow the market, for all of its vagaries and unpredictable ways, to have a far larger role in determining the efficient allocation of those resources. To put that more sharply, such a transition will require massive layoffs in the state-owned sector and breaking the rice bowls of powerful stakeholders across the top of much of the inefficient state-owned sector, people who have strong personal incentives to keep the system just like it is. More broadly, it means lessening the grip on the economy and allowing greater openness, transparency, and market-oriented forces to take the lead. But it's not clear yet, now into the beginning of the fifth year of Xi Jinping's leadership, it's not clear yet that the Chinese party state is prepared to take these kinds of steps. Instead, the default response seems to be economically more debt and more capital investment. No less authority than the recently former Chinese minister of finance and one of China's most acclaimed economist, Luo Jiwei, said last year when he was the minister of finance that China has a 50-50 chance of getting stuck in the middle income trap, the middle income trap. That's to say, not continuing up the ladder of growth to a highly developed economy if serious reforms are not implemented soon. Luo Jiwei lost his job this week, probably because of age limits, but who knows. But if that voice is not authoritative enough, what are we to make of the fact that Chinese transferred a record $670 billion out of the country in 2015, all of it to invest in Melbourne, I think. No, that's just a joke. But $675 billion out of the country, which could be a signal of a growing concern among investors in China about the country's longer-term economic prospects. This political and economic challenge which Xi Jinping faces is critical, but could be addressed with the proper types of policies. But it's further exacerbated by a challenge against which he has very little recourse, and that's China's aging population. In just 10 years, by 2025, approximately one in four persons in China will be over the age of 60. That will number about 367 million people, more than the population of the United States. Over the next 25 years, the ratio of working-age persons to retirees will rapidly shrink further from about six to one today, the ratio of working to retiree people, six to one today, to two to one in 2040. So in a nutshell, China's going to grow old before it grows rich, and that's going to add downward pressures on China's growth, and all the more so if much-needed economic reforms go unimplemented under Xi Jinping. Other domestic and socioeconomic challenges for Xi Jinping and the party leadership would have to include the continuing challenge of corruption. We will not have time to delve into this in detail this evening. I think you're all relatively familiar with the problem, but suffice to say that in spite of Xi Jinping's anti-corruption drive, graph remains a big, big problem. Just read the documents coming out of the recently completed 6th Plenum. No less authority than Xi Jinping himself openly acknowledges that corruption is the biggest threat to party rule, saying in his July 1st speech this year, commemorating the party's 95th anniversary, quote, if we cannot manage the party and govern it strictly, leaving prominent problems within the party when settled, our party will sooner or later be consigned to history. And he's talking about the challenge of corruption and what it means for the legitimacy of the party. Not unrelated, the income gap in China continues to widen between rich and poor, another potential problem for a party concerned with ostensibly representing the needs of the masses. China's income inequality has steadily worsened over the past decade, and according to most recent data, China ranks about 29th in terms of income disparity, ranking higher than the United States, but below countries such as Brazil and South Africa. But it's trending upward towards Brazil and South Africa territory. According to Chinese official data, some 200 million Chinese today still live under the poverty line, which is defined in China as less than two dollars, two US dollars a day. China's monumental environmental challenges are legion. They're big. They're complex. There is difficult and complex as the country itself. China's air pollution, of course, is legendary, and Beijing is not even the worst of the country's major cities. Surface and groundwater is widely contaminated in some places even unsuitable for irrigation or industrial use. Deforestation, desertification, dwindling arable land, resulting from centuries of intensive agriculture and more recently intensive urbanization pose additional challenges. And these are not only environmental problems, but of course are political as well as pollution and toxins endanger people's lives. Environmental, political, but also economic, as we know that China's environmental challenges can slow or otherwise imperil Chinese economic growth. In the face of his tougher disciplinary measures, slowing economic prospects and other domestic challenges, it shouldn't be a surprise then to us to know that there is growing disgruntlement in some important sectors of Chinese society. At the very top of the pyramid, there are signs that Xi Jinping must still assert his legitimacy within the upper leadership of the party to fully stake his claim to power. I think we still need to read the tea leaves coming out of the sixth plenum meeting and in the run-up, of course, to the Communist Party Congress late next year. And