 Well first of all thanks very much to you all for coming. I really do appreciate it. It's a big thing to come out on a cold camera night and thanks very much Andrew for that very very gracious introduction. But my book The China Choice presents a very simple policy argument. There are five bits to it. That China's power and its ambitions are growing. But America has so far been reluctant to change the way it thinks about its relationship with China in the light of China's growing power and ambitions. But doing that risks escalating strategic competition between the US and China and that escalating strategic competition in turn carries a risk of conflict and perhaps a war and perhaps a very major war. That it will be much wiser therefore for the United States to accommodate China if it can if China is prepared to agree to some acceptable accommodation by sharing power with China in Asia. And that outcome though very hard very difficult thing for America to do very difficult thing for Australia to accept protects US interests much better than any of the alternatives and protects Australia's interests better than any of the alternatives. It's a pretty simple argument. It's generated a bit of discussion as Andrew has been kind enough to say. Some of that has taken the form of vigorous disagreement and quite a lot of that is taken for vigorous disagreement with things that I disagree with too actually vigorous disagreement with arguments I don't make. I'm not going to spend a lot of time this evening unpacking that in detail but it is true that some of the most interesting and important responses or rather let me put it another way some of the responses most interesting and important people particularly those in government have tended to focus on arguments I don't make. For example that the US has finished in Asia and will have no substantial role in Asia in future I don't think that. But the United States must choose now between the US and China. I don't think that. Australia should actually side with China against the United States I certainly don't think that. And that war between the US and China is inevitable. I don't think that though I think it's a serious risk. In fact I don't think anybody in the Australian government or for that matter the US government really believed that I think any of those things. I don't think any of them really think I think any of those things. And I'm kind of reassured therefore that they pretend that they do because they're very smart people. And if they can find holes in arguments I do make they wouldn't bother shooting at straw men the way they're doing. So some of the responses have been reassuring in that kind of backhanded way but I've got to say most of the discussion that's ensued in the last month or so since book was released has actually addressed those five key arguments that I do make the ones I just sketched. And I found it very interesting and helpful to see in which this see the ways in which those arguments have come forward. And it actually helped me to see some points that I hadn't thought of before. I'd like to say I'm glad to say it hasn't made me change my mind. But I have quite a few of them. I wish I thought of that put that a bit differently. In other words debate works does actually help you understand your own arguments better and you come back at things in different ways. And what I want to do this evening is to revisit three of the core arguments in the book in that kind of book. I wish I'd said that kind of tone. And I hope maybe just notice the debate a bit further. I'm going to do it very simple structure. I'll talk first about some judgments about China, second is some judgments about America and third is some judgments about Australia. Let me start with China. And start with China's power because the main spring of the whole argument, the main spring of the argument that the United States should change the approach it takes to China is based entirely on the idea that China is getting more powerful and that is based entirely on a set of judgments about what's happening in China economically and what that in turn means for power more broadly. Now even today many people are in, I would say, just like the colorful term used, but I would say they're in denial about China's economic trajectory and achievement. It's not that my argument depends on the proposition that China will inevitably keep growing. It's possible that China could crash. It's certain, more or less, that at various times China will falter. Growth is not going to go like that across the graph and perfectly straight line. It has a pretty straight line for the last 30 years. There's no part of my argument that China's economic rise has to be entirely uninterrupted. But it is core of my argument that the most probable outcome is that China's economy will continue to grow pretty steadily quite a few decades ahead. Not as fast as it has in the last few decades, but fast enough to meet the expectations of what you might call the core economic projections. And the core economic projections are pretty bullish for China still. The next few years could be pretty rocking. I might do people have said that about the Chinese economy almost all the time since 1979. But there are plenty of reasons to think the next few years could be pretty rocking. But the long term judgment that China's economy will continue to grow will overtake the United States and keep growing past that point. That it could easily be twice the size of America's economy within a few decades. Decades, not very long time frames in the circumstances which we're talking about. That is a really core judgment. And when I see people respond to that judgment, I see first of all a tendency to think that we can, the short term concerns about what might happen in China's economy in the first, the next one or two years, is translated into a judgment about its long term trajectory, which I think is wrong. There's a belief that China's demographic problems, very significant though they are, somehow getting the way of those projections. No they don't. The people that make economic projections know about China's demographics. China demographics are pretty lousy. They're not that bad. It's still going to be a population of 1.3 billion people. Still got the largest workforce in the world for the next few decades by a very long margin. And certainly way bigger than America's workforce. It remains the case that for China's economy to overtake the United States, where the workforce foretimes America's, it's out of average productivity only as we want quarter of America's. That's not that hard to achieve. And that whilst China may well get stuck in a middle income trap, in a middle income trap, people still have the GDP per head half America's and the population of workforce twice the size, it will have an economy twice the size of America. So you can take all of that into account and still face the fact that China's economic growth is something truly remarkable and does fundamentally change the economic balance between them. Now that's not going to say that China is going to be the world's biggest economy indefinitely. In fact, it's only going to occupy that spot for a few decades until India takes over. And it's not to say that that's going to make China so strong that it's going to rule the world. One of the most significant factors when we look at China's rise is not just how strong it gets and how rich it gets, but how limited its power is, and particularly how limited its relative power is, because although it will