 Mike check one two three Check check check one one two Check check three four five Well, thank you all very much. I'm first of all. I apologize I Watch stopped. I'm not kidding. So I know it's not what is it seven after a ten or so? Thank you all for or coming during this holiday week and during this Aftermath of what I think all of us agree was an Interesting election we sort of toyed with the idea of having this event Just before the election and he said that that was not a good idea And then we thought about having it. Well enough time has passed everything will have settled down by this date so let's have it now and I Don't think there is any good time maybe a year from now I don't know in any event again. Thank you for coming. Thanks to Ashley My colleague and a long-standing friend of many years To come and give his views What I'm going to do today. I'm both moderator and presenter so I can give myself as much time as I want And I can cut Ashley off at any time. I think he's gonna say something. I can't answer. I'll say Ashley That's your five minutes But no, I will try to leave I will try to leave Enough time well enough time to have some Q&A's but what I'd like to do today is Present the sort of gist of this report which has just come out and There are hard copies outside here Called creating a stable Asia and agenda for a US China balance of power That I wrote with two colleagues former colleagues here at Carnegie When you and dung and ob re lisker Who very very bright young women who know far more about statistics than I do and We're very helpful in the preparation of this document. It is essentially a follow-on document To a article that I wrote last spring that appeared in foreign affairs In response to a piece by Andrew Kropinovich I don't know if any of you saw that and then was also on a on the Carnegie website in a longer version, but it was still an essay and Oh I should say I'm Michael Swain. I'm a senior associate at the Carnegie Endowment and I work on US China security issues This is actually tell us he works on South Asia issues, particularly India and Where was I yes and that I that I then went out and I briefed that essay in various places But the Harvard Kennedy School in the US government the Pentagon other places and the reaction that I got was Kind of interesting and a little surprising It was not. Oh, this is ridiculous. No way. This would ever happen. It's the whole concept is you know Not very good. How can we have a balance of power? It was more Yeah, I think that's where we're going to end up But how do we get there in a stable way What's the process? What's the what's the argument? That will overcome a lot of the counter arguments that are out there to this kind of a concept And so I thought well, that's an interesting kind of reaction. It's less submissive than I thought I mean less dismissive than I thought and I And I and I thought well what I need to do then is I need to extrapolate and extend this argument and I need to provide some actual data and other things and try to make it as systematic as possible But what I'd like to do today is Present the gist of what that argument is without all the supporting Data, which you can find in here, although I will make some reference to some of the key data conclusions at certain points and then I will turn it over to Ashley and he can I Basically boil my argument down to seven and it is keep in mind. It's an argument that is not about tomorrow It's not about a year from now. It's not about even I would say five years from now It's about the long term And it's about the long term in Asia Because I think that the Asia situation and in particular the Western Pacific along the Asian Littoral is The critical area for us China strategic interaction Into the foreseeable future as far as we can tell It's not about a global struggle between the US and China in any kind of US Soviet style contest it's not about Pure competition and and activities and other parts of the world outside of Asia as much When I'm talking about security issues strategic by and large Related issues. It's about the Western Pacific and what's going on there and what's likely to go on there over the next 15 to 25 years and that's the projection is out to the 2040 area I know that's way out there, but there's a range of possibilities here, which we try to deal with so first point is That even if the US remains the major global power For a long time into the future There is today in Asia a very fundamental and an undeniable military and economic power transition that is occurring and It's already Seriously altering the calculations and by that I mean the kind of calculation of interests and the calculation of risks and benefits of certain actions of the major powers involved and it's doing so in A security sense in what I would regard as destabilizing directions If unchecked, I think this power transition is highly likely to continue and to deepen over time since I think Chinese growth rates and defense spending are Unlikely to decline down to such levels or Experience a hard landing that it would basically take the Chinese out of the picture. I don't think that's likely for a variety of reasons But even with relatively Modest expectations about Chinese growth rates and by modest I mean Average average of about three percent Right now the Chinese are running at something over six Official figures some people say it's less but many economists. I talked with say probably around six six and a half percent Some might say even a little higher Long-range forecasts of Chinese GDP growth by very reputable organizations. Oh, we see the others Project a continuation of that level for quite some time I'm saying that even if you get down to something around three percent on average for this next 15 to 25 years You're still talking about a very substantial size Chinese economy and a very substantial capability to spend on defense I won't get into all the details. We can maybe talk about that in the Q&A a lot of this depends upon How much of a how fast you grow? What percentage of your GDP you decide to devote to defense? Right of your overall GDP how much of that defense spending is is devoted to acquisitions of weapons platforms and other things that change perceptions of balance and What percentage of your defense spending do you focus on the Western Pacific as opposed to some other region? we try to deal with all those variables in this study and and We assume also the US growth rates and US defense spending are likely to remain relatively consistent now This assumes a mature economy US growth rate That's probably going to continue to be somewhere around the two to two and a half percent range some people say three I think most economists would think that's probably going to be high US spends right now About four percent of its GDP on defense that is well over twice what the Chinese spend That number could go up But it's unlikely it's going to go up in a big way absent a major event that would drive it up So when you project out and and also we assume that the United States will continue to Hold global responsibilities that will lead it to deploy forces around the world So you're looking at a certain percentage of that aggregate that is not going to be devoted to Asia It could be moved into Asia and that's something we can discuss in a crisis But I don't think that's going to be a critical issue for affecting this argument because it's about Sustained capability in the western Pacific over time and the perception that that has on the actors in the region so So you have those two factors which I think will continue and The results of the projections that we have just to make a couple of short reference to this is That by the year 2040 you could have the Chinese spending Anywhere from 500 to a trillion dollars on defense If they would continue to spend now There's all sorts of issues about capping defense spending levels etc. But if you just continue to project out You're getting from 500 to and the most likely kind of feasible range is seven to nine hundred billion dollars About 70% of that we think is going to be focused on Asia Still focused on Asia China China is not going to become a global military power in my in my view The way the United States did after the Second World War. It's going to remain focused on Asia And so a large part of that spending is going to come into Asia now There's a whole argument about guns versus butter Well, the Chinese need to spend more on butter and less on guns because they have all these domestic