陸克文：中國的全球戰略

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What Surprised You Recently

主持人

One thing I’d love to start with is that you’ve been an observer of geopolitics for a long time and I kind of assume that there’s not a lot of things that surprise you anymore. But there’s been quite a lot of things happening in recent months, in years, that took me by surprise, I think took a lot of us by surprise. So I’d love to hear to start, what surprised you recently? What was something that really took you by surprise that you did not expect to happen?

陆克文

I could say, having just come out of the Australian political environment, that my party finally won an election, I would say.

主持人

Congratulations.

卢克文

Thank you.

I’ve spent five weeks on the hustings kissing babies. And here’s a message for Klaus Schwab, by the way. I reckon I shook 5,000 hands in Australia in the election. I didn’t get COVID. Yet everyone who went to Davos has got COVID.

The serious answer to your question is not Ukraine, because I’ve become something of a student of Vladimir Putin since 2014. I’ve only met him a few times, but it did not surprise me. What has really surprised me, and it’s geopolitics, I suppose it’s geoeconomics, is how China under Xi Jinping has actually quite profoundly changed the growth model within China itself and made it more statist, less friendly to the private sector, and as a result causing a rapid slowdown in China’s economic growth. And as someone who’s looked at the Chinese economy for 40 years, this surprises me, because it’s something I didn’t think that China would do. And the thing which may still surprise me is whether they correct it or whether they sustain the direction in which they’ve now taken, which is in a less growth-friendly direction.

Understand China’s Worldview

主持人

Excellent. Well, I think that’s something that we would have to invite you back in a few months or years to figure out whether it’s happened. So we wanted to focus tonight’s conversation on understanding how China sees the world, because I think that’s something that we often maybe kind of overlook. But I want to start with a somewhat fundamental question. Given that there’s an ever bigger divergence between China and the “West,” what’s really the point of investing time and energy into understanding China’s worldview? So obviously we have to concern ourselves with China. There’s a competition going on. But does it really make sense to invest time into understanding how the Chinese leadership thinks instead of investing time into building out our own capacities, our own capabilities? It seems that’s what China does. So what is the merit of trying to understand deeply the way you do how China thinks?

陆克文

That’s a good and provocative question, Nica, which is, Kevin, have you been wasting the last 40 years of your life?

主持人

Yes, yes, that was the question. Possibly. I assumed you had an answer.

陆克文

I think it’s a bit like this. I think we’re all required to walk and chew gum. The beginning of wisdom in politics, the beginning of wisdom in international politics, the beginning of wisdom in business is to understand how the other person thinks, why they think that way and what their priorities are, rather than commit the cardinal error, which many of our American friends still commit, which is to mirror image everything. That is to think that those you’re dealing with will automatically reason in the same way in which you reason. So if you want to, for me to answer the question, why bother seeking to understand the Standing Committee of the Politburo, the Chinese Communist Party, China’s political economy, Xi Jinping’s worldview, it’s because we need to constantly challenge ourselves as to how does the world look through the Beijing Politburo lens. And it does not necessarily accord with what we would assume about ourselves in a similar position. I think that’s why we need to spend time.

And the second part of your question was, at the same time, it’s not just an idle academic reflection because these are profound real world changes now. And we’ve just been through a couple of hundred years where the Anglosphere, first the Brits, Long May She Reign, 70 years today, and then the Americans sometime probably in the 30s, have effectively been the central powers underpinning the international system, probably since the Napoleonic Wars. Really? I think that’s a fair summary. And this is a profound consequence, what’s unfolding beneath our feet.

If China does become the largest economy in the world, and we can come back to that question soon given the challenges to the growth model which we’ve just discussed, if it does still become the largest economy in the world, it’ll be the first time since George III was on the throne of England that a non-Western, non-English speaking, non-democratic country will be the largest economy in the world. And that’s of profound significance. So therefore, understanding that and its consequences in terms of how we therefore acquire our own national capabilities in responding to that is, I think, of first order importance for everybody, whatever your form of professional life may be.

China's Vision

主持人

Excellent. And I suggest we do exactly that tonight and try to understand how Chinese leadership sees the world. Last week, Asia Society and you, back in the US, hosted US Secretary of State Tony Blinken, who gave his defining speech on the US-China policy. And there’s a line in the speech that I wanted to quote and then ask you about it. And the line is like this, and I quote, “Beijing’s vision would move us away from the universal values that have sustained so much of the world’s progress over the past 75 years.” Let’s put a pin into what universal values exactly are and what Tony Blinken means when he says that. Here’s something that always trips me up is that he refers to Beijing’s vision.