overtake the United States in an economic way, and certainly the relative balance between the US and China in other forms of power will shift very significantly China's way. It will nonetheless be a very strong state in a world crowded with very strong states are going to be awful lot of competitors out there. There's the United States itself, which were made for a fantastic, powerful, fantastic, powerful state. There'll be India, there'll be Japan, I think still has a very big role as Russia with all the complexity of Russia's role as Europe and so on. It's a very crowded place, and that's without even mentioning Indonesia. So China won't rule the world. But it will be richer than the United States and more powerful relative to the United States than any country has been since the United States became a world power. And easily strong enough to challenge American leadership in Asia, easily strong enough to render America's pressing posture towards China. And it's worth bearing in mind that that set of propositions, richer than the US, richer relative to the US than any country has been since the United States became a world power and powerful enough to challenge America's posture in Asia, that's not a prediction. That's already true. That's already happened. I do understand why people find this basic economic fact so hard to get their heads around. It is a complete change in our worldview. It does remind me of the particular of the Chinese, in fact, in the late 18th and early 19th century, when they first really started to face the reality of Western power, which for millennia before then they've been able to regard as a curiosity. And they looked at what the West threatened or looked at what the West offered, presented to them. What can this mean to us? How can these guys possibly challenge China? We are the center of the world. Well, they were wrong. Something really big was happening in the late 18th and early 19th centuries or something really big is happening today. It challenges our worldview, requires us to recognize the possibility of profound discontinuity in the distribution of global power and the global order. And that's what we're watching right now. So this point about Chinese power. The other point of a lot of responses to the book has been questions about China's ambition. But it's okay, China's going to have all this power. What's it going to do with it? And the second key element of my argument is that China is ambitious for power influence, that amongst all the other things that China hoped for from its future, it hoped for more power influence. And many of the people who disagree with the argument in the book disagree with it on the basis that they think China is really only interested in economic growth. They make the case that for the Chinese Communist Party, the key thing is survival. That's survival. The key thing is to keep providing economic growth keeps 1.3 billion Chinese happy and that they will do nothing that risks economic growth. And in particular, they won't risk economic growth by pushing for more regional influence, because that would bring them up against the United States and risk the disorder that would send the economy into a tailspin. I think that's a very unwise assumption. It is certainly true that China and the Chinese people, that China's leadership are extremely focused on maintaining economic growth, just like governments everywhere else. But there is no evidence that they care about it to the exclusion of other things. There's no evidence that they can't attain to potentially conflicting ambitions, aspirations of ones. And I think it is perfectly clear that in addition to being very concerned to see China's economy keep growing, China's government and the people of China are very concerned for China to be more powerful, more respected, more influential, have more status. And in this they're really just like the rest of us. In other words, nobody believes that the United States government is utterly concerned with maintaining economic growth. They obviously have a wealth of other different aspirations. No one believes the Australian government is only concerned with economic growth, but it will all go into concern with economic growth, but they will also face a whole lot of other ambitions, aspirations, pressures on them. And I think that is just the true of China as it is everywhere else. Moreover, if you agree from China's point of view, the apparent tension between the desire to keep the economy growing and desire to keep the Asian order stable may not look so clear. If we're in Beijing, we might see a change political order in Asia as actually necessary for further economic growth, because they see the risk that as China's economy grows, as China's power grows, as the United States sees China as more threatening, United States will start to use its control of the present order to suppress China's economic growth. It will move from using its power to encourage China's rise, as it has done for 30 years, to using its power to construct China's rise. I don't actually think the US is doing that, but I can see why, if I was Chinese, I might fear that. I mean, I look at some aspects of American policy, like the Trans-Pacific Partnership. I do think I could understand why the Chinese might read it that way. Even if they don't, of course, they might just misjudge the economic risks of their strategic ambitions. It's possible that the Chinese aspire to see their economy grow, aspire to greater power and influence, and fail to see that the tension between them, that those two objectives could be intentioned. That is, of course, would be a very straightforward mistake, but it does, after all, seem to be the mistake that the United States has made. Now, the States has got a very clear strategic agenda in Asia to preserve the status quo. It seems to believe that it can preserve that, pursue that strategic agenda without economic cost. That's just as wrong as China would be if China had the same fuel. I think it's where it would be possible that the Chinese might, like the Americans, misunderstand that connection. I just got to say, when I look at China's conduct, when I look at what China's actually been doing, particularly since 2009, it's clearly become more assertive. The willingness to push for greater political and strategic role in Asia, the willingness to throw its weight around, has clearly become stronger. And I think it has been pursued without any very evident regard for the risks that that runs to its economic interests. So, to judge one's behavior in recent years, China is either unaware of the risks or unwilling to run them. I think probably a combination of both. In fact, when I look at the judgments that both many Americans and many Australians make on this issue about China, I see a kind of an attention. Many people who believe that the United States doesn't have to accommodate China because China is not really ambitious. Also, believe the United States can't accommodate China because China's ambitions are so great. People will say almost in the same sentence that China would be mad to compete with the United States because it would get in the way of economic growth. But also that if we try to accommodate China, we'll find ourselves in an endless cycle of compromise and concession because China's aspirations to regional leadership were insatiable. I don't think they can both be true. My judgment is that China can be dealt with, can be accommodated because it does have a clear sense of its interest in maintaining a stable order so