problems We try to take account of all of that as well, and we still decide that on balance. You're talking a pretty significant number for the United States You're talking a number that's about probably 1.1 To a little bit more than that trillion dollars out to 2040 So on the upper end of the Chinese estimate and the lower end of the US estimate The actual aggregate defense spending gets pretty close That's totally aside from how much they're going to put into Asia So it it looks very much as if The Chinese will have the capacity the raw capacity at the very least to be spending close to if not as much as and some Analysis such as by the Australian government in its recent assessment of long-term defense spending Things the Chinese will be spending considerably more than the United States in Asia so That's the first point. Sorry long point. That's that's where all the data work. Okay, so we won't get into data much anymore now What is this environment? What difference does it make? So what? Well, the United States has generally felt that stability and prosperity in Asia have come as a result of its Superior position in the region as a military and an economic power. I Think I've strongly believed this that that is what the United States believes is essential for this stability to continue Because it provides as Joe and I once said the oxygen For the region and in other places as well, but it provides the assurances the security Deturing a possible hostile hegemon that might emerge in other quarters. It was originally Russia today more people talk about China and allowing the countries of the region to focus on growth development and Dampening down regional rivalries such as Sino-Japanese Korean you name it US played this pivotal role for decades 70 years. I Think that's coming to an end and That fact plus the fact that the US and China although they agree on many many issues and They have a lot of common interests and they do have a General support for most international norms in my view They differ in Asia over very critical issues that have to do with American responsibilities and American sense of credibility Ability on the Korean Peninsula the Taiwan issue and Maintaining Taiwan's freedom from coercion and and being brought by force into China as part of China The behavior of maritime disputes how they're managed and in and interacted with and how they interact among the disputants the behavior of Militaries in exclusive economic zones near coastal nations China US have very different views about how those militaries should operate So there are significant differences on these kinds of issues that could become volatile because of the change in relative capabilities between China and the United States and the Specific dynamic that could work in this regard is that as Chinese power and it's kind of a power transition argument and a security competition argument and a security dilemma argument, which is that as China's influence grows and I'm not talking I should say I'm not talking just military Economic influence is also strong and growing in Asia for China And I think it is growing faster than that of the United States and I think in the in the trade realm I think it's very clear in the investment realm. It's not so clear The United States still is a much bigger investor, but the Chinese are moving quickly in that area But in any event the dynamic here that I think will work is that as China becomes more capable as It becomes more confident It will decide that the risk calculus involved in affecting these Contentious issues will change it will have more leverage than it used to have in sustaining its position and trying to get a resolution or a long-term modus vivendi that Favors its interests without the use of war or force, but through its leverage Military presence economic influence in ways that will lead to overconfidence to miscalculation in Overasserting itself in various ways and by the US token the concept of the United States as a power that is seen by others as Losing its relative position over time in Asia will lead American leaders to think to Compensate for that perception We need to react strongly and the propensity for overreaction will go up So overconfidence over reaction the likely possibility here is not war But increased likelihood of crises That could be badly managed That could lead to a much much more adversarial Environment in the western Pacific and by that token then In larger areas of the relationship, and that's my second point overconfidence over reaction More likely crisis third major point, which is implicit in what I've already said Efforts to deal with this situation in my view by sustaining or creating Clear American or Chinese regional military and economic predominance Will prove in my view futile and dangerous. This is probably where Ashley and I will disagree the most I don't think the United States will be able to Maintain that level of clearly unambiguous superiority in the western Pacific that it has enjoyed for so long despite President-elect Trump's talk about a 350 ship Navy And about whatever that means for increases in defense budget I don't think that is very likely to happen for a whole host of reasons that have to do with US economic and political Features and also with the very features of the Chinese character the Chinese economy and military itself so My fourth point key US allies most notably Japan Will very likely remain unwilling or unable To augment declining relative US capability There is a very big argument among some that says it doesn't matter what the United States if it slides somewhat relatively The Japanese will take up the slack. I Don't believe absent a major crisis that galvanizes the Japanese public and That stimulates Japanese spending in ways that could be very destabilizing domestically absent that that they're gonna weigh in revise their constitution which they have not yet done and Play a major role as a regional military power sufficient to augment the United States. I think that is Unlikely and I make the argument in this in this study and I've actually we've got an argument We made in other studies that we've done about regional projections for Asia I just don't think it's very likely the Japanese are in a step into the breach if you will Despite the fact that I think probably Prime Minister Abe hopes that he can convince Donald Trump that he will give him support in Affecting his that is Abe's domestic environment to make this happen because I think I think Prime Minister Abe would like to see that Happen and I think actually despite what Trump has said about alliances. He might think that's a good idea But I don't think it's likely to happen So my fifth point The creation of a stable version of what is going to be in effect a de facto balance of power in any event That will almost inevitably emerge is in my view both necessary and feasible if a The powers concerned recognize the problem that I've just outlined Be national leaderships develop the will and the commitment to overcome the obstacles involved in getting to a stable balance Those are two big ifs Right now. I don't think The US body politic if you will a Recognize the problem to the extent that I've just defined it and be are willing to Think about moving away from a 70-year position of American predominance in the Western Pacific Despite the fact that events will suggest that that predominance is declining So I think it's a it is a big if now what are the what are the types of balance? What is it? What am I what am I saying when I mean a balance of power? It has several features to it It has in as I say in this report, there's a maximalist position and there's a minimalist position the maximalist position is One that would be very difficult to attain in Certainly the even medium term and even over the longer term. I think it would be very hard to attain Not impossible, but hard. What does it consist of and there's overlap between the minimalist and maximalist? First, I think it has to have a transition of US force posture and doctrine and Chinese force posture and doctrine in the region Towards a much more defensive oriented structure. What's called in technical terms a mutual denial strategy This is gets into a lot of complicated argumentation about what force structures are like it basically means you emphasize Defense over offense in your deployments in your weapon systems in their size in their scope in their function and You focus on denying the other side the ability to control a certain theater So sustain