I'll be very interested to hear from folks in this room who follow these issues very closely. But I think it's fair to say that he continues to have some difficulties, some challenges in fully staking his claim to power. He took a highly unusual step recently in publicly acknowledging that several ousted top-level political and military leaders, including the flamboyant rising star princeling Bo Xilai and former internal security chief Zhou Yongkang, were involved in not just corruption, but according to Xi Jinping himself, quote, political conspiracies, unquote, to, quote, split the party. To admit this tells us a lot about the machinations at the uppermost reaches of the Chinese political system. Xi sweeping anti-corruption drive against the highest levels of the party and military means he is generating a lot of disgruntlement, fear and no doubt some enemies. Intellectually elites at universities, in think tanks, cultural institutions, in the media, and even in the wider society openly criticize the country's turn toward a harder form of authoritarianism while it increasingly suppresses even modest attempts at contrarian or out-of-the-box expression. Among the broader population there is also evidence of growing discontent. The Chinese Academy of Social Sciences published a study in 2012 claiming that there are over 100,000, quote, unquote, mass incidents and protests in China every year. Plans to shut down wasteful and unproductive state-owned enterprises will generate millions of unemployed workers in China's major cities, which is another potentially volatile problem for Chinese leaders. Ethnic unrest around China's periphery and particularly in its west remains a persistent problem for Chinese authorities and often takes on quite violent forms such as in Xinjiang. In that respect, I think it bears remembering that about half of the Chinese land mass, 49% of the Chinese mainland territory, is made up of just four provinces, Tibet, Xinjiang, Inner Mongolia and Qinghai, four provinces traditionally territories of non-Han peoples. Here are the results of a poll taken late last year, showing the high percentage of Chinese respondents who list corrupt officials, pollution and income equality as the top problems facing China. This poll conducted, I think, by the Pew Global Attitude Survey, relatively reliable just to make the point that I'm not making this up according to pretty good survey data, the people of China feel strongly that the corruption, environmental degradation and income equality are becoming big problems. Note that 84% of the respondents felt that corruption is either a very big or a moderately big problem. So these are things that Xi Jinping certainly needs to wrestle with. He's fully aware of them and the challenges may well grow larger. Let's then return to some of the foreign policy challenges that Xi Jinping will be facing. Looking at this map, just the map where China sits, we can see that the country already lives in a difficult neighborhood. China has the world's largest land borders extending more than 22,000 kilometers, direct land frontiers with 14 states, the most in the world, tied with Russia, maritime borders with several more. Four of these land neighbors are nuclear weapons states, or nearly so India, Pakistan, Russia and North Korea. And if we include forward based US nuclear weapons, we could say five nuclear armed neighbors. It's also the case that China's economy is highly dependent on its maritime approaches for exports and imports, and its economic center of gravity is highly concentrated on its eastern seaboard, all of which further highlight China's strategic vulnerabilities. But aside from these inescapable geostrategic certainties for China, China's external environment looks worse today under Xi Jinping than it was 10 years ago. On the Korean Peninsula, for example, China North Korean relations are just about at the worst that they've been in decades, owing to Pyongyang's pursuit of a nuclear weapons capability, and Beijing's apparent inability and or unwillingness to stop it. That in turn has soured the political and security relationship of South Korea, demonstrated most recently by Seoul's decision to jointly deploy with the United States batteries of terminal high altitude air defense or THAAD systems to counter the North Korean threat, systems which Beijing claims could undermine its own missile force. China's political and security relations with Japan are likewise at a low, sparked by a sovereignty dispute over the Senkaku-Diaoyu Islands, but sustained by decades of combative rhetoric towards Japan, and especially toward the policies of current Japanese Prime Minister Shinzo Abe. Don't they look happy together. In a poll by the Pew organization in June of this year, fully 86% of Japanese surveyed said they had an unfavorable view of China. In Southeast Asia, the story of difficult political diplomatic and security relations continues, primarily as a result of Chinese actions in the South China Sea, especially since 2012. There is of course now some evidence that China and the Philippines may try to reach a settlement of some kind coming out of the recent visit by President Duterte to Beijing. But overall, I think we can argue that China's reputation has been badly damaged in the region and certainly internationally as a result of its recent actions in the South China Sea. More broadly, in the region, we've seen a gravitation amongst many of the key states toward the United States, who are concerned about China's growing influence in the