that its economy can grow. But it must be accommodated, it must be dealt with if we're, if you would avoid a highly adversarial relationship because it does have clear ambitions and it has the power to pursue them. I think China's ambitions, the exact extent of nature of China's ambitions have remained very unclear. I think the fact that they're strong is very significant. How far they go, what China would settle for, I find very unclear. I think it might settle for being treated as an equal by the United States, genuinely treated as an equal. I think it's very unlikely that it'll settle for anything less. And in the end I think my argument is to why that seems to me to be likely to be China's minimum position is that I think it will be ours. I don't think we'd settle for anything less than being treated as an equal if we're in China's position. So that's China, a very strong country with very significant ambitions, limits to its power and limits to its ambitions potentially. But the scale of its power and the scale of its ambitions render the present order and particularly the U.S. role in the present order in Asia, I would say, unsustainable. Let me turn to America. Central to my argument is that the United States will most probably continue to play a very big role in Asia, certainly can play a very big role in Asia if it chooses. Nothing inherent in China's rise prevents the United States continue to play a very big role in Asia. The United States is not finished in the Western Pacific. But that that role is going to be different. It's characterized the U.S. role for the last four decades has been that it's not just been the dominant power but that it's been uncontested. That's already passed. The status quo is no longer current. What we've been used to for the last four years has already passed. It's promised he has already contested, I would say, very clearly by China. So the role is going to be different whatever happens. And if it's going to be a stable and peaceful role, it's going to be a role that supports peace and stability in Asia as strongly as the role it has for the last four years. And it's going to be different in a very different way. And the key to understanding that is that that there are more than two options. A lot of the comments about the future of U.S. posture in the Western Pacific and therefore the future of the Asian Order is based on a presupposition that there are only two possible futures for Asia. Like the United States dominates Asia or China dominates Asia. So if the United States doesn't dominate, it will in effect be be be signing up for Chinese primacy. Very central part of my argument is that this third option that the United States can remain a very active player in Asia without exercising privacy. You can play a very strong role in Asia which looks very different from the role it's played in the past. Now the argument against the idea that U.S. primacy in the U.S. position in Asia, U.S. role in Asia should change. The argument against that comes in two forms. The first is an argument that there's that there's no need to change America's role in Asia because there are offsets to the shift in economic primacy or economic weight that I've mentioned before which which render China's power less challenging to the status quo than you might think. So the status quo can be preserved notwithstanding your China's great power and ambitions. And the second argument is that there's no need for the U.S. to change its posture in Asia because it's already accommodated China. It's already made the shift that I'm arguing should be made. It's already treating China as an equal. Just touch on each of these. First the argument about power offsets and there are really two arguments here, two elements to the argument, one's political and the other's military. The first argument is amongst those who accept that China's economy is great and say yes you're China's rising, absolutely we know that. But on the other hand United States has this network of allies and friends in the western Pacific who both seek America's continued engagement in Asia and will support the United States in resisting China's pressure to change the status quo. Now there's a half, that's half true. That is U.S. allies and many others in Asia want the United States to stay engaged in Asia. But they won't support the status quo, that is they won't support the old status quo, the status quo of U.S. primacy at the cost of escalating strategic competition with China. Because they don't need, we don't need, we don't need the United States to remain in Asia as the dominant power in order to avoid Chinese together. We just need the United States to stay in Asia as a balancing power. Our interests can be served by the United States playing a very different kind of role in Asia than the role it's played in the past. Everybody in Asia wants to avoid living under China's shadow. So everybody wants the United States to stay engaged. But nobody wants to find themselves in an adversarial relationship with China and nobody wants the United States to have an adversarial relationship with China. So everybody wants the United States to stay engaged in Asia in a way in which China is in the end prepared to accept. And that is a way which looks very different from the way the United States has been involved in the past. It's also worth bearing in mind that the allies, in particular, are lots of an asset to the United States than is often seen. And there are two ways of looking at this. The first is that the allies do risk drawing the United States into conflict with China. The United States really doesn't need. If we look at what's been happening in South China Sea over the last few months, or in the Senkaku reception the last few days, we can see how badly US friends and allies in Asia's problems with China affect America's capacity to manage its own relationship with China. And the United States is again going to find that the price for having support of countries like Japan and the Philippines and Vietnam in Asia against China is that they find themselves drawn into problems and disputes with China that in the end America has no primary interest in. The other side of the coin is that I think the United States is going to be very realistic about the amount of support it would receive from its friends and allies in Asia in the event of a crisis and particularly a conflict with China. Partly that's a matter of capability. There just isn't much capability support the United States in this part of the world, military capability I mean. But it's also a matter of will. It's worth asking oneself. If the US does find itself drawn into a conflict with China, for example, on behalf of Japan over the Senkakus, who in South this day will go to America today, nobody in South this day is going to fight China on behalf of Japan, put it, turn it around. If the US does find itself drawn into a crisis with China over Taiwan, who would support the United States? Really support it. I think it would depend a bit on the Senate for example, but I think that I think the likelihood is the years will get very little support there and certainly not enough to make a difference to the amount of power that people are to bear. Which has been for the second part of the story, which is militaries are part of the story. The other part of the argument that says the United States doesn't have to accommodate China because its power in Asia remains so strong notwithstanding the shift in economic relativity. This is the argument the United States