a sustained way both sides under this concept would have that ability in the area Along the Western Pacific near China, which I would call between the first and second island chain so you're running all the way down from Japan Korea all the way down to Southeast Asia about a thousand miles out and That has a host of implications for the current US force posture Probably more for the US than it does for the Chinese But for the Chinese it definitely involves altering some of their current trajectories in terms of force in terms of weapon systems, etc It also involves a much more extensive level of confidence-building measures and crisis management measures Mechanisms than we have yet seen the US and China have implemented some limited measures in this regard about Unanticipated incidents at sea which I think are good, but very much inadequate To be able to deal with this changing power dynamic second element is This is probably the most controversial and probably the one that would be the most difficult to achieve It would be a unified but largely non-aligned Korean Peninsula Now if you say that sentence to most American officials, they will just look at you dumbly and say you must be joking I believe that over the longer term To influence the way the Chinese think about the Kim regime North Korea and the way they think about other things like Taiwan That and the way they think about their security in Northeast Asia We're gonna have to move in that direction This doesn't mean a Korea that is fully independent and nuclear It means a Korea that is still Aligned overall with the United States, but it means no US forces on the Korean Peninsula No combined command The US will have to strengthen its position in Japan Beyond what it has today, but still within limits But the Korea situation would have to be significantly different in my view Now there's a minimalist version of this which I'll mention in a second, but let me just finish up this maximalist As I said another feature is a strengthened but limited US-Japan relationship one that is Much more from a security perspective focused on denial Rather than offensive war meaning take it to the enemy preemptive action Type of military which that the United States is Japan is not at this point But it means that Japan in the US would be cooperating more in the creation of this denial where Japan would Be much more dedicated to on its own defending the home islands And not patrolling across the seas with the United States South China see all that sort of thing It would be limited in its capabilities a third element of this would be a demilitarized Taiwan Strait This is also a very big change The United States and this I think would require a dialogue between the United States and China about military Deployments and capabilities relevant to Taiwan right now the United States will not engage in that discussion with China It is limited under something called the six assurances Which was enunciated under President Reagan, which is not law. It's not a treaty. It's a statement of a policy So it's not cast in concrete But it does say that the US will not treat with or discuss with China anything to do with the defense of Taiwan I think those days will be over. I Think at a certain period of time the United States is going to have to engage the Chinese about mutual assurances To avoid an escalating crisis over Taiwan that could come not now not in five years But I think longer term now this is an argumentable point and some people argue that this is unlikely to happen You won't have a crisis of that type and the best way to deal with it is by simply building Taiwan up continuing to sell arms and The Chinese will always calculate that it's in their best interest not to push the envelope on this I think that's a precarious argument. We can get into that, but let me just put it out there now Next would be a militarily limited and a jointly developed East and South China Sea environment with a much Clearer and strong code of conduct and now that is what everybody says is the right solution to this I think that it's going to be hard getting to this as well There may be lesser versions of this that are possible But they have to begin in my view with a clarification of jurisdictional claims and a demilitarization of actions not demilitarization but a limit on militarization of That air of those two areas That's going to be the hardest in my view for the United States and for Japan For reasons that have to do with US concepts of freedom of navigation But I think freedom of navigation operations should be subject to adjustment Based upon this kind of effort to try and demilitarize Therefore there should be a sense of limited Operations in that regard including surveillance and reconnaissance along the Chinese coast physical surveillance which I think are probably not Necessary to the degree and frequency and intensity and proximity that the US conducts them And then finally I think an element of this is Unfortunately in light of what we've recently seen in this election a more integrated Open trade and investment oriented region Right now we're moving in the opposite direction And in very in my way in my sense very bad ways. I think to reinforce the common positive some Perspectives of this balance concept that there needs to be greater efforts to try to increase integration in Asia including the Chinese and the Americans ideally this would be through a Beyond a TPP Trans-Pacific partnership or an RCEP a regional comprehensive economic program which the US and the Chinese are basically supporting each they're not In conflict they're in some ways complimentary and very different But I think it needs to go beyond that to get to an Asia-wide free trade area that all countries can participate in What's a minimalist version of this minimalist version of this is basically is still the mutual denial force I think that mutual denial posture is going to be essential Gonna have to be more emphasis on CBMs and crisis management mechanisms to try and avoid crises as much as possible Rather than settling the Korea Peninsula because obviously the North Koreans are still here It's going to have to have to do with future crisis contingency understandings between the US and China with South Korean assent about future crisis contingencies that could occur on the Peninsula Which the Chinese don't want to talk about Discuss this in the in the report. I think the Chinese can be moved on this under certain circumstances and then the remaining characteristics are sort of lesser ambitious versions of Issues to do with Taiwan which is be a stabilization there based upon certain understandings about use of force which is very difficult to do But also other lesser versions of a free trade system in the region Sixth point Given the long lead times involved here and by the way, I'm not talking about a grand bargain Some people have said oh, this is just an old. This is just a grand bargain This is the same as Hugh White's argument he's a scholar in Australia who's put forth an argument says The United States and China need to have a de facto sort of concert of Europe style understanding You sit down around the table. You both explicitly declare that you're going to have influence on this You divide up the region basically like spheres of influence. I think that's impractical I think it's impossible in many respects. I think what I'm talking about is something that's going to have to occur in a very stage incremental testing Way with reciprocity involved at different levels over time That's going to have to be built up as confidence builds And it's not going to be it's not going to be something that can be settled in finality with one kind of or even a few Meetings, but it has to be based upon a common commitment To move towards something that is indeed a balance and not a predominance on the part of either side Given the long lead times of doing this. I mean it I think it needs to people need to begin thinking about this now And I believe the now the common the common Rebuttal to this other than doubling down In other words the US keeping ahead being predominant, which I think Donald Trump probably would like to see Based upon what he has said, but I think then again probably Hillary Clinton would like to see that I think most American officials would like to see that think they could get it As I've already said, I don't think it's feasible So the fallback position to most is to say well, we'll muddle through I mean literally that's the friend will muddle through