region. Here in Taiwan, following eight years of stable and steadily improving relations with China, Tsai Ing-wen, the leader of the Democratic Progressive Party, was elected earlier this year and took office in May. She's not expected to take any contentious pro-independent steps, but cross straight ties heavily so far, become cooler and a little bit less certain. And as for the United States, China's most important bilateral relationship, Beijing-Washington ties have likewise soured over the past three years across a range of issues, including cybersecurity, trade, and maritime security in the East and South China Seas. Given the events of today, while we may not know quite yet who is the President of the United States beginning in 2017, most analysts have argued that regardless, whether it's Donald Trump or Hillary Clinton, the early stages of relations with China will be difficult. China's growing power, particularly its military might, has raised concerns, particularly among China's nearest neighbors, and especially those who have outstanding territorial disputes with China, about how China wants to use this growing power. This in turn has contributed to various forms of diplomatic, economic, and military efforts to counterbalance China in the region and beyond. So putting it more pointedly, Xi Jinping and his fellow leaders continue to struggle with transforming China's growing power more to its advantage. Or if we want to draw from the title of David Shambaugh's recent book, while China has surely gone global, it nevertheless remains a partial power. So who is Xi? On the basis of this very brief review, his background and the challenges he faces at home and abroad, what can we say about his leadership style and the kind of China we'll all be working with in the years ahead? Unfortunately, there is so much about China's leader that we simply do not know. But with that caveat in mind, here are four sort of simple takeaways that I'd like to share. First, party first and politics second to the fourth. Xi Jinping strikes me as a true believer in the Chinese Communist Party, more inclined than his predecessors to look to the party and its extensive apparatus of ideology, propaganda, and control, and the party's pivotal role, indeed indispensable role in his view, in the long narrative of reversing China's humiliation and re-establishing China's greatness, the China Dream. This makes a lot of sense, given Xi Jinping's own life story as a privileged, princeling son of the party elite, who benefited massively from those party connections, and whose very life, arcing from the earliest days of the People's Republic to today, parallels the incredible trajectory of China's rise. For Xi, one abiding constant throughout that life experience has been the leadership of the Chinese Communist Party. Hence, we see far greater importance of the core domestic political imperative, that is, survival of the Chinese Communist Party, as an even more pressing priority under Xi Jinping. And both domestic and foreign policies are changing in ways to support that priority. Second, Xi appears to have reformulated the concept of peaceful rise, or He Ping Jie Qi, in a more assertive and nationalist direction. Under his predecessors, Jiang Zemin and Hu Jintao, and especially under Hu Jintao, China clearly recognized the need for a generally peaceful external environment so that it could more readily access vital inputs for its economic growth, markets, capital, raw materials, and technology, and stay focused on domestic stability and development. In essence, this peaceful rise conformed with Deng Xiaoping's well-known axiom, that China should be patient and not flex its muscles. Or in Chinese, as it's known, Taoguang Yang Hui, which is often translated as hide your capabilities and bide your time, or just hide and bide for short. Under Xi, domestic stability and development remain a priority, but he seems far less concerned with stable external relations. Why is that the case? My speculation is twofold. On the one hand, it is because China's domestic political, social, and economic challenges have become even more pressing. But on the other hand, and here's the important change, Xi Jinping appears to have concluded that a stronger, more active, and more nationalistic assertion of China's interests abroad, even at the risk of serious deterioration in relations with key neighbors is the best way forward for dealing with many of China's domestic problems. So put that another way, this will mean less hiding and biding and perhaps less peaceful, more rise. Third, given what is at stake, from Xi's perspective, he has proven to be a much bigger risk taker. In numerous ways different from his comparatively low key predecessors, Xi is determined to leverage the party's control at home and China's power abroad in pursuit of Chinese national interests as he sees them. It is a highly risky approach with the potential for high rewards, but also potentially high profile failures. Fourth, and finally, we should not lose sight of the fact that Xi Jinping faces many constraints and vulnerabilities on both his domestic and foreign policy agendas, and they may be catching up with him. Perhaps the biggest constraint on Xi's power is the same unresolved conundrum that have been faced by all of his predecessors since Deng Xiaoping. That is any serious effort to introduce the economic and political reforms necessary to assure that China emerges as a secure, prosperous and contented society will almost certainly weaken the one party authority of the