The US and China: Will it be collision or cooperation?

On the eve of Chinese President Xi Jinping's first state visit to the US, a China expert lays out how the two great powers can avoid confrontation.

Cover Story

‘G’day. My name’s Kevin. I’m from Australia. I’m here to help.”

The silver-thatched man on the stage in a loose-fitting black suit and no tie pauses for laughter from the crowd. It’s March 2015, and Kevin Rudd is delivering his first TED talk, an 18-minute guide to China’s post-Mao economic takeoff and the growing trepidation it stirs in Washington. Using visual cues and folksy language (“You see that bloke? He’s French.”), Mr. Rudd threads China’s modern journey with his own: the tale of a poor boy from rural Australia who studied Chinese history and rose to become prime minister in 2007.

For emphasis, he draws Chinese characters with his finger on a touch screen, which is projected behind him. As with many TED talks, it’s a mélange of college seminar and stump speech.

Within a decade, he explains, authoritarian China will become the world’s largest economy, ending more than two centuries in which English-speaking democracies in the West – first Britain, then the United States – held that position. Already, China trades and manufactures more goods than any other country. With economic power go the privileges of primacy. For now, the global economy is expanding, and China is an integral part of it. Yet history is replete with examples of rising powers that, intentionally or not, spurred incumbent great powers to take up arms against it.

“[C]an we carve out a future which is peaceful and mutually prosperous, or are we looking at a great challenge of war or peace?” Rudd asks.

Rudd the politician seems to know his audience. After laying out the mutual suspicions and fears of the US and China, he cites examples of cooperation and partnership, and proposes a peaceful path forward. To succeed, it must combine the American dream and the Chinese dream. With a final flourish, he draws a four-character phrase: a dream for all humankind. 

After a bitter exit from Australian politics in 2013 that still casts a long shadow, Rudd is pursuing his own dream in this land of second acts. He spent a year as a visiting scholar at Harvard University’s Kennedy School of Government in Cambridge, Mass. In January he became the inaugural president of the Asia Society Policy Institute (ASPI) in New York. It’s a high-profile position that plays to his strengths as a thinker on Asia and a former statesman. At a time of fraying Sino-American ties, this straight-talking Australian has emerged as a sort of US-China “whisperer” – a conduit and interpreter for policymakers on both sides of the world’s most important bilateral relationship in the way that Henry Kissinger and Lee Kuan Yew, the late Singaporean leader, have done in the past. As Chinese President Xi Jinping prepares for his first state visit to the US later this month, Rudd offers his views on where the taut relationship between the two global powers might be going. 

Mr. Xi is already provoking concern in Washington’s policy circles with his forthright style of diplomacy and firm grip on power. Earlier this spring, several prominent think tanks issued a tsunami of reports that bore down on the US-China strategic rivalry on issues ranging from maritime disputes to North Korea’s nuclear program to cyberwarfare. While their policy advice varies, as does their assessment of the relative strengths and weaknesses of the two countries, the consensus is that under Xi’s leadership ties are being tested in new and dangerous ways.

“We’re at a tipping point in this relationship,” says Richard Solomon, a senior fellow at RAND Corp.

If so, Rudd may be a man to watch. For now, he’s working on his own study on US-China relations, a summary of which was published in April by Harvard’s Belfer Center. In speeches and articles, he argues that despite the rancor and paranoia, common ground exists between West and East – and more can be found. “Most of the world today is made up of folks who like blowing up bridges, or, alternatively, those that prefer shouting to bridge-building,” Rudd told me when we met in New York in July. “Unless you build some bridges, problems frankly become irresolvable.”

Rudd knows firsthand the political constraints that leaders face in foreign affairs, particularly when it comes to China. He already has the ear of senior politicians, officials, and thinkers in Washington and Beijing. Having left politics, he can speak more freely, and as an Australian, he can be blunt. He makes his points “without currying favor or offering flattery,” says Kevin Nealer, a partner at The Scowcroft Group, an international advisory firm in Washington. Even his critics – and in Australia they are legion – concede that Rudd is a trenchant analyst of geopolitics. But in the US political arena, where toughness on China is prized and compromise equals capitulation, is anyone listening?

•     •     •

The modern evolution of U.S.-China relations began in 1971 under President Richard Nixon. That year, Dr. Kissinger, his national security adviser, reached an agreement with China to normalize relations between the two countries. Nixon’s visit to Beijing in February 1972 ended a quarter-century of isolation from the West.

By the end of the 1970s, China had begun to reform its socialist economy; in its place, a capitalist phoenix emerged, eager to do business with the US and other rich nations. Chinese citizens soaked up foreign ideas and fashions no longer deemed politically toxic. Many personal freedoms were restored. Some people got rich. Others made a modest living, while urging their children – in most cases, a single child – to aim higher. Opportunities for education exploded after formal schooling had been all but abandoned during Mao’s Cultural Revolution. More than a quarter of a million Chinese are now enrolled in US universities.