We'll just take each problem as it emerges try to establish and understand where the Chinese they'll be restrained. I Think that works when you've got dominant power. I don't think it works very well when you don't I Think it's a recipe for testing every single element of a muddle through agreement for relative advantage And pressuring the other side in ways that could lead to escalation So muddling through to me is basically just another way of saying We'll try to deal piecemeal and hope the Chinese will accept that we're not going to have a balance And I just don't think that's going to work So what I believe is necessary is there has to be a process It has to begin with an understanding Within the country countries concerned about where we're going and what we need to do to try to moderate and Lower the likelihood of increasing crises Then there has to be before there's any kind of interaction about this there has to be consultation Nothing none of this can happen Or at least large parts of it can't happen Unless America's closest allies and friends Believe that this is a good option Some people will say that's impossible. The Japanese would never accept it or the South Koreans would never accept it. I Don't think that's the case But I do recognize that you need to have that consultation as you move along and you need to have buy-in on this and it needs to be presented in ways that do not Compromise the security interests or the economic interests of these countries involved and in order to make that happen it needs to happen on the basis of American confidence and American strength This is not a strategy of weakness This is a strategy of using American strength to establish a stable long-term future And if the Chinese reject it and they believe that the only solution is dominance Despite all the elements that I've laid out here and a willingness of the United States to establish a balance Then I think the United States would have no choice but to treat the Chinese as a hostile power in the Western Pacific and You would be in a very negative situation So the stakes are high for the Chinese not to do that in my view And when you particularly consider their domestic problems Which are going to continue. I think they have a strong incentive not to Not to Seek dominance. So let me just end by saying There are four assumptions that underlie all of this the first is Which is pretty obvious the magnitude and scope of relative military and economic power Particularly between the major powers of Asia are decisive in Determining the scope the pace and the intensity of the security competitions So I do believe that economic and military Capability GDP etc has an effect on how these countries manage their security environments and how they look at their relative advantage second While balance of power arrangements can and do emerge naturally that is not through any understanding of all at all but powers just Evolve and get to a point where they're balancing off against each other and some some people who? Acknowledge this idea of a balance is necessary say that that's most likely what's going to happen US and China are not going to talk about these issues. You'll just end up with a balance. I Think that balance will be unstable I think it needs to be to a certain extent deliberately calibrated and it has to be adjusted To a on the basis of a process of this kind of understanding that I've talked about third, I think it is possible to overcome What I think are some of the critical obstacles to this which is the inertia of large and complex governments and the cultural hubris and The bureaucratic and political biases that operate on both sides that includes nationalism. I think that nations are capable of Adjusting with or dealing with those kinds of features that operate to push them away from consideration of these kinds of things To make them kick the can down the road endlessly until a crisis forces them to do otherwise Now if you believe that states can't do that Then that's what will likely happen Some kind of change will be forced by crisis and that change Could very well not be in a direction that we like Finally as I just said I think the creation of this kind of stable balance does not Assume or require the United States operating on the basis of a weak position It is still by far the strongest power in the Far East It has leverage that goes beyond that of the Chinese I think it just needs to use that strength and that leverage to achieve a more stable Situation in the Western Pacific which will be the key to a more stable in my view global situation Over the long term there. Thank you very much. Thank you, Michael as Michael indicated he invited me to Offer some thoughts on the paper Not because we have the same views on the subject in fact, he went through the building and looked for the guy who had the biggest horns and found me and Therefore I think invited me to offer this comment. Let me start by off telling you something about the report in the book itself This is a very sophisticated report it's multi-layered report and it's a very textured report in terms of its sophistication and its argument and There is no way in which I can do justice To the complexity of the argumentation or offer a comprehensive critique of the report here That's simply beyond my capacity to do in the 15 minutes or so that I intend to speak on it I would strongly urge you to read it and read it in its entirety Because as Michael pointed out there are a whole set of assumptions Which lead to arguments which lead to conclusions and you can't appreciate this until you sort of see it in its totality I'm going to in my presentation this morning address just one slice of the problem and The slice of the problem that I'm going to address because it's really the kernel That in my mind to my mind underlies Michael's entire argument and That slice is encapsulated by the following question Is the age of effective American power projection in Asia over? If you believe that effective American power projection is over Then the established East Asian order that we have protected for the last 70 odd years Cannot be sustained because it's very clear that that order hinged fundamentally on the security guarantees offered by the United States and so I want to engage that question and If you believe that that order is over then we do need to look for alternatives And we need to take the alternatives that Michael proposes seriously if you believe that the Age of power projection however is not over that we it still has some life to it Then it may be possible to protect the current environment with some changes And so that's the question that I want to ask so let me walk back a bit and Ask what the problem is the problem is Michael pointed out which I agree with completely is the rise of China and the rise of China creating in natural desire to build a sphere of influence around It in order to enhance its own security all great powers have done that in the past the United States Not being any exception to this rule Now if China existed all by its lonesome in the middle of the Pacific This would create few problems for others Because it would create a sphere of influence outside of itself and there would be no challenges posed to other states but unfortunately for us Pacts of geology have created political predicaments That China's rise is occurring in a location Where it is surrounded by other major powers and Because that rise is occurring in a situation where? the impact of China's growth is felt on other major powers it creates as Michael points out security dilemmas that China's growth and capabilities Creates a certain nervousness on the part of other players Which then compels these players to defend their interests by competing Economic and military modernizations of their own Now what makes a story a little more complicated is that many of these players? Have security arrangements of the United States and the United States has over the 70-year period Assured these players that the US will stand essentially as the guarantor of their security Irrespective of what happens to the fundamental balances of power in Asia This is therefore the heart of the security competition in Asia It's where the US power projection can today in the face of rising Chinese power Underright satisfactorily the security assurances that the US has offered the proliferation states for the last 70 years that's the heart of the problem and As Chinese modernization improves or increases There is a competition between the United