Podcast: Kevin Rudd and China's Future

TRANSCRIPT: Kevin Rudd and China's Future

Ian Bremmer:

So, grade Trump on China so far. How's he doing? What do you think?

Kevin Rudd:

This is your questions I really hate answering.

Ian Bremmer:

Why? Because you don't grade people?

Kevin Rudd:

Well, I'm basically a social democrat, and we're gentle and we have-

Ian Bremmer:

So, you grade on a curve?

Kevin Rudd:

No, no, no. We basically have a seminar and talk to your parents.

Ian Bremmer:

Hi, I'm Ian Bremmer, and welcome to the GZERO World Podcast. I'm host of the weekly show "GZERO World" on public television. In this podcast, we share extended versions of the big interviews from that show. This week I sit down with Kevin Rudd, president of the Asia Society Policy Institute and former prime minister of Australia. Today, I'll ask him about China, North Korea, and the general state of play in Asia. Let's get to it.

Announcer:

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Ian Bremmer:

Prime Minister Kevin Rudd. Great to be with you.

Kevin Rudd:

Dr. Bremmer.

Ian Bremmer:

Yes, indeed.

Kevin Rudd:

How's life?

Ian Bremmer:

Life is good, but China's interesting these days. I keep hearing that Xi Jinping is under a little more domestic pressure. How seriously should I take that?

Kevin Rudd:

Well, the interesting thing is that there's been a commentary published online-

Ian Bremmer:

By this professor.

Kevin Rudd:

... by Professor Xu, X-U, professor of law at Tsinghua University, which is a very direct, in-your-face criticism of Xi Jinping personally, and an in-your-face criticism of the current conduct of the Chinese Communist Party. So, what has got all of us scratching our heads who watch these things professionally is, how come it's stayed up now for more than a week?

Ian Bremmer:

Usually, that would be not shared.

Kevin Rudd:

Yeah, very rapidly these dissenting opinion pieces online would be vaporized in one form or another, but it's also in the week when the leadership retreats to the beach, Beidaihe, a place I've been to over the years, not to be recommended as a normal beach resort, but they've been doing it since the fifties. That's where the entire leadership go to chew the fat on what's happening for the year ahead in Chinese politics. So, this occurs on the eve of that. So, to your question, how much pressure is Xi under? I think some is the answer, and it's certainly a more complex political environment for him than it was three months ago.

Ian Bremmer:

If you were looking at all of the constellation of difficulties that Xi Jinping is presently facing that would lead to this kind of a backlash, how would you rank them? What would you tell people to say here's what I'd really be paying attention to?

Kevin Rudd:

In terms of the pressures, I put them into three boxes. Number one, the trade-related box. There's a criticism of the administration in Beijing that they didn't get their analysis of how serious Trump was right, but secondly, they also thought Europe would stay on their side and not rejoin the American side. The Juncker visit to Washington, I think, caught them by surprise.

Ian Bremmer:

The EU Commission President.

Kevin Rudd:

That's right, Mr. Juncker. That was a big development in frankly, upsetting the applecart from Beijing's perspective. Then there's a second box, which is, have you, Xi Jinping, gone too far out there in provoking the United States, and the collective West more generally? In other words, have you been poking the bear too much, the bear here being the United States? So historically, Deng Xiaoping and Jiang Zemin adhered to a different strategy, which was hide your strength, bide your time. In other words, let's not talk about what we might be thinking of doing in the world until we've got all our ducks in a row. Whereas Xi Jinping, as of about four years ago, abandoned that strategy. So, there is a debate about that, which is bringing pressure to bear. The final box is a lot of chatter in the Chinese Twitterverse equivalent, on Weibo and elsewhere, comes and goes, disappears quickly, about the cult of personality. That is the critique that there is too much of Xi Jinping as the dominant leader in Chinese politics, more so than at any time since Mao.

Ian Bremmer:

So, grade Trump on China so far. How's he doing? What do you think?