remains a dominant military power. And that the pivot and the evident termination reflected in the pivot for the United States to remain the dominant power in Asia reinforces a sense that we can relax, so to speak. Things aren't going to change because whatever else might shift, no matter where GDP might go, military power is going to remain in the hands of the United States. I think that's a mistaken argument. In fact, when you look at the way which the United States is responding to China's growing military power, and particularly look at the concept of the AC battle, you see how the rise in China's capacity to deprive the United States of seat control, the rise in China's capacity to sink American ships, means that America needs to undertake a massive escalation of any crisis in order to destroy the China's seat and oil capability, in order to project power into the western Pacific to do the sorts of things that Hitatua has been able to do, more or less, off the pin. In other words, the shift in relative economic power, although the United States remains a military power, the United States remains a much, much stronger military power. The asymmetries in the operational situation in the western Pacific mean that China, with the capabilities it's already developed, can increase the cost and risk to the United States of deploying forces into the western Pacific, point where the United States must escalate to destroy those capabilities before it can project power into the western Pacific, and therefore a whole range of situations to respond to something in the second half, or the South China Sea, or Taiwan, the United States must already have escalated to a major conflict with China. That raises the cost and risk to the United States of even relatively modest strategic deployment from the western Pacific, well above the weight of the interests involved. What that tells us is that notwithstanding the US, the various of the US military position in the western Pacific it cannot use force to oppose its status quo in the western Pacific in the face of China's growing power. The second argument is in some ways a more interesting one. It's the one that says not that the United States doesn't have to accommodate China because of US power, political and military power, but that it doesn't have to because it's already done it. This has been the argument I must say which I found most intriguing. The argument runs that the United States is already doing what I'm arguing the United States should do. After all, we America help China to grow. We have welcomed it as a responsible stakeholder. We're already treating it as an equal and indeed we're asking it to do more than it's willing to do. If anything, one of my critics has said, we're asking China to do more to take on a bigger leadership role than it's prepared to take on. So how can China be demanding numbers? It's a very important argument and it's a very important argument because I think it shows the depth of the problem. The essence of the argument I think runs like this. The United States is willing to share power on American terms and is is willing to provide China with a larger role in Asia within the framework of the status quo. In other words, in ways which do not erode American leadership. In other words, it will allow China to support the US leader order rather than to challenge it. It seems to me to embody the key assumption that the United States remains able to dictate the terms of its relationship with China and therefore to role in Asia rather than having to negotiate it with China. And what that tells you is that US hopes and expectations of a good relationship with China are based on the expectation that China will accept this. So for example, when the US says that it's not containing China, which is a point it's often made, they mean we're not containing China around the assumption that China will not ask for more than we're willing to give. If China does ask for more than we're willing to give, then we will contain it. But we're not containing China because we don't think it will ask for more than we're willing to give. And of course I think it already has. I think that's the, I think that's the an element of self-delusion in this policy. It assumes that China will accept the status quo when it's already become very clear that China's not accepting the status quo. It's just worth, I think, exploring the nature of this evasion or rather the nature of the choice that I think America is evading here. Because I don't argue that accommodating China would be easy or cost-free. I, in fact, make a point in the book of describing as clearly as I can just how hard this will be. An age in which the United States shares power with China will not be as good for America or for us, I might say, as the status quo has been, as American Privacy has been. I do believe our key interests can be protected. But there will be risks and it will be painful to America's sense of itself. It will require a very significant change in America's whole sense of its international personality, exceptionalism you might say. But we need to set against, and Americans need to set against, those risks and costs. The very big costs of resisting accommodation with China. Because that does carry very big costs too. America's choice is whether it's willing to pay the costs of escalating strategic competition with China for the advantages of preserving the status quo rather than moving to an accommodation. It cannot ignore those costs. It cannot ignore the costs that go with trying to preserve the status quo. Can't ignore the fact that the less the US accommodates China, the less the US is prepared to move from the status quo, the higher those costs are likely to be and the more the fact that the more powerful China becomes relative to the United States, the higher those costs are going to be. And those costs, the fact that preserving the status quo, refusing to accommodate China, carries these costs, reflects the naked reality of power and that's a little disconcerting. It makes us itchy and uneasy to think about to see power being used this way and particularly if you're Anglo-Saxon because for a few hundred years so much of the world's power has been ours not to be too far apart. So seeing power, seeing the idea of us the states having to adjust the way they conduct themselves in relation to other countries in the face of power like that is a very edgy and uncomfortable thing. People resistant, they worry that adjusting our policy in the face of power amounts to conceding that might is right. Now I don't think might is right, I don't think power determines what is right but it does determine what it costs to uphold or impose our view of what counts as right and that must influence what rights we think are worth upholding or imposing because the rights, the things we'd like to see, the concept of the regional order we'd like to see and the value to us of that regional order does have to be balanced against the costs and risks of maintaining it. And where the cost is as it is in this case, the cost of escalating strategic ground rip between the world's two strongest states and a very significant risk of catastrophic war as that ground risk escalates then that cost is very high and it has a very strong value component that is we have things which we very strongly value on one side of the letter but we have the risk of conflict threat to peace on the other side of the letter. So there are values on both sides of this. That's not to say that we sacrifice anything for peace