States to sustain its ability to project power and China's efforts to prevent that power projection from being effective Now what's the solution there are three possible outcomes? One outcome is simply to hope that China goes away China sort of either collapses or it weakens or it becomes a great democracy or a great friend of the United States So that's our outcome one. It just takes away as it were all the dilemmas The second outcome is that the United States as Michael points out works to defeat China's efforts at undermining power projection and by implication The coupling between the United States and the peripheral countries of Asia And the third outcome is we reach a modus vivendi with China By essentially constructing a local balance of power whereby we find ways to adjust to each other's Existence and part of that adjustment will entail a willingness on the United States to withdraw from applying power as it might and Outcome to which is essentially full-fledged us power projection in a way that we've been used to for the last 70 years Now Michael I think and that's why I think the analysis is sophisticated Offers two variations of what this balance of power World would look like The maximal world Which I won't pay any attention to because I think of that is the deus ex machina world if we could find solutions to Korea If we could find solutions to Jap Japan if we could resolve the Taiwan Straits problem all with a wave of the hand then by definition our Power projection demands automatically become much more manageable, right? So I don't want to think of that universe because if it can be miraculously produced. We'll all be spared a lot of grief. I Want to think about the middling world Where none of these outcomes of possible or certainly not possible easily So what where do we defer? I think Michael and I both agree That the first outcome which is that the China problem goes away is a fantasy China problems not gonna go away It's going to remain we may have disagreements about how intense or how serious but China is going to remain as a challenger on The second outcome, which is the possibility of defeating US power projection Michael believes that the long-term trends make It's simply untenable for the US to project power in the way that it did before and Therefore requires some revisiting of our strategy and the third on the third outcome The modus vivendi Michael believes that it's difficult, but it's possible Now I disagree with him on outcomes two and three. I believe there is still life left in the power projection alternative and On the modus vivendi, I'm not as far from him as one might imagine But I believe that a genuine modus vivendi is going to be very difficult Virtually impossible to engineer by design and In my view is best left to gradual evolution and I'm going to try and explain why I think That is the case in a few minutes and then I'll go back to defending my power projection sort of alternative Why is the modus vivendi? Alternative which is we broker a stable balance of power in Asia so difficult First it has too many moving parts and it requires Such high levels of synchronization That are virtually impossible to do outside of war When we have seen large scale synchronization of Balance of power in the past it has only been in the aftermath of major wars When major wars have a sort of leveling effect and then the pieces find their own equilibrium and Therefore you can create an order that is somewhat stable But in a situation where as Michael points out there is an ongoing power transition Where one part is in fact rising and The second part is by no means falling the United States is by no means falling right? We are all agreed that the weaknesses of the United States are only relative not absolute So in a sense, what do you have are two rising powers one just rising faster than the other and In this kind of environment to actually Construct a solution which has so many other players who also have ambitions of their own and Ask each of these players not just the principles, but also major powers like Japan like Korea possibly India and Russia to sort of play their part in Self abdication as it were I Think is simply hard to do and I cannot imagine any policymaker in the real world setting out to embark on this project No matter how horrific the alternatives are right you can always go to a policymaker and say look I'm going to do a thought experiment for you. I'm going to show you that if you don't do all these difficult things the alternatives are far worse You can construct that kind of a thought experiment most policy makers will say I'll take my chances Because it is simply too hard to deal with a world Which has so much complexity and ask them to do wholesale political re-engineering Second many of the components that Michael identifies as part of the balance of power Project are extremely sensible and we should do Irrespective of whether we want to pursue a balance of power or not So for example deeper economic integration in Asia. I think should be encouraged Enhanced confidence-building measures among all the major players. I think should be encouraged intensified a diplomatic engagement Should be encouraged and if we can find some way of managing The challenges in the South and East China Seas by all means we should do that Because to my mind these are still peripheral concerns. They don't affect the central core of the interests of all the players There are other components that are extremely difficult How do I engineer a unified career that will remain Non-light I mean I can come up with a sort of theoretical way of doing it, but I have virtually no way to do it in practice except In the face of worse alternatives How do I engineer a strengthened US-Japan relationship that simultaneously stays limited? I don't know the answers to that and I don't know whether it's possible as a policy project It's not that these outcomes are not possible They are but I think they will have to come through a process of evolution Where each of these players sort of reach these conclusions because of fundamental changes in the material balances of power If the material balances of power evolve in ways that make American security guarantees harder and harder to sustain Then I think both Washington And the regional capitals will recognize that and draw their own conclusions But as long as the material balances are not so unfavorable I don't think it'll be easy to engineer the kinds of outcomes that I think are acquired by Michaels project But the most difficult component in his strategy, which I was struggling to understand how I would implement is The military component, which is the mutual denial posture That Michael wants to build at the heart of his balance of power solution He wants symmetrical Defense-oriented Mutual denial capabilities both in force structure and doctrine I Understand the appeal of this solution because throughout the Cold War if those of you followed the literature would recognize that there was a particularly in the latter years a Great interest in in pursuing options that were called defensive deterrents and The idea of defensive deterrence at its root is a very simple one if I can create military capabilities That are dreadfully effective for defense But not very effective for offense Then you have an extremely high degree of strategic stability Because I can defend myself, but I don't need to attack you in order to defend myself effectively And so what Michael is pursuing is a variation of the Cold War quest for defensive deterrence and he identifies three Important components of what would make defensive deterrence first a resilient force capable of surviving pre-emptive attacks Second the capacity to threaten forces that are engaged in offensive operations against high-value assets and Third the absence of capacity for deep penetration strikes against the homeland So if you can create a force structure that meets these three criteria, then you can get effective defensive deterrence Now I would argue that there's no way to do this. There's no way to square the circle for a very simple reason That the forces that by definition are capable of effective defense Are also the same forces that are capable of offense We have struggled ever since the Washington conference To construct or develop military technologies that would be effective for defense, but not for offense and We have been unable to come up with such military technologies Because we've realized over the last hundred odd years That every military