Chinese Communist Party. But to eschew those reforms and instead further tighten the party's grip, which seems to be Xi's preference to date, this puts China's stability and even prosperity at risk. Of course, the big question going forward is, will he double down or will he moderate this approach? For the near term, that is certainly for the next year and in the run up to the Communist Party Congress later in 2017, I suspect it will be the former. He will continue to see it as a necessary, though not always winning, formula to solidify his standing and take greater advantage of China's growing power. It is possible, possible over the medium term, meaning out to 2022, when Xi would complete his expected second and final five year term as China's paramount leader, he would find it possible in that country to lose the party's grip at home and walk back some of China's assertiveness abroad. But I think that's highly, highly uncertain at this stage and we certainly won't know that, I don't think, until 2018 or 2019 at the earliest. So, looking ahead, what can we say all this might mean for Australia and for the wider international community? Xi Jinping's current directions in foreign and domestic policy have serious implications for Australia and the wider Asia Pacific and I think warrant a more cautious approach in capitals across the region, including in Canberra. Xi's economic pet elections in favor of a strong role for the state and which protect much of the state-owned sector, raise serious medium term concerns about China's future growth prospects as well as prospects for opportunities available to Australian business, particularly in China. He advances a more muscular nationalism in China's relations with foreign governments as well as businesses with an increased use of economic coercion as an instrument of statecraft. The tightening grip of party authority and associated crackdown on dissenting voices at home and even abroad, including in Australia, also runs counter to Australian interests and values. Australian interests rightly seek a more open, stable, productive, and mutually beneficial relationship with China and a China which is increasingly prosperous, stable, just, and constructively contributing to regional and global affairs. China should seek the same. But under China's current leadership, this may prove more challenging than ever. Thank you. Now we've got time for questions, ladies and gentlemen. So there will be some roving microphones. I think Jasmine is still, I'll get the microphone and we'll pass the phone around for questions. Hello. Thank you, Mr. Bates. I really got a lot from good commander of knowledge about China. And just now I have noticed that you use two terms about the translation of China. Why is China's dream and not China's dream? And also you mentioned occasionally in your speech. No? What are the differences? Oh, I see. Thank you. Well, I'm glad you caught that. Of course, the term in Chinese could probably be translated as both a direct translation of the China dream. And I think the way you're raising that question is an interesting one, because what you're asking is whether or not this is a dream for China, the nation, or is it a Chinese dream? Meaning are we talking about a dream for the Chinese people? I used it probably in the same meaning as Xi Jinping would mean it. And I'll forevermore never say Chinese dream. I'll make sure I say China dream as he would translate it, or at least as it's directly translated. But the point you're raising is a very interesting one. And I suppose that is exactly what Chinese people themselves are asking is whether or not the dream he's putting forward does indeed represent the dream of the Chinese people. Is that is that the question you're asking? I see. Well, that's a little easier to answer. I would say no. At least because if we're simply talking about material gain, getting richer, you know, having a more prosperous life, if that's what the China dream means, then I suppose we could say yes. I don't interpret it as such, because as I was trying to make clear here, at the real center of the China dream is the legitimacy and survival of the Chinese Communist Party. When people talk about the American dream, I think there's a far less political content to it, or a far less than understanding, at least the way I learned about it when I was a kid, that somehow held up the legitimacy of one particular authoritarian party or another. Maybe that will change under the new leadership in America. I don't know if I'll say that. There's a gentleman up the back there. Just this is more like a comment and also a question. You mentioned about China being growing old before they get rich. I'd like to mention it to you. I've been to China a couple of times. They are in the Chinese people are now able to enjoy high speed rail, the first class motor freeways, the first tier city and the second tier city has the mass rapid transit system. Now, I don't like the word rich, which is kind of connotation of very dirty money. I like to use these of prosperity. And I think the Chinese people are able to enjoy right now in this middle. In the last Chinese New Year, there are 3.6 billion passenger trips completed within two months. And without that kind of infrastructure, that 3.6 billion billion passengers, you know what is the concept is that it's equivalent to the population of Latin America, North America, Europe put together. Now, what I'm trying to say is that Chinese are already prosperous. And when you say to read, grow too old