but we do have both a prudential as policy makers or analysts, we have a potential and a moral responsibility to ensure that the things which we're willing to sacrifice peace are really worth it. So when Americans look at this judgment and when Australians look at our attitude to the judgment that America thinks, we have to recognize just how strongly on both sides the values weigh. We can say that we don't want to accommodate China, treat China as an equal because of its human rights record because it's not a democracy because we're concerned about freedom of navigation or whatever but we do need to be willing to pay the costs for that choice. We need to be aware of the assumption that those costs will evaporate because China will be willing to forego its ambitions so that we don't have to pay the costs of foregoing ours. That would be a very unwise assumption. Finally just a few words about Australia. Australia today does not face a choice between the United States and China. Like ours, I don't advocate we should make that choice. I don't even advocate we face that choice today and like others I believe that if we ever do face that choice it will be a catastrophe for us. But we do face a choice today and it's a choice between whether we try to do anything to prevent the situation arising in which that disastrous choice is forced upon us. We need to recognize that whether we do end up having to choose between the US and China depends on the way the United States and China get on with one another. They will decide whether we have to choose, not us. And so whether or not we end up having to make that choice depends on whether the United States can build a relationship which avoids escalating strategic competition. And I would argue that only a substantial accommodation of China's growing power by the United States can do that. And the best way that we can, therefore, prevent the circumstances arising which we have no choice but to make that choice is through Washington. It's not that China doesn't face a choice as well. It absolutely does. One could write a sequel called The American Choice, why China should share power. It's a remarkably similar argument. But where are US allies? America should be the place where we have the most influence. And I think the best way we can influence the future of the US-China relationship and therefore the possibility that we might have to end up making that disastrous choice between the two of them is to go to Washington and to represent our views not as an intermediary but simply to put our views there. Now it's it's easy to assume that the US will get this right without us nagging them. I must say I think that's much harder to assume after Barack Obama's speech in parliament here last November. I think that did reveal to many Australians just how stark America's attitude to the United to China is. And I've got to allow myself to say I think it's also a bit harder having had a good long look at Mitt Romney. It's not because he's a Republican. It's not even because in the idiot theater of the Republican primaries he says some really pretty bizarre things about China. I kind of say that's because he looks so weak. He just doesn't look to me like a president. He's going to be able to stand up and grab this issue. So we just simply cannot afford as a country to assume that we don't have to speak up on this because America is going to get it right. And it's a kind of a cheap shot but I think it is actually a significant point because I have some of my own history on this. I'm as pro-American as anybody in Australia and I've worked very closely with the United States for a very long time. I have a high admiration for their system of government. And in 2002 when people started talking about invading Iraq I went around saying that's not going to happen. America is not going to invade Iraq because they're far too smart. It's a very good system of government. They won't make that kind of mistake. I'd wear the scars of that. It's also easy for people to assume that the US won't listen even if we do say we do speak up. Now I just don't think that's right. I actually don't think it's fair to America. America can drive you mad. But one of the great and most lovable characteristics is it's a very open marketplace for ideas. The bad news is quite a few good ideas floating around the marketplace are crazy but actually it's not that hard to get a hearing in the United States. Where do you get a hearing depends on how big your argument is. And I don't think we as Australians, I think it's unfair to us if we don't think we can mount a persuasive argument. It's very striking to me watching a labor attitude to this. That those on the labor side who in opposition during the debate on Iraq said that we should have played the role of a good ally and warned America not to go into Iraq that that's what a good ally would have done. And now saying we should sit back and let the Americans sort this out by themselves. This one is much more important than Iraq. Incomparably more important than Iraq both to America and to Australia. So in China choice I argue that a stable peaceful order can be built in Asia which may be able to accommodate China's ambitions, constraints, power, retain a very strong US role and protect Australia's most critical interests. But I don't predict it will be built. I can see how hard it is. I can see all the obstacles to doing it. I don't for a moment predict it is what's going to happen. What I can see though is the risks if it doesn't. I find it very hard to see how Asia can be peaceful and how our future can be good if the US is not prepared to take this kind of step. What I'd really like to see out of the debate is for someone to come forward with a better idea than mine. That is a vision of Asia's future order which gives a reasonable chance of peace and stability and which is not as hard to achieve as a concert of Asia model that I articulate. But I haven't heard one of those yet and until I do hear that I'll keep arguing for the concert of Asia and I'll keep asking what steps Australia should take to guard against the quite likely possibility that for all the advocacy that Australian might put forward. Nonetheless the US and China don't do a deal and we end up in a much more contested and dangerous Asia. I think that's another very big question for Australia but it's a question for another time. Thank you very much. Thank you, thank you very much. Ladies and gentlemen we've got time for some questions and answers. We've got to drink some nibbles outside for a little bit later. There's a roving mic I believe that's going to come around and if we just ask that you briefly identify yourself and no long questions please. That way we can give lots of people a chance to engage. The floor's open. Over here. I was breaking out, we have an extra fence now with the United Services Institute. Australia has a role to play in negotiating in Washington. Does ASEAN have the same role? Rosemary, I don't think ASEAN as an institution or even as a collective has much of a role in this. It's a subject for a different occasion but I actually think that escalating strategic competition between the region's major powers makes ASEAN's future a bit grim and I think we saw the shadow of that falling over non-pen a few weeks ago. But other countries of Asia including the countries of south-east Asia do. I think I mentioned that it seems to be one of the very distinctive features of our situation is that Australia's interests in the trajectory of the Asian order and therefore of the U.S.