technology that has been developed so far is essentially Janus faced It can be optimized for offense It can be optimized for defense simply depending on the intentions of its creators and its users And so if we are in a world where technology by definition does not allow us to create Defense dominant regimes as it were Then it is going to be extremely hard to put in place the kind of solution that Michael wants That is even the minimal forces that would be necessary for Keeping his defense solution alive would be the very same forces that would enable their operators To engage in offensive military operations should they require And there's a very simple example his report has a very interesting discussion For example where he compares carrier battle groups, which are seen as the Acme of power projection forces versus submarines and Michael argues that we should move away from carrier operations because those are threatening and offensive and Move towards more defensive capabilities like attack submarines Now I would argue that attack submarines can be in fact far more effective offensive weapons compared to carriers in a world where Anti-access and area denial capabilities are in play. I Can do much more damage to the adversary with an undersea weapon like an attack submarine Then I could with something that floats on the surface of the ocean and You can pick any technology you want and you know, I'd be happy to engage in the extent discussion of this down the line But you can pick any technology you want and you will find that it can be used with varying degrees of felicity for both conventional operations in the offense or the defense what complicates matters further is Michael's Agreement that the US will continue to have global interests outside of Asia and So we will require offensive capabilities for maintaining our interests outside of the Asia Pacific So even if we don't Bring these offensive forces to bear in the Asia Pacific We are going to maintain them and if we maintain them and have them in our inventories There is every likelihood that we will bring them to bear in the case of conflicts in Asia So there are no arms control solutions that we can construct that are reasonably ironclad That would reassure the Chinese that the aircraft carriers that the United States is going to build and going to deploy Will only be kept for operations in the Atlantic or in the Western Hemisphere and not along the Asian So when you look at the detail It raises questions about whether the kind of balance of power regime that Michael wants to build by design is a regime we can build Let me offer a few thoughts before we break on why I think we can maintain a power projection regime for still some time to come and So the need to shift to a dramatically different strategy of the sort that Michael identifies may not necessarily be as pressing as he believes There are five reasons why I think there's still life in the current regime First the challenged posed by a rising power to America's capacity to project power is not a new one We face this in the case of the Soviet Union The Soviet Union to was an extremely powerful and capable military It didn't have an economy anywhere as close as the as the Chinese have But the essence of the problem was still the same That is as long as the Soviets were willing to apply resources to maintain a powerful military They could make pop US power projection very difficult and yet we found ways to cope with it They were not the solutions are not always elegant the solutions are not always successful but we found ways essentially to protect allies who were in relatively close proximity to a major military power There are new technologies to be sure in the current case Anti-ship ballistic missile is a good one But there are many other technologies that are used for anti-access scenario denial which we are all very familiar with cruise missiles Combat aircraft submarines so on and so forth. So one this is a problem That's new in the levels of sophistication and in the complexity of some technologies, but it's not a radically new problem to We should be very careful about Simply extrapolating China's new capabilities in terms of long-range weapons with the effectiveness of those weapons in combat China has new long-range weapons with great reach That can be highly effective against fixed targets like airfields Whether they will be as effective against mobile targets like aircraft carriers Submarines etc. It's still an open question and That is a very important fact if our mobile reserves Which either exists outside the Asian landmass or can be brought to bear in Asia Can be protected Even in the face of rising Chinese military power Then I think it may be a little too early to sort of sing the swan song for US power projection It's very important to remember that the only circumstance under which China has What you might think of as war-winning capabilities against US power projection is When the Chinese mainland enjoys absolute sanctuary If you get into a conflict with the United States and by definition You define the Chinese homeland as having absolute sanctuary. That is no US weapon ever touches the Chinese homeland Then yes, the United States is fighting this war with a very short stick But if you imagine that any major conflict in Asia will involve attacks on the homelands of our allies Possibly attacks even on the US homeland and suddenly attacks on the Chinese homeland if not deep in the homeland at least on the periphery Then Chinese advantages with respect to limiting US power projection diminish very rapidly And it's there's a very simple reason why For Chinese Counter-power projection to be effective. It needs a robust and resilient sensor net If those sensors are essentially attacked by US combat operations all those long Vapants long-range weapons that China have become far less effective and There is simply no way in which China can protect its sensor net in perpetuity throughout a conflict So China's ability essentially to defang US power projection Really becomes questionable if one opens the door To the fact that there will be discrete attacks on Chinese sensors no matter where they are or the more The United States and its allies can replicate vis-a-vis China Exactly what China is doing to the United States today. That is we can build up anti-access area denial bubbles Around China because of China's geography. There is a first island chain where which Essentially contains Chinese military forces They have to break out of the first island chain and if the United States and Japan if the United States and the Philippines and Korea Make the investments in fact exactly the investments that Michael talks about cruise missiles fast shipping submarines We can create a denial force that makes it extremely difficult for China to operate At the end of the day, what is the great advantage of the United States has? The great advantage the United States has is that our war aims are fundamentally conservative The US and its allies are not seeking to remake the regional order. All we want is to preserve the status quo And if all we want is to preserve the status quo, there is a way to do it and it's called deterrence It's simply a way of communicating to the Chinese That should they aim to revise the status quo by force their risk running a major regional war Which will be costly for both sides to be sure But one in which their homeland will no longer be a sanctuary and if their homeland is no longer a sanctuary The probabilities that they will actually win that war begin to diminish and If the probabilities that they begin to win that war diminish Then their incentives to engage in any efforts to change that status quo to should diminish so what is the likely outcome of the Current shifts in offense and defense. I think the likely outcome is is very simple US freedom of action close to the Chinese coastline has Diminished and will continue to diminish But it will never diminish to the point Where the United States will simply be unable to uphold its security obligations That is if you posit a major regional war The United States will be able to protect its allies as Long as you do not presume that there is a Chinese homeland sanctuary Because important Chinese assets Which are necessary to win the war will become targets for US military action? I'm going to just end by offering a couple of thoughts of the future There is no question in this is where Michael and I and complete agreement that the rise of China erodes US regional advantages