before they get rich in this country in Australia, we are very rich. But we don't have that facility. No high speed rail, no mass rapid transit and look at our highways. Second tier third world. So what I'm trying to mention to say, please look into this respect that China is not going to grow old before they're getting too rich. They are already very prosperous. Okay, thank you. Thank you. No, you're absolutely right. In many respects, the the only comment I would make is, you know, what? What do we make of continuing poverty in the countryside? What do we make of the figure the Chinese official figure that still 200 million people are nowhere near rich. And probably in another 200 million people would not be considered rich by any Western standard. And the I guess the you're right, if we're simply trying to define rich in terms of income per capita, it's going to be a very, very long time before that would be the sort of outcome for China. So I take your points, they're right. But I think you'd also agree that there are continuing very, very large gaps in China in terms of income, and that not everyone's living the Chinese dream. Gentlemen in the blue shirt. Thank you, Professor, for your presentation. David Lindsey from the Research School of Management. I think Marcy Tong once said, and you can correct me here, that those that don't don't learn from history are bound to repeat it. And I'm just wondering if there's a case historical case where one country is so aligned commercially and economically on one side and relies strategically and militarily so much on the other, and whether we can learn from that. And there's no prizes for guessing which country I'm thinking about. Well, certainly it would be difficult for for Australia to itself look to its own history to find lessons of such an unprecedented situation. It's very new, the situation that Australia is facing today, as I understand Australian history. Whereas in the past, you know, until the recent, the recent past, both the strategic and the economic partner was more or less the same. This has changed. So what could where could we look to history to try to try and draw some lessons? I think it's very, very difficult to do so. But nevertheless, I don't think it's an impossible situation for for Australia to to manage. In fact, I'm increasingly of the mind that it's a false dichotomy. It's a false paradigm for analysis. It doesn't help us really in sorting through the sorts of prioritization and decisions which Australian policymakers and people need to make about its relationship with China and the United States. The fact is, that both the United States and China are extremely important security and economic partners of Australia. That is the concept. Sorry, that's complicated. It's not black and white. But it's real life. That is the paradigm that we need to take on board. As we wrestle with what I agree, our unprecedented foreign policy challenges because of some of the dichotomies that do exist. The United States is not the largest trading partner of Australia. Certainly that title belongs to China. But the United States is by far the largest investor in China in Australia. 10 times 10 to 15 times more investment in Australia than than China currently has. And of course, where do Australian investors park your superannuation futures? They park it in the United States, not China. So on those very basic simple facts, we cannot say that America is not an important economic partner of Australia. Likewise, China is increasingly, while in the news, we receive a lot of sort of concerns about China's growth as a military power. But that doesn't deny that China also plays an important role as a security actor, which has benefits for Australia. That may sound strange, but it's true. For example, conducting anti piracy activities in the Gulf of Aden, increasingly stepping up its counter terrorism and intelligence sharing activity, the largest peacekeeper, UN peacekeeper of the permanent five members of the UN Security Council. And even more broadly, one can argue and many many scholars do argue that China's 40 year focus on domestic development, and it's remarkable economic success story, has been a critical factor in explaining why since 1978, there has been no major interstate conflict in the Asia Pacific region in spite of many, many dire predictions to the contrary. In all those ways, China is playing an important security role for Australia. So I think we need to be more nuanced in our thinking and not say China is economic, the US is strategic, end of story. It's much more complicated than that. They are both important economic and security partners for Australia. Yes, that's going to make your foreign policy task more difficult, but a lot more interesting and a lot more realistic. Thank you very much for this talk. It was fascinating. I'm particularly interested in some of the non Western challenges we're seeing to the Western led international legal order. And you focused, I think absolutely rightly on China's part in this story. I'm interested in looking at some of the other challenges as well and the relationships between them. So in the United States, there obviously have concerns about some of the challenges from China and South China Sea. They also have concerns about some of the challenges from Russia and with Crimea and interference potentially in the election. And they're also particularly concerned in some times about areas of international law where the two states are acting together. And so cyber security is a very interesting