-China relationship and therefore of U.S. policies towards China are very strongly congruent. But they want what we want and so we're a really critical feature of an Australian policy on this is not just to go to Washington and say guys why don't you approach China this way? It's to go to Jakarta and Singapore and Bangkok and Manila and Seoul, Delhi and even maybe Tokyo although Tokyo is a tough one and say look you're interested in this at the same time. You don't want to choose. You don't want to live under China's shadow but you don't want to live with the consequences of U.S.-China escalating strategic rivalry so you want the United States to stay engaged. So let's all represent the United States that it's that the role we want at the play in Asia looks like this and you know being one of a big crowd there would be well it'd be certainly a very good way to amplify the message if that's the message we want to send. I'm not saying we should all turn up in Washington together. I think that might look a little heavy-handed but I do think that the helping Americans to understand that actually nobody in Asia if China can be persuaded to share power and of course there's all of this questions to what China is willing to sign up to and maybe I'm not you know it's possible that China's ambitions are insatiable in which case we're just in for a telehealth at the time but we shouldn't we shouldn't presume that and I don't think we should presume that I don't think our colleagues and our neighbours in South East Asia should presume that I think if we can persuade the United States that everyone in Asia wants the United States to try and do this kind of deal with China then it's going to have a bit more weight. Question here then one there then up the back then there so those are the questions. The first one was here. Thanks Hugh. I'm currently a student in SDSC but since I suppose the right government white paper defends back in 2009 since we've been in a discernible shift towards a less outspoken view of what America might do to China what do you want to talk about why that should have happened if that I mean to my mind your idea is to push back against that shift and where that's going. Look very good question. I don't think I pick the turning point as 2009. Oddly enough I'm going to pick the turning point as 2007 or indeed the very end of 2006. For the first until the last year of John Howard's Prime Minister ship it seems to me not uniformly a John Howard fan but it does get nostalgic for him doesn't it. But one of the characteristics of Howard was that after Oddly's start in 1996 he managed he was extremely attentive to the US-China relationship and how that affected the way that Australia managed those two by that for relationships and developed I think a much more sophisticated way of positioning Australia between the US and China than any of the successes. That stopped actually at the end of his it's almost as soon as Kevin Rudd was elected leader of the opposition because I think Howard saw an opportunity to paint Rudd as being too close to China and he therefore moved then and only then towards the United States. I think Rudd was always in office when he was in office Rudd was always very anxious about being painted as being too close to China and therefore I think moved the centre of gravity of Australia's policy much more towards accepting a more starker US stance towards China than Howard had after 1996 and I do think that both Rudd and Gillard have reflected that and that partly I think reflects what you might call the inevitable labour anxiety about being painted as being not strong enough on their lives and you know just as it was an extent who could go to China in 1972 it was it's always going to be much harder for labour than for the coalition to be courageous on questions relating to the US alliance. So this is not a hate political advertisement but it does suggest that you're more likely to get progressive policy on this issue out of a Republican president if a Republican president was a strong one. I've got to say I had a moment of optimism when Gillard announced the Asian Century White Paper still forthcoming I had not given up hope that that might be an opportunity for the government to really identify that amidst all the other changes in Asia that are brought about by the Asian Century there is a fundamental change in Asia's strategic order which requires a fundamental change in the kind of role we should expect the United States to play and the kind of role we should be urging the United States to play. But I'm not holding my breath. Thank you very much. I am the parish ambassador. I have to start with a compliment because so few white books and presentations are always an intellectual piece, especially the age of political intellectual basket. I have one question. You've been underlying the fact that sharing of powers has to be not only on American terms which is a very valid point. What would you tell us about Chinese terms? In other words have you met with some feedback or reaction from your Chinese partners and friends in the academia because as we all know both America and China understand differently the words concert the words powers not speaking about concert of powers. Absolutely. Thank you Ambassador. Yes, I mean the first point to make is of course you're absolutely right. As I said there's another whole book to be written about China's choice about America. China does face a terribly difficult choice. America faces a difficult choice because it's been the dominant power in Asia for as long as anyone can remember and now the relative powers have shifted it's going to be very hard for the United States to sustain that position. China faces a difficult choice because it's growing like mad. It's going to be the richest country in the world. It's going to be an exceptionally powerful country. It's very natural particularly with its history for its people to assume and its leaders to assume that it will lead Asia the way America has done and it won't. And a really hard message for China is that China won't inherit America's position as the uncontested primary power in Asia. It won't be strong enough and it won't be liked enough. So it's a very, it's not, I think to be fair when China's friends and colleagues first see the argument of making they quite like it, the United States must treat China as an equal. It's not the like. China must treat the United States as an equal is the other side of that argument. It must also treat other major powers, great powers. I think there are at least two other great powers in Asia, Japan and India. China has to treat Japan as an equal. That doesn't go down so well. So it's actually quite a tough message to China and you're precisely right to phrase it the way you did. The United States cannot dictate the terms of its relationship with China or on American terms. China can't dictate the terms of its relationship with America. America is a fantastically powerful country and as long as it's willing to stay engaged, which I do not take for granted, but as long as it's willing to stay engaged, it will and it should, one might say, must constitute a very significant constraint on the way China exercises its power and China will either have to accept that or itself evaluate all of those costs that I talked about because the costs are as high for China as they are for us. The hope that both sides will recognise the costs to each of them of not doing a deal and will therefore, that recognition of costs will feed into