But it does not eliminate the huge preponderance in comprehensive national power that the United States enjoys over China today and Will continue to enjoy for at least the first half of the century that disparity in aggregate capabilities gives the US extraordinary leverage and Gives us the freedom Not to have to move towards more riskier strategies like the balance of power Until we absolutely pushed to it second It's not clear to me that despite Major Chinese improvements in capability that China can actually defeat the United States in a conventional battle and If it cannot Then our ability to protect the current order. I think will still stay substantially intact and Third and last point I'd make is that especially at a time When the future of Chinese national power and the operational effectiveness of the Chinese military are uncertain and There are strong uncertainties on both. I Would argue that there is no reason for the United States to prematurely surrender its primacy in the Asia Pacific Or to weaken its resolve to protect its allies in accordance with a conventional strategy There may come a time where we may have to do both these Think about reaching some kinds of accommodations of the Chinese in the ways that Michael identifies but I would argue that that time is not now and We ought not to Prematurely push in that direction Thank you. Well, we have Only 15 minutes. I'm afraid But I and I will not take that up with a detailed rejoinder to Ashley. We could go on for quite some time I'll just say a few very very basic things and I'm afraid it'll be inadequate, but I Obviously, I I don't believe that it's impossible to construct a denial force that is not inherently Offensive in the way in which offensive forces operate today At least in the United States concept of that that notion I think it is possible to have a force level that has certain forces that are certainly ambidextrous if you will But that also has a large number of forces that are limited in both range and function That will make them far more effective as defensive forces and seem to be so By the other side We can get into all issues about ballistic missile defense limited-range aircraft aircraft The the the criticality of air control or the absence of air control in an offensive campaign submarines have almost no effect on that and You know a lot of other issues that I think play to the Argument about why a denial force would be feasible in a in a stabilizing way and people have written in much greater detail About this than I have people at Ray and Eric Hagebotham and others have written in Considerable detail about what a denial force would look like and could do And I guess my my other point is maybe two other points is that the I Think precisely because the kind of force structure that Ashley thinks is essential to maintain deterrence That is to say an ability to strike the Chinese homeland Virtually at will and to any range is precisely the most escalatory type of force posture that we could consider having and I am not at all clear absent an absolutely predominant ability to prosecute that kind of a war that would so Convince the Chinese that they have Absolutely no ability to begin any kind of an escalation or coercion regarding some of these issues I don't have the confidence to think that that kind of a confrontation Would lead to controllable escalation. I think it would be a highly highly dangerous situation That could get us to nuclear conflict So for me, it's it's it's That's part of the reason why I think we need to have some kind of balance in the region because Precisely because the United States relies on preemptive long-range strike I think against a country like China that simply is too dangerous Well, there has to be an alternative to that and then the third thing that I will readily a seed is that what I am proposing here Ain't easy. It is something that would involve a certain amount of risk No question about it it would be Relatively complex in some respects, but not quite as complex. I don't think as Ashley may perhaps think as I said before I think it depends very much on whether or not the major powers involved Recognize that this is somewhere. They want to go and that it is achievable and if you have that kind of Belief and many people will say that is unachievable you cannot get that kind of acceptance Because I think many people will be swayed by Ashley's argument and they will think why why rock the boat? We haven't lost our relative position and it's going to happen so gradually if we do that we can all adjust to it I think that that is another way of saying We'll be able to deal with the inevitably increasingly more severe crises that will happen Based upon our ability to engage with the Chinese and our mutual ability to know that we have to have restraint I think that will work to the extent where it will likely prevent war I don't think it will work to the extent where it will prevent escalating crises that would then have ripple effects that would alter fundamentally the way in which the two countries look at each other and That leads to something that I think would be a much more intense arms race if not a an overt Cold War I will say one last point Sorry, I haven't used all 15 The one point that is that I that I really have thought about and that is a very a very strong one is the idea of global American power I once presented this argument to a group of American military officers and The only strong point of pushback that I got Was that? Strangely enough it wasn't oh, we would never accept that it was why would the Chinese ever accept this if we are a global power because we'll be able to deploy forces into the region and Negate whatever force deployments they have there that are there denial oriented And so why wouldn't they take a global structure and looking at this problem as opposed to a local way of looking at this problem? and I Think there is no easy answer to that But I think the probably the best answer at least the best I can come up with at this time is that I Don't believe the kind of pathway to the kind of triggers of crisis and the pathways to crisis that would likely occur Would give the United States the luxury of Being confident that it could bring those assets to bear quickly enough and decisively enough that the Chinese would assume that they can't That they have no Incentive whatsoever to conduct a more riskier action. I Think I think that they could believe that they have the ability to establish a kind of fate a complete With a much greater capability than they have today Such that it would be an in any a very Significant consideration for the United States to deploy forces because the escalation potential would be enormous We'd be back to the problem. We're talking about before So in other words, I don't think time would be on the US side And I don't think it would be a sufficiently effective deterrent that would make the Chinese not even consider Using their equal if not slightly better power in the region to affect change. So anyway I'm sorry. We have not that much time left, but Sir, yes, could you say who you are please and try to make make your comment or question short because we don't have much time Yes Mike Dom US Navy. I appreciate mr. Tells is Confidence, but believe he might be slightly over optimistic and to the extent that the the potential for miscalculation and Friction within the relationship is almost seemingly inevitable I've been a long fan dr. Swain of your work on crisis management and in the crisis management Exercises that I recall you doing some 10 years ago now The US and China seemed to talk past each other in the context of crises Even the the notional crises that you that you established so to the extent that you believe that Confidence-building measures may be effective in a verting crisis should we find ourselves in a crisis? Have you reevaluated? Your assessment of our ability to communicate in the context of a crisis to keep things from spinning out of control You mean have I become more confident that we could avoid it a crisis spinning out of control? No It's not that I think that the United States and China are you know sort of locked into this Zero-sum mentality when they look at a crisis in most kind of what he's referring to I've been doing a project for many many years With the Chinese on crisis behavior crisis interaction What you find in most cases in many cases is that the United States and China when they get in there some people in the room I can see Jim Bodner and others who have