example of that, where there's a real sort of standoff in terms of international norms being developed between the Chinese and the Russians on the one hand, and some of the Western states on the other. So I just wanted to draw you out a little bit on China's alliances with other non Western states, and particularly with Russia, whether you saw anything in that, or whether you think it's really China by itself on some of these issues? Oh, that's a very complicated question. Obviously, it'll take a long time to provide a very sufficient answer. Just maybe I just to make a few observations. First, we should not lose sight of the fact that if you take a slightly longer term perspective on China, let's call it China's engagement of the global community, dating it say from about 1980. Actually, China has had a remarkable openness to accepting, embracing, and even implementing and even enforcing, I would say the vast majority, even most, if not almost all norms and rules and that sort of underpin the international system as we have come to know it over the past 70 to 100 years. And it's easy to tick off what we're talking about, right? I think everyone's familiar with that. We shouldn't lose sight of that. That, I think, has been a remarkable achievement of the international community in being open to engaging China, and I think also of some political courage of Chinese leaders to take those steps, seeing them in their interest to do so, and even going further to become contributors to the global public good. Some of the issues you've raised more recently, yes, are concerns. And I suppose if I want to link it back to the talk, I don't think it's a coincidence that some of the concerns that have arisen in the minds of the international community on such issues as maritime claims, law of the sea, cyber security and the like, have arisen more or less coincident with the advent of the leadership of Xi Jinping. Not completely, but it's interestingly close. Of course, we can't say causation, but there seems to be a good deal of correlation. So you have in place the combination of both a China that can, through its increased power and leverage in the international system, take actions to challenge them, to question them, to try and put their own stamp on them, to try and even create their own sets of standards and norms on certainly emerging issues like cyber security. But more importantly, a leadership that is willing, not just able but willing to pursue these aims, as I say, I think largely because it's seen as so critical to maintaining the legitimacy of the Chinese Communist Party. What do we do about it? Well, I think, as I think I'm suggesting, it's going to be a lot more difficult, a lot more difficult because they are both willing and able to challenge many of these things. I still wouldn't lose sight, though, that China is, by and large, a constructive international contributor. And I guess I wouldn't be too worried, not too worried, you know, about would be alliances or connections with other countries that may share some of their angst and concern and unhappiness with the West. You know, those relationships have their own inbuilt problems, which we can't lose sight of. And in many ways, I think, certainly for China, certainly for China, its long term future rests with a stable and constructive relationship with the broad international community. And I think they're smarter than simply throwing their lot in with one or two other major countries that have their own vast sets of challenges to face themselves. Thanks for your presentation, Dr. Goh. And last week in Melbourne at a panel, Linda Jacobson and Hugh White were discussing whether the voluminous meetings that Chinese and American officials have these days will dampen strategic competition. And Linda's view was that, well, they will. They are talking serious strategic issues in every day of the year, except for Christmas and Chinese New Year. And Hugh's reply was, well, you can have many meetings in fancy hotels with fancy mineral water and say nothing of substance. So I was wondering, which view do you incline to? Yeah, Hugh's probably been a lot of those meetings in different in different capacities. But I think I would tend to agree with with Linda Jacobson's view on this. Maybe we fall back on Churchill's famous statement about jaw jaw rather than war war. Because there is substantive outcomes to them. Certainly, I would say it's better than the absence of them. And while we could probably say that many of the high expectations that resided in the minds of lots of analysts and strategists, policymakers in the 1990s that engaging with a increasingly open China would help to sort of moderate worse behaviors, help to integrate the country in ways that were more conducive to stability and beneficial. Yeah, more recently that's become a more challenging prospect. But again, let's look at the longer term trajectory. It's precisely because of those forms of engagement, precisely because of those forms of interaction, not only from the United States, but with others around the world, including Australia, that we have to thank the great progress that China has made in becoming a constructive, integrated and important contributor to the global commons. So I don't think that simply because we can be frustrated at many turns, simply because lots of mineral water gets finished without a lot of outcomes, that that in itself should lead us to conclude to think that these processes don't work or that we should stop them all together. We can point to