And it seems to me that over the last years, many people have written about China becoming more powerful, eventually overtaking the US and ruling the world. And while that all may be true and may be happening, I have yet to hear, I think, sort of a convincing formulation of what Beijing’s grander vision for the world that they’re supposed to be ruling soon is. So beyond preservation of power and securing influence, is there a larger vision that the Chinese leadership under Xi Jinping has for the world as they would like to run it?

陆克文

Yeah. Because I’m old-fashioned and Australian, I don’t like seeing people stand up. So there are five seats down the front here.

主持人

Those are actually, need to be blocked off for the cameras. I was told.

卢克文

Oh, I’m sorry. You’ve got to stay where you are. I was going to try and find you somewhere to sit. So please, don’t worry about me. Just find somewhere to sit, because this will go on for a while. I don’t want people to be… So I don’t care if you shuffle around and all the rest of it. I’ve just been kissing babies for five weeks. Nothing surprises me.

So let’s go to this question of what is the worldview? I think that’s probably the best term. What is China’s worldview under Xi Jinping? I think there is an underpinning reason, Nico, why it’s important to understand this, because China now has just celebrated the 100th anniversary of the establishment of the Chinese Communist Party. It’s been the ruling party in China since 1949. It is a Marxist-Leninist party, which in the year 2022 takes Marxist-Leninist ideology deadly seriously.

So therefore, understanding concepts of worldview, the Chinese term is Shijie Guan, worldview is really important because it is the organizing principle within which reality is viewed. It may seem arcane for those of us in a post-communist, as it were, West, but in my attempt to understand the worldview, I’ve had to reread the ideological underpinnings of Xi Jinping’s view of the world. And on that score, there has been no leader since Mao who has written so much on Marxism-Leninism than Xi Jinping. There are multiple texts out there which define his attachment to the ideology, and the fact that his analysis is that the collapse of the Communist Party of the Soviet Union was because they went soft on ideology, and therefore the Chinese Communist Party should not face the same fate, and it must therefore begin with an ideological rebuilding of the party. I think it’s important we understand that. So take that as the premise, how do I summarize the actual worldview? And give me three or four minutes to do it, and then I’ll promise to shut up.

In the book, please buy a copy, I describe it as ten concentric circles of interest, and these are really important, I think, for us all to understand, and I’ll give ten seconds on each.

One, keep the Leninist Party in power at all costs, and keep me, Xi Jinping, as head of the party at all costs. Not as a transition point to some future slow evolution in the direction of a Singaporean-style democracy. That idea, which may have once existed, is no longer applicable.

Number two, national unity. That’s how we maintain our legitimacy as a party. That means what we do in Xinjiang, what we do in Tibet, and what we’re now doing in Hong Kong, and what we propose to do with Taiwan.

Number three, grow the economy. Interesting now. Living standards up, achieve political legitimacy, a sustained basis with the Chinese people, by continuing to have higher levels of disposable income, but also greater national economic power through which to fund other critical national capabilities, most particularly those of the military.

Four, do so now in an environmentally sustainable fashion, because the Chinese people don’t like dirty air, dirty water, and dirty soil, because they don’t want to eat contaminated food products and die prematurely. It’s a new factor in the hierarchy of needs.

Five, modernize the Chinese military, in Xi Jinping’s terms, to ”turn it into a modern, world-class military capable of fighting and winning wars.“

Six, China’s 14 neighboring states, zhoubian guojia, the greatest number of neighboring states of any country in the world, apart from Russia, which also has 14. And have those relationships benign, at a minimum, and optimally compliant, from Beijing’s point of view, in order to have a reasonable cordon sanitaire around the country.

And seven, on your maritime periphery, that is facing to the east, over time, push the United States back in order to accommodate your eventual reunification with Taiwan. And that means doing what you can to undermine American alliance structures in Asia, with Japan, the Republic of Korea, and Australia in particular, but also Thailand and the Philippines.

Eight, there are only three to go, on the continental periphery, moving west, not east, use the Belt and Road Initiative to convert Eurasia into a zone of economic opportunity for Beijing, but also a zone of greater economic development, period, and a series of economies which become themselves increasingly dependent on China. Extending across Eurasia, into South Asia, into the Middle East, eventually to Eastern Europe, 16 plus 1, then to Western Europe.

Nine, in the rest of the developing world, Africa, Latin America, the rest of Asia, to become the indispensable economic partner of all, A, to expand your markets further, B, to develop those countries through their infrastructure, and then C, have them as reliable votes for China in international organizations, where the votes of all those countries matter, UN, Bretton Woods institutions, elsewhere.

And