Nixon was no idealist. He saw China as a counterweight to the Soviet Union. What China did at home was a lesser concern. “The relationship has always been strategic,” says Jeffrey Bader, a senior fellow at the Brookings Institution in Washington.

Since Nixon, successive US presidents have adopted the notion that engagement with China – trade, diplomacy, education – would eventually lead to political liberalization, as it had in some other closed regimes. In essence, the more that America knew about China, and China knew about America, the more certain it was that Western norms and practices would prevail.

By most measures, this hasn’t happened. Under Xi, who took power in March 2013, civic space for critical debate has narrowed. Human rights lawyers, Christian activists, and liberal professors have all been targeted and detained as threats to single-party rule. Under Xi, whose term runs to 2023, China’s growing military muscle is being flexed over disputed islands in East Asia. Its economic weight is already felt globally, from Brazil to South Africa to Australia, and that in turn is giving Beijing a greater say in global affairs.

“Chinese power is increasing. Its economic and financial influence is increasing, and it’s winning a lot of deference from the world on that basis,” says Andrew Nathan, a professor of politics at Columbia University in New York.

One example is the $100 billion Asian Infrastructure Investment Bank, which China launched in June with 56 other countries. The US was not among them. But close allies such as Britain, Germany, and South Korea chose to join, despite US objections to the bank’s lending rules. China says that the AIIB fills a gap in financing for poor countries and isn’t a competitor to the Washington-based World Bank. At the same time, the US is negotiating a trade pact, the Trans-Pacific Partnership, which pointedly excludes China. “If we don’t write the rules, China will write the rules out in that region,” President Obama told The Wall Street Journal in April.  

Such political and economic rivalry, combined with China’s military buildup, raises the question of whether China may undermine the US role as guarantor of global security. In the South China Sea, China has built airstrips on disputed islands and reefs. It bristles at US Navy surveillance flights along its coastline. Further north, the Senkaku Islands held by Japan, which China calls Diaoyu and claims as its own, are also being contested.

“It’s not about lumps of rock or coral,” says Hugh White, professor of strategic studies at Australian National University in Canberra. “It’s about who leads in Asia.”    

Along China’s rim, countries such as Australia, South Korea, the Philippines, and Japan are military allies of the US. But like all countries in Asia, their largest trading partner is now China. Should Sino-American relations turn overtly adversarial in the future, they would be forced to pick a side. For now, any sign that US allies in Asia are cozying up to China as a hedge against a perceived decline in US strength or willingness to fight could encourage Chinese hawks to push harder – and panic US military strategists. Conversely, an American move to expand its role in the region and arm its allies would spark similar reactions on the other side.   

Historians call it the Thucydides Trap: a cycle of conflict that escalates when a rising power disturbs an existing order. In the 5th century BC, Sparta began to see Athens, an upstart city-state bristling with new ideas, as a rival. This led to a protracted and mutually ruinous struggle for military supremacy in ancient Greece. “It was the rise of Athens and the fear this inspired in Sparta that made war inevitable,” wrote Thucydides in his “History of the Peloponnesian War.”

Rudd clicks on a picture of Thucydides during his TED talk (“This guy up here? He’s not Chinese, and he’s not American. He’s Greek.”) He highlights the research of Harvard professor Graham Allison, director of the Belfer Center. Mr. Allison has found that, since 1500, the Thucydides Trap has been sprung 15 times. In 11 cases the result was catastrophic war, including in 1914 when Germany challenged British primacy.

Americans may find it hard to picture China as Athens, the birthplace of democracy. But Chinese policymakers, as keen students of world history, would have little trouble transposing Sparta, a superpower accustomed to dictating terms to others, onto the US. In 2013, Xi told an international delegation, of which Rudd was a member, that China wasn’t seeking to impose its will on the world. “This is not in the DNA of this country given our long cultural and historical background.” Then Xi added, “We all need to work together to avoid the Thucydides Trap.”

There’s a saying: “When elephants fight, the grass suffers.” In ancient times, the grass was unruffled by the rise and fall of distant empires. In our globalized world, a stampede hurts everyone. When Josette Sheeran, president of the Asia Society, attended a summit in Ethiopia, she was seated at dinner with seven African leaders. All told her that their nations’ future depends on constructive US-China relations. “Every region is telling us that the US and China need to work it out,” she says.