lots of examples of pretty good success. I would hold up nonproliferation as a major success story, precisely through lots of mineral water between Beijing and Washington, or the recent agreements on to support the Paris Accords and to take their own bilateral actions in support of mitigating global climate change, again, resulting from lots of meetings. So I share Hugh's skepticism or at least frustration that oftentimes these meetings have no outcomes or little to speak to. I would also add to that, maybe Hugh made the point that it's only going to get harder, right, as China becomes stronger and has more leverage points with us, with the United States and with many, many others around the world. But I don't agree that that's a reason to stop doing it. And I would not agree that they have not been a factor in helping to maintain the stability that those two countries have remarkably enjoyed in spite of all predictions to the contrary over the past 20 to 30 years. Thanks for the talk today. You put up a series of domestic challenges, and in the economic one you suggested for the opening of the markets was the way forward. But it would seem to me that actually that's typically Western response to the challenge that China faces. And it seems to me that that also potentially exacerbates each of the other challenges apart from the aging population. And therefore, I can't help feeling that that is not necessarily the way forward for China. It has to find a different balance than what might be typical in a Western economy. Well, that seems to be that you and Xi Jinping would be in agreement that there's going to be some form of muddling through and use of massive capital resources in ways that are really quite unprecedented, and which, as you suggest, probably run counter to a lot of Western economic theory. We shall see. It's true that up till now, the Chinese economic leadership have weathered some pretty tough transitions and have really had quite obviously a remarkable success story to now. I guess the critical turning point on whether one agrees or disagrees on this question is on the issue of capital mobilization and efficiency. Whether or not continued capital intensive oriented growth and the amassing of greater and greater debt, not only within government, you know, both at the, not so much at the national, but especially at the state and municipal levels, as well as increasingly private debt, can be sustained. And you're right, we're sort of moving into uncharted territory, at least as far as Western economists are concerned. So you may be right, there may be some third way that simply has never been seen before. I suspect it's going to be not really a third way, but a kind of at best muddling through and continued slowing in the economic pace of growth, still, you know, envious levels of growth, but slowing in the pace. And perhaps really the question here isn't whether or not the economic model can be sustained, but whether or not the economic model to the degree in its past form, it has provided the basis for the political model, whether as the economic model needs to change or at least slows or becomes less successful from its past, will that have an impact on the political situation? And I guess we really don't know. Thank you, Dr. Gill for covering a comprehensive topic in such a short time. My name is Vibhore, I'm a master's student. So my question is previous Chinese regimes, they've maintained this policy of non non intervention in the internal affairs of other countries, or giving foreign aid without any baggage or any conditions, given the personality traits that you have described of President Xi, do you expect these to change these policies to change under his leadership? Yes, in a short answer, it will. And it already has. And that's an evolution actually that we saw forming even before Xi Jinping. And it's an interesting phenomenon to follow. I always like to remind audiences, and especially, excuse me, Chinese audiences, remind audiences that, of course, even well before Xi Jinping, Hu Jintao, Jiang Zemin, this notion of non intervention, you know, had lots of exceptions, right? I mean, the biggest exception being the invasion of Vietnam. That's a massive intervention in 1978. Of course, that's not how the Chinese officially want to look at that. But that was a huge intervention. But aside from that, we've seen as China's global interests have grown, as its diaspora of Chinese citizens have spread around the world as China's economic presence in so many far flung parts of the globe, and even increasingly in quite dangerous and troublesome parts of the world. So to that is grown the interest within Chinese policy circles to have the capacity to take action if necessary. I think fundamentally at this stage to help protect the lives of their own citizens. But as we see, to build a capacity with that, to maybe intervene in more robust ways down the road if necessary. So, yes, the policy of non intervention has undergone a great deal more flexing, a great deal more reinterpretation on the part of the Chinese leaders, which I think at this stage is primarily driven by a need or a perceived need to want to be able to protect citizens and economic interests in different parts of the world. I don't see this as yet. Certainly in any near term capacity, a desire to intervene into foreign countries, you know, to unnecessarily or in any sort of unwarranted or unprovoked way. Of course, again, China would not consider the militarization and reclamation of islands and disputed territories