Kevin Rudd:

These are your questions I really hate answering.

Ian Bremmer:

Why? Because you don't grade people?

Kevin Rudd:

Well, I'm basically a social democrat, and we're gentle and we have-

Ian Bremmer:

So, you grade on a curve?

Kevin Rudd:

No, no, no. We basically have a seminar and talk to your parents, and say that you should improve, or that you've been misbehaving slightly. I've got to say on the economy stuff, Trump has achieved what none of his predecessors have, which is to focus China's attention on the long-term unacceptability of Chinese mercantilist practices.

Ian Bremmer:

You sound a little surprised by that.

Kevin Rudd:

Of course I am, because the general critique of your president is that he's a bit of a klutz. Well, he might be a bit of a klutz, but on this question of demonstrating to the Chinese that he's not just got a loud mouth talking about stuff on China, like during the campaign, but he's actually done stuff. So, I give him marks for that. Where I don't yet give him any marks is the lack of coherence as to what the exit strategy is from a trade war once you've declared it and operationalized it. And there's complications there [that the] Chinese face, do you look at the possibility that this ends in China's case with them saying, "We don't have any cards left to play. I, Xi Jinping, am in some degree of difficulty personally. Trump ain't going to back down. So, I therefore will pull the nationalist card more comprehensively."

Kevin Rudd:

Where does that then take the entire US-China relationship, including on security questions? That's one scenario we should think through. So, tick to Trump in terms of causing the leadership to focus, as they will be, for an entire month down by the beach at Beidaihe. Second though, in terms of what's the landing point? Not sure. On the security relationship, I think Chinese policy has not yet been challenged in the South China Sea by the United States to any significant extent. It remains to be seen whether there'll be any change on that score. Where Trump, I think, in the China relationship has given China a lot of encouragement, has been the periodic outbreak of frustration on his part toward American allies generally in Asia and in Europe.

Ian Bremmer:

So, if you had to pick Trump or Obama in terms of preferable policy towards China so far, you'd say...

Kevin Rudd:

I would say they dealt in different times and different periods-

Ian Bremmer:

Yeah, I know.

Kevin Rudd:

... of the China relationship.

Ian Bremmer:

That's terribly diplomatic. No, it sounds like you're saying Trump is, surprisingly to you, doing a better job on China.

Kevin Rudd:

No, I'm not saying that. I'm saying that on the economic relationship, his reaction has been so in-your-face that it's caused an internal debate to emerge in China whether they have gone too far. That's useful. What Obama succeeded in doing, which Trump has failed abysmally on, is getting the Chinese to place one foot on the sticky paper, perhaps an Australian expression, on climate change, and get them to Paris and get them to agree to the Paris Accord.

Ian Bremmer:

Is the sticky paper where large spiders get stuck so they don't bite you in the house? Is that what it is?

Kevin Rudd:

Yeah, it's like that. You have these bits of sticky stuff around, so that the really big challenges, for those who suffer from arachnophobia like you, get stuck. In Australia we have such big spiders, and they're hairy, and they basically can tackle you, and then take your carotid artery out.

Ian Bremmer:

So hence, you need that, and Obama had one of those for China.

Kevin Rudd:

Yeah, he got-

Ian Bremmer:

Trump does not have a sticky-

Kevin Rudd:

He got the Chinese onto that sticky paper on climate, and climate, given that China is the world's largest emitter, is important for all of us. So, tick to the Obama administration on that one.

Ian Bremmer:

Where might we be surprised? Where are the big opportunities where it sounds like there's going to be a flip, there's going to be a change? The New York Times head story that hasn't been written yet, where you say, "Wow, I had no idea the Chinese would do that."