been involved in some cases The Chinese and Americans really want to get out of that crisis fast and they try to de-escalate And so it's kind of reassuring But These are generally worlds that are very different from the kind of world that I'm positing in this argument And it's a world where the Chinese believe they have a lot more leverage And it's a world where they believe that their commitment to a particular issue because all these issues reside right in their backyard is Probably likely to be higher than that of the United States And their suspicion about what motivates American actions I mean some of these interactions the most benign Moves that the from a US perspective that the US considered making in some cases the Chinese regarded as threatening That's not to say that they were quick to whip out the military option and start deploying forces they weren't They were very hesitant to do that But they were also extremely suspicious of When an ally does something is it doing something by itself? Or is it doing it because the United States has told them to do it? And if they are doing something really bad Why doesn't the United States stop them from doing it because the US after all is a superpower and its allies will do what it says so you and you have I mean there's a whole host of Perceptions and misperceptions and assumptions about how power and governance and all these other things operate They don't you know create this Immediate conference. It's not like North Korea in the US But there is enough Bases for miscommunication and misunderstanding that you need I think a lot more effective Mechanisms than we currently have to deal with these dangers effectively Can I just add one thought to that It really doesn't matter whether I'm optimistic or not about our capabilities The only thing that matters is whether the Chinese are optimistic That our capabilities are so weak that they can change the status quo in Ways that limit our options my viewers as long as we keep deterrence as The centerpiece of our policy which is to prevent them from changing the status quo That gets us the outcomes we want That's all we need to invest But denial is deterrence And we have the capacity to do that and more Thank you Kathy I'm from voice America. I know at the very beginning you mentioned that you did the discussion It's focused on long-term strategy So I'm just wondering whether you could address something in the near future will president elect Donald Trump I will kill off the rebalance to power and also He mentioned his Peace throw strength, but do you think his strategy is? Visible. Thank you. I was really hoping we get out of this We can we can we can't oh time's up isn't it? Yes almost I don't think anything We can say this morning is actually going to answer that question either satisfactory or confidently So I would just urge you to wait. I might go a little beyond that. I would I would My I mean Ashley's certainly right. We don't know for sure anything really about what President-elect Trump's policies will be in Asia Or anyway or toward or toward the Chinese My my my sense is that I think he he will adopt policies that are He'll be he'll be very focused on the domestic situation in this country be very focused on other areas of the world probably more most likely I Don't see him Moving immediately to do things that would necessarily provoke Crisis, although that could happen But the biggest I think one of the biggest dangers is that something could be forced on a Trump presidency And the most likely one in Asia will be in North Korea Because that situation has become so alarming in the terms of the development of North Korea's weapon capability nuclear capability A president Trump could want to think out of the box. Let me put it this way in ways that could be Immediately pretty alarming Maybe I'll just leave it at that Sir hi, I'm Jonathan Donald from IHSI International I'm very curious dr. Swain you seem very confident that we can keep this discussion particularly focused on Asia and the Pacific regarding the Chinese how do we do that when we're talking about strategic nuclear weapons and Digital issues as especially because we're taking the net assessment approach and looking out till 2040 How confident are you that these won't become global issues? And if that that Asia Pacific can be a force of Stability in the overall discussion. Thank you. Well, I certainly don't want to be sanguine I mean, I'm not assuming that the rest of the world will will will sort of stay in a In a path in a relatively placid and stable way. I mean, we're seeing the exactly the opposite in some respects I Don't believe however that in the I Mean there there are all kinds of things that could go wrong in the world Beyond the US-China relationship including possibility of nuclear Nuclear issues Certainly, but in terms of the US-China relationship, I don't see how How the nuclear dimension to that and I and I sort of thought through this in the context of this report and Tried to sort of consider it to what extent do I need to bring in the whole nuclear equation into this outside of the escalatory? Talked about and I and I frankly I just I don't see that Working in ways that could be highly De-stabilizing primarily because I don't see the Chinese Seeing it to be in their interests To transition away from the kind of nuclear force and the kind of nuclear doctrine that they have today. I Think probably the biggest danger could be Danger in the sense of uncertainty is that a president Trump has said things about no first use The viability of this in the context of the American nuclear posture that could prove to be Very De-stabilizing Because of allies because of allies and that probably would be most cogent most clearly expressed in Asia Not that I want to defend The present elect but just to remind ourselves That US nuclear posture and US nuclear policy has never Committed itself to a no first use policy Take our Nuclear posture literally the US is paid to use nuclear weapons first now We've just been prudent about you know not going to town about it But our entire posture is premised on the idea that if we have to use nuclear weapons first We will use them first, right Of course again, we don't want to make too much of that fact But that simply happens to be the baseline of US policy No, I'm just saying that I think Trump has said some things that that would call that into question And I'm not saying that's likely because I think it probably isn't but that's the only thing I can think of That would bring in this nuclear issue Is there anybody else yes sir in the front here? I mean we're already over time So I'm sorry if you if you need to go but we'll stay a couple more minutes I'm Jim Dandridge. I'm a retired Foreign Service officer and military officer And I was just wondering if you could make a quick comment on what I think Is probably the more immediate challenge and it probably you probably address it in your your study here on page 17 Talk about regional economic influence and the fact that We have alliances based on Regional security arrangement, but I would like to think that our economic influence is probably More Attainable And is probably the larger challenge to stability In asia this could you make a quick comment on that? I think you're absolutely right. I mean the economic dimension to this it actually In my presentation. I sort of gave it short shrift and I shouldn't have it's a really critical issue and Economic stability in the in the region. I think Is critical. I think the u.s. Plays a very important role in this. I think the movement away from A liberal economic order that is kind of presaged by what donald trump has been saying Rejection of the tpp a very sort of more narrower nationalistic kind of View of of u.s. Economic interests. I think that does not bode well For the economic environment in in in in asia and the relationship with the united states and its allies economically And I I hope that he doesn't move forward In in this effort because I think it's it's counterproductive to american interests in the region Precisely because of those economic stakes That's a short a short version of answer Maybe we should stop here because some people have already left and Thank you all very much for coming appreciate it all and uh get my report I heard some very interesting very interesting presentations yesterday at the university of virginia I gave before yesterday by two japanese scholars from jia And they gave assessments of the chinese economy and they were both