in the South China Sea as an intervention into the sovereign affairs of other states. They just don't consider that to be the case. Others would obviously differ. Yeah. So earlier you talked about Arthur Kroger, who essentially predicts the soft landing for the Chinese economy. But many other economists like Jonathan Anderson are looking at a more hard landing. And, you know, given that Xi Jinping has put on so much importance on the 6.5% growth target and so on, what wouldn't it be a massive loss of faith, faith and credibility for the party if it were to have a hard landing and what sort of political outcomes would that lead to? Well, yes, I think the basic compact between the Chinese Communist Party and the Chinese people is still fundamentally in place that the party will continue to lead the delivery of prosperity and continued economic growth, continued wealth accumulation, continued improvements in the in the standards of living of the Chinese people. And in return, obviously, be granted a sort of mandate, if you will, by the people to continue its rule. So I think that's very much in place. If an economic crisis were to occur, to seriously challenge or turn the trajectory in some very negative way on that compact, I think it would raise some pretty serious political consequences. We already know that there are at least minor minor incidents of political unrest on the basis of of China's economic growth when people are dislodged or when villages and cities are hit with toxins or other pollutants or when corrupt officials do land grabs and move persons off the land in return for bribes or kickbacks for industrialization and other activity. We see even in those circumstances, there's a fair bit of unhappiness and unrest, although it's relatively under control. What would happen if, for example, there were to be a property bubble burst or if, for some reason, the Chinese economy were to slow more considerably, more than sort of peasant unrest or problems in the country side arising, I think there you're going to begin to hit the pocketbook of a group in China who may well be the strongest supporters of the Chinese Communist Party, namely the middle to upper middle class who have benefited so enormously from Chinese Communist Party leadership of the economy. So yeah, I think, you know, if that's if such a crisis were to arise, that would have very, very serious political implications, I would think. And, you know, you scratch your head and you wonder what would it take, what sort of crisis would have to unfold in China to dislodge or seriously threaten the Chinese Communist Party. It's hard to come up with very many good examples, at least for me. But I think one certainly would be a major economic crisis of some kind that dramatically turned that equation around, that social compact around. And for people to believe that tomorrow's not going to be a better day, that their savings are lost and that their opportunities to grow wealthier in the future are beginning to be eroded. I think that would be a real serious problem politically for the leadership. I'm not predicting that. I'm simply saying it certainly would be a problem. And the Chinese Communist leadership fully understand that. And that's why they're working hard to figure out this third way, so that they can stay in place and keep the engine going. Thank you, Professor. A simple question. Do you think it is possible for President Xi Jinping to make friends with President Trump? And how do you look forward the future Sino-US relationship? Thank you. I was wondering when that question would come along. Thank you very much for asking it, because of course I've been giving it a great deal of thought. Very, very hard to say. Unfortunately, we do not know a lot about Mr. Trump and his foreign policy views, except what he's said thus far on the campaign trail. We don't have a real record of statements, of real-life scenarios, of conversations across the table with leaders of the stature of President Xi. We don't know. We have no idea. On top of that, what little we might claim to know about the people who are advising him on issues in relation to China. And again, much of this may be hearsay. We just don't know who these people are. But if some of the things we've heard are true, these are no friends of China. They have been quite strong in their views about the need to push back against China, in their views that engagement with China is a fool's errand, that containment is the proper approach to this rising power. And of course, that we are in their view currently in a pathway to ruin, both in terms of security and economic spheres, because of this past several decades worth of engagement and attempts to try and work with China and find constructive pathways forward. Whether those individuals who have been so engaged in the campaign would somehow rise to positions of power within an administration, we don't know yet. So I don't know. I honestly don't know. You think about what he has said on the campaign. If that's what he believes, then, well, it's going to be a difficult relationship with China to start, to start. Maybe he, like so many other presidents before him, once in office and once fully apprised of the realities of the relationship with China will change his thinking and return to at least a moderately constructive effort to work, you know, to seek the best one can while preparing for the worst. Maybe he will, but, you know, this is a, we're going into very unknown territory here if President Trump takes office in January.