incentives to do a deal, that's the best reason to think that we might get a deal between these guys. But like I said, I don't assume we'll get it right. Folks, we're struggling with the number of people who want to get a question in here. Hugh, would you like to take questions two at a time? Yeah, no, that's fine. Let's see what we can do. Would you like to give the microphone to the gentleman next to you or not? Up the back, the gentleman in the blue shirt standing. Thank you. I'd like to raise the question of how America would finance a conflict with China. I understand that already America has immense international debt and a lot of that debt comes finance comes from China. Would the paradox arise that America would have to get funds from China? American public finance, there's one question. If I'm not mistaken there was another quick right beside you there. Thank you. Tom Murphy, I'm also studying Asia Pacific Security, they knew. Good to see. My question was with reference to one of your colleagues, Paul Dipps, comments about the capabilities gap. He's been engaged in military policy in the Australian government. He says that the Chinese military is very feeble, much of their Air Force and Navy is obsolete. Further, they have very little training in combat or intelligence capabilities. Most of their hardware is bought from Buster and he says that there's no indication that US spending will dwindle to the point where the Chinese capabilities will overtake the US. I just wondering what your response was. Very good question. Two very good questions. One of the really weird things that happens when a really big war breaks out is that all the financial rules get thrown out the window. People actually ask you exactly the same question as your question about how America would pay for a war with China. At the beginning of the First World War when the economies and the financial sectors of Britain and Germany were almost as closely intertwined as the economies and financial sectors of the United States and China are to date. The last new draw from that is just how immensely, I mean unbelievably disruptive a US-China conflict would be. Even a relatively small one. It's worth bearing in mind the US and China go to war, trade with China stops I mean stops, dead. A million tonnes of iron on stops heading north. And even if it was a short conflict it would be a shock on the global economy of the sort you couldn't imagine. If it's protracted then the whole global economy changed its shape. Now our sense of the orderliness of life kind of rebels against this possibility but I think the real conclusion to draw from the men's economic independence of the United States and China is not that they can't go to war but if they do go to war everything changes. Honestly to the relationship about the balance of military power it's a really key point and I'll give it a quicker answer than it deserves. When you look at the relationship between armed forces in a strategic context the question is not just what have you got is what can it do where it matters and when it matters for a particular relationship. Now there's no doubt the United States are much bigger and better military and particularly much bigger and better air and maritime forces than China does. And so if it was a fair fight between the two sides somewhere in the middle of the Atlantic ocean there's no doubt the United States would win. But the particular military confrontation which is relevant to the US-China relationship is the capacity of the United States to project power by sea against China and in that context all of the asymmetry stack China's way. China doesn't have to be nearly as good as America in order to be able to sink American ships. I'll put two final points on it, sinking ships is easy and keeping them afloat is really hard. And the Chinese Navy might not be all that flash but it's a lot better than it used to be and it's good enough to put a hole in an American carrier. So I think I disagree with Paul and say that lightly in several ways. But I disagree with Paul. I think the development of China's air and maritime capabilities over the last decade has decisively shifted the balance of maritime advantage China's way. That is not that China itself can achieve sea control and can project power by sea. It can't and I don't think it will be able to do it for a very long time but it has succeeded in depriving the United States of deploying power by sea to the point that I think the United States would now be very likely to try without undertaking first the kind of highly escalatory pre-emptive campaign foreshadowed near sea battle. Completely separate point of course and that is that on land, on the mainland of Asia China has never had the capacity to confront China. It's demonstrated this a couple of times. We've gone along to help and that remains the case. The United States is only a maritime power as far as continental power is concerned China is in. What do we know of US India times that could be strengthened or even in order to avoid an accommodation of China? I'm going to run us to the University so I have a question relating to Australia. At the very beginning you said that this fits into the bigger picture of a dynamic where the Western world is losing its dominance. How can Australia link its capacity to help the US and help itself as it adjusts to its own changes because Australia too has changed with about a quarter of people born here overseas and that dynamic is very much an integration with Asia? Yes, it's a fascinating question. Indian angle. I think India is a terrifically important part of this picture. Although I think there's lots of interesting questions about India, as always I tend to be bullish about India. I think it probably will overtake China to cover the biggest economy of the world sometimes around 2040 and we could easily find that by mid-century India-China relationship is the relationship which shapes our world. Just as I think the US-China relationship will be a relationship which shapes our world for the next few decades. But I do not believe that India's power will serve to support American primacy because I don't think American primacy is what India wants. India's power grows. India's objective will be to use its power to maximize its own power influence. Now maybe Indians will go for primacy themselves although there's something about well, I wouldn't say that if I was one of India's neighbors. I'm going to say something about India that makes it look an improbable hegemon. But I guess if I was one of India's neighbors I wouldn't think. The question as to why India's rise is less destabilizing of the regional world than China's. It's itself a very interesting question partly to do with very geographical things that India's kind of isolation there and the part with the role of Japan and very other things. But my bottom line is that India will be very keen to see America stay engaged in Asia to help balance China's power but will not sacrifice its own relationship to China in order to support the United States maintaining its own primacy. American primacy is not an interest for India American presence of the balancing power is. So I think Americans, a very significant slice of American opinion has got this wrong I think there's been a great willingness to assume that as India grows it will support America in the western city because India's democracy. Well India might be a democracy but it's still India. She'll see itself as a great power in its own right and all that sort of stuff. And it