•     •     •

“Call me Kevin,” Rudd tells me when we meet in his surprisingly spare office at the Asia Society. In person he’s affable and solicitous, asking if my cup of tea is hot enough. He tells me he made it himself – the actual tea blend. When he was foreign minister, he won a tea-blending competition run by Twinings. Now, a share of profits from all sales of his Australian Afternoon Tea go to his designated charity for animal welfare. I tell him I like the tea. He looks pleased. “I grew up on a farm in rural Australia. The culture of having a cup of tea was a defined culture,” he says.

Rudd speaks in measured, often digressive chunks, with the cadence of a diplomat and the ellipses of a politician adept at swerving past questions. He’s fond of folksy Anglo-Australian metaphors. Referring to political changes in Myanmar (Burma), he speaks of “movement at the station,” a cattle-ranching term. He also lapses into wonky bureaucratese – political “internalities” and “investment instrumentalities.”

China has defined Rudd’s career, for better or worse. Raised in hardscrabble rural Australia, he studied Chinese history and culture and went on to serve as a diplomat, then built a political career that culminated in him being elected Australian prime minister in a landslide victory in 2007. While Rudd’s campaign was grounded in domestic politics, his credentials on China at a time when it was buying up vast amounts of Australian natural resources were clearly a selling point. 

His message, says Nicholas Stuart, author of a 2007 biography of Rudd, was that “America is the past. China is the new century. And I can unlock the door for you.” 

Three years later, Rudd was out, replaced by his deputy leader, Julia Gillard. His brusque style of leadership had alienated party colleagues and senior bureaucrats alike, and he’d lost public support after flip-flopping on issues such as climate change, which he once called the greatest moral challenge facing the world. At the United Nations climate talks in Copenhagen, Denmark, in 2009, Rudd was overheard using colorful expletives about Chinese negotiators who helped sabotage a binding deal. On this and other issues involving China, Rudd frequently found himself caught between conflicting views and expectations. “He overestimated his position and thought the Chinese would give him a lot more space” on global warming and other issues, says Professor White, who has informally advised Rudd.

He was also hurt by the release of a WikiLeaks cable in which he struck a bellicose tone on China over a private lunch in 2009 with then-Secretary of State Hillary Clinton. 

Rudd served unhappily as foreign minister under Ms. Gillard. In 2013 he unseated her and briefly served as prime minister again before losing an election. It was a bitter end to his political career. He resigned from Parliament and accepted an offer to teach at Harvard. In September 2014, Rudd spoke with former US Treasury Secretary Henry Paulson at an Asia Society panel on China, which led to him being tapped as president of ASPI.  

In Australia, many believe that Rudd is eyeing the job of UN secretary-general after Ban Ki-moon’s second term ends next year. The Asia Society, in proximity and prestige, is an ideal launchpad. Rudd denies that he covets the job or that he would stand a chance. The UN’s informal rotation system is against him: Someone from Eastern Europe is due to fill the post next. Still, Frank Brennan, a Jesuit priest and law professor at Australian Catholic University in Canberra who has known Rudd since 1990, says he would be a candidate. “He’s got another big gig in him, whatever it might be.”

•     •     •

Rudd considers himself a realist on Chinese politics. In his Belfer study, he flatly rejects the idea that China’s brand of authoritarian capitalism is bound to fail in the future, despite its current economic travails. It would be “imprudent in the extreme” to assume a “China collapse,” he writes. “This would amount to a triumph of hope over cold, hard analysis.” 

Boiled down, Rudd’s argument is that the US and China need to set aside political issues on which their positions are too far apart, such as the status of Taiwan. Instead, they should build mutual trust via joint initiatives on common problems where there is overlap while taking a “constructive” approach to bilateral and multilateral issues, such as reform of the UN and of Pan-Asian forums. Rudd argues that Sino-American cooperation can in time yield the political capital needed for strategic breakthroughs. Curbing the effects of climate change – Mr. Obama and Xi drew up a joint plan of action at a summit in Beijing last November – is an example of common purpose. 

Rudd says his report is aimed primarily at policy elites in the US and China, and that any bluntness is intentional. “It’s causing some level of discomfort in both capitals, I assume.... I’m not in the business of dancing around the edges,” he says. 

For US readers, Rudd deftly unspools Chinese “realist” thinking on the tenets of American foreign policy, namely that the US has “a dual strategy of undermining China from within, while also containing China from without.” Exhibit A: Obama’s first-term “pivot” to Asia and US arms sales to countries such as India and Vietnam. From China’s perspective, such steps are evidence of preemptive containment.

Similarly, Rudd recognizes the concerns of US strategists who fret that China seeks to create a sphere of influence in Asia that would exclude the US. Rudd notes that Xi is far more decisive and destiny-driven than his predecessors. In May 2014, Xi outlined a regional security concept in which the US wasn’t welcome. “The people of Asia are capable and wise enough to strengthen cooperation among themselves in order to achieve the peace and stability of Asia,” he said. 