Kevin Rudd:

Well, the one that's always caused me to think, in terms of American reaction, will be when China reaches a tipping point in its net economic influence in Central America and the Caribbean. In other words, on your doorstep. Historically, as far as America's other neighbors, the pesky Canadians to your north and the Mexicans to your south, neither of those have had particularly close relationships with China, but where does that fit within Chinese grand strategy? "Well, if you Americans are going to give us a whole lot of trouble on our doorstep by continuing to be the power metropolitan in Asia, in countries which border the People's Republic of China, then we won't be nearly as provocative in terms of being militarily upfront, direct, and in your face, but don't be surprised if we become the indispensable economic power of every single country within the Caribbean and Central America while you guys are not watching, including Mexico."

Ian Bremmer:

How far do you think the Chinese government presently thinks, in terms of a global role, how much of the world they want to be able to determine?

Kevin Rudd:

Well, those are two different questions. I think if you look carefully at what Xi Jinping has said most recently at the foreign policy work conference of the party only a couple of months ago in Beijing, the very significant change in Chinese language is this. Five or six years ago, China was going to "participate" in the reform of the global system. Chinese word is "canjia." Then a few years on, China would help "guide" the reform of the global system. "Yindao" is the Chinese verb. Two months ago it became, China will "lead" the reform of the global system. "Lingdao." This is a very significant linguistic transformation given that China speaks through these sorts of formulations as a one-party state. On the more hard edge geopolitical point, which is the core of your question, China's mission is to have a role in wider East Asia where they are capable of singularly influencing events in the direction compatible with China's core national interests because they see this as their natural strategic hemisphere.

Ian Bremmer:

So, the Americans must leave at some point.

Kevin Rudd:

It's been quite plain from Chinese declaratory policy for decades that they want to see the end of US alliances, and they don't see a future for the United States in the region in a geostrategic sense. As for the rest of the world, I think the Chinese template is not that. The Chinese template is to be the indispensable economic partner of the rest of the world, so that when matters arise in other regions of the world or other global councils, there's always this economic lever to pull in saying, "Hey by the way, you do know that we're pretty important to you. You wouldn't want to make life too difficult for us."

Kevin Rudd:

So, I think it's kind of at those three levels, the immediate 14 neighboring states and wider East Asia where China has a definitive view that it doesn't wish to be messed with in terms of its core interests, and therefore will apply maximum, over time, geostrategic leverage to the other continents, Europe, the Latin Americas of the world, North America, Africa, the Middle East. They wish to be the indispensable partner so that when the issue arises, if it does, then you pull in the favor. Then there's the global order reform questions, the rules of the system where they're active.

Ian Bremmer:

So, despite all of the challenges that Xi Jinping is experiencing, headwinds today inside China, as a country, are you more confident about China today than you were a couple years ago, about the same?

Kevin Rudd:

Confident of China-

Ian Bremmer:

Capacity going forward.

Kevin Rudd:

Of China actually succeeding in becoming the next superpower?

Ian Bremmer:

Yeah.

Kevin Rudd:

No, my view hasn't changed. It's a qualified view, and the reason for it is because of the political economy of the country, they've still not bitten the bullet on the next stage of economic reform. They're not implementing the next stage of market-based reforms effectively. So, that will affect productivity growth over time, and conceivably economic growth as well. The reason they have gone slow on that is because of the politics of political economy, which is, "I, Xi Jinping, still want to be able to control industry policy through state-owned enterprises which act independently of markets." So, I think the big strategic problem China faces in realizing its dream, apart from the usual list of environmental constraints and some civil unrest and the rigidity of a one-party state is the core question of having, thus far six years into his administration, gone really slow on the reform blueprint that was laid out for them in 2013.

Ian Bremmer:

Kevin Rudd, thank you very much.

Kevin Rudd:

Good to be with you, Dr. Bremmer.

Ian Bremmer:

If you like what you've seen, check us out at gzeromedia.com. See you next week.

Announcer:

The GZERO World is brought to you by our founding sponsor First Republic. First Republic, a private bank and wealth management company. Imagine a bank without teller lines where your banker knows your name and its most prized currency is extraordinary client service. Hear directly from First Republic's clients by visiting firstrepublic.com.