really falls into the point I made in relation to Rosemarie's question before. I think it would not be hard to build a quite deep convergence between the views of Delhi and the views of Canberra on this issue. And as for what all this means for Australia, well of course the reason why this is so hard the reason why the whole issue is so hard, the reason why it's so hard I think for Australians to come to terms with the idea that we might go to the United States and say guys we'd rather you didn't maintain primacy we'd rather you treated China as an equal. The reason why this is such a deeply counter-intuitive idea is precisely that since 1788 we have regarded dominance, the dominance of the western Pacific by the Anglo-Saxon Maritime Power as a necessary and sufficient condition for our security. And that American power has framed what, I mean I do think continuity here is very important, British and American power has framed our approach to Asia forever. And so this was always going to happen. It is as I say not a coincidence that this continent was settled by Europeans just at the moment of lift of European power driven by the industrial revolution. And the moment we're facing at the moment is the point where not that we're losing that lift it's that they're getting it. China have been the richest economy in the world for a Brazilian years until well about the time we turned up here. And that's not a coincidence. And so this does go not just to very deep questions of American identity American exceptionalism and all of that. And I don't take American exceptionalism quite seriously. I don't mock it. I think it's a very significant part of the American makeup and it's been a very good thing in the world for the world so far. But likewise in Australia's case our sense of who we are is very strongly framed by the fact that for every single week since January 1788 except for the weeks between the 7th or 8th of December 1941 to be on and the 4th of June 1942 about the midway an Anglo-Saxon power of one description or other one or other of the two great powers has been the dominant power of the West Pacific. And so for us to try and think what it's going to be like for us to live in an Asia which is no longer framed for us and made safe for us by Anglo-Saxon powers is a truly scary thought. The only point I would make is that if we've been facing this moment as we could have nearly did in 1940 say 1941 then amidst all the other dramas to be a very strong racial component to it. Thankfully my parents generation got over that one I think. Boy, I think where we'd be today if we still had the White Australian policy. Here's an offer to get something right. But it's worth bearing in mind that the reimagination of ourselves that's required to think about how we how we take this forward is going to be comparable to the reimagination required to get rid of the White Australian policy. Not growing very classical in terms of how big is this. This is a different kind of country relating to the region in a different kind of way. And the issue's always been there. Always been there. But the miracle is that for 234 years the Anglo-Saxons managed to maintain that maritime privacy on the basis of maintaining the world's biggest economics. Now it's passed. We've got serious time. Rob's going to take one more question. Right up the back there was a hand. If it's still there. Thank you. Yes sir. The crux of your argument is the deal between China and the U.S. What would this deal comprise? How would it be reached and how would it be maintained? Okay. Well that's a big question. I mean it's a serious time. I haven't got a lot of time. No thank you. Andrew's interjection The book spells that out in some detail. The essence of the deal is an agreement that neither will seek to dominate the other or dominate the system. The deal does not need to be reached in a formal way. That is it doesn't need to be a signed piece of paper. But it does need to be explicit. That is both sides have to acknowledge to the other that they are forgoing the objective of dominating the system themselves and they are intending to treat the other as an equal. And that would need to be reflected in all kinds of very particular ways. For example the two sides would have to absolutely respect the legitimacy of the political systems of the other. Something which I don't believe the United States does today. It doesn't mean you have to agree with everything they do. It doesn't mean you couldn't criticize it. It would have to accept that it's legitimate for both sides to have armed forces at a capable of limiting the options of the other. Including nuclear forces. And it would have to accept that where their national interests differ those interests have to be negotiated in what you might broadly call a mercantile fashion. We all have to do a deal. And the model I have for that is the concert of Europe which did manage to keep the peace between the great powers of Europe roughly speaking for 100 years. How is it enforced? It's enforced ultimately by the confidence of all parties that if any of them does try to dominate the other, the others will gang up on them and they'll lose. So in the end it's not actually a very touchy feeling idea, but at its heart is a recognition that none of the states is in fact strong enough to dominate the others at a cost that's acceptable to them. The point about this kind of agreement is that recognizing that they agree not to try. And that's if it works as it did I would argue in Europe in the 19th century that can suppress strategic competition and allow all the other good things that you want to see happen. Trade, interaction, people movements and so on allow all that to happen. And that's what happened in Europe. The 19th century the century after the Napoleonic Wars from 1815 to 1914 was a European century. Europe's economy took off like a rocket. It's population blossomed and it took over the world. That's what might happen in the Asian century if we get it right. Ladies and gentlemen over the last so many months around this town and in major cities around the country there's been giving talks, versions of this talk in the process of building up to the book that's now out. Some of those meetings have been small and closed door others have been open and public like this one. But what's striking about them is that there have been so many of them. So many of them. And what goes on inside them? People don't fall asleep. I've got lots of talks where that happens. People don't walk out. And you probably by this stage of the evening have some sense of why. Some people have been nodding their heads furiously this evening. Some people have been quietly shaking them. The book's up the back. It's very accessible. It's a book that is going to be discussed for years to come. Get your copy while you care. The bad news is this part of the evening's over. The good news is we get drinks to keep going and you can ask you all kinds of questions. The one thing I'd say is people get up to go. If you enjoyed this evening, Hugh Brandon and their colleagues in the Strategic and Defence Studies Centre and their wider team of colleagues in the School of International Political and Strategic Studies are running all sorts of events like this. As is the wider big college of Asia and the Pacific. If you're curious about these sorts of issues, jump onto the website. Get on the subscription list because there are lots of events that are open to the public, to alumni, to students and we're happy to have you all here. Thanks very much.