The US military remains far more capable and better equipped than the Chinese military and is likely to remain so for decades. But perceptions matter. In 2013, the Carnegie Endowment for International Peace reported the findings of a survey of opinion leaders in China and the US. Majorities in both countries said they viewed the other country as a competitor. Asked if they considered China  as an enemy, only 2 percent of US government elites said they did. Among Chinese, 27 percent view the US as an enemy. 

Critics say Rudd’s engagement strategy – finding common ground and solving non-core problems – won’t defuse the deeper divisions. Sino-American tensions aren’t simply about a lack of goodwill or diplomatic mechanisms, says Ashley Tellis, a senior associate at Carnegie and coauthor of a report published in April that advocates a hawkish US stance on China. “These are fundamental clashes of interest. There’s nothing in Kevin’s report that tells me how to circumnavigate these clashes.”

Rudd argues that Xi may be open to a “grand strategic bargain” with the US on the denuclearization of the Korean Peninsula. Other analysts have proposed that a parallel formula be found for Taiwan, whereby the US stops selling weapons in return for a Chinese pledge not to force reunification. Mr. Bader, who was Obama’s principal adviser on Asia from 2009 to 2011, is skeptical of sweeping quid pro quo deals. “They don’t happen. Every issue is unique and disaggregated and has its own set of bureaucratic actors involved,” he says. 

Professor Nathan discounts the likelihood of any great-
power accommodation, too, which he likens to the 1815 Congress of Vienna. “I think there will be a long period of friction over these particular issues. I don’t think they can be settled upfront by some kind of compromise.”

Rudd doesn’t linger on the consequences of the US ceding ground to China in Asia. Yet even a gradual rebalancing would mark a major shift, says White, author of a 2013 book, “The China Choice: Why America Should Share Power.” He says Rudd needs to be frank about what it means to the US to begin to treat China as a peer. “Kevin is trying to say you can do this and it’s not going to hurt. But this is going to hurt.”

•     •     •

Since leaving office, Rudd has kept up his contacts in China. He attends academic gatherings and has been invited to speak at military-run events. While his Belfer study refers to “senior Chinese interlocutors,” Rudd is cagey about whom he meets with. “It’s far better to talk to folks when you can when opportunities arise, in Beijing or Washington, but not to make a song and dance about it,” he tells me.

In 2008, Rudd asserted in a speech in Chinese at Peking University that he was a zhengyou, a sincere friend who would speak frankly to China. But his charm offensive flopped after WikiLeaks revealed that he also spoke frankly to America about China. In 2014, Bob Carr, who succeeded Rudd as Australian foreign minister, wrote in a memoir that his Chinese counterpart, Wang Yi, had said of Rudd, “You know, in China ... some people love him ... and some people ... hate him!”

In Washington, Rudd has cultivated policymakers on both sides of the aisle, though his personal connections are strongest among Democrats, including foreign-
policy advisers to Mrs. Clinton. In 2009, Obama called Rudd two weeks after the president’s first inauguration. After he was demoted to foreign minister, Rudd continued to meet with Obama’s national security adviser. Rudd is still consulted on China by the Obama administration, says Mr. Nealer, who notes his briefings “appeal to senior policymakers who crave insights without agendas.”

While China may be the reason the White House calls, in his new position at the Asia Society, Rudd has a broad portfolio. One morning in July, I joined a small group at the launch of an ASPI task force chaired by Rudd to promote Indian membership in the Asia-Pacific Economic Cooperation grouping. The next day, he held an hour-long teleconference briefing on Japan. On the third day, I attended a panel on the Iran nuclear deal, which drew a large crowd to the eighth floor of the Asia Society as the evening sun glanced off the platinum-priced apartments of Park Avenue nearby.

Flanked by a former US ambassador and an Iranian-born researcher, Rudd used his introductory remarks to emphasize the historic challenge of nuclear proliferation. He then segued into a self-deprecatory joke about being unable to find his way around New York. As a moderator, Rudd is brisk and sure-footed. Still, just as he did at the earlier event on India, Rudd casually let slip his own bona fides. “I was just talking to the Chinese mission at the UN, just a few days ago,” he said, and added that China takes some pride in its role in the Iranian negotiations.

It’s a claim that anyone could probably adduce from public statements. But coming from Rudd it has the ring of authority.

As the Iran panel broke up, Rudd lingered to greet invitees and mingle with the public. From the back of the room, I watched a group of six button-down students from a Jesuit high school approach Rudd for a photo. Their teacher explained to me that the boys were all members of the debating club, and had been studying the Iran deal. Smiling, Rudd turned to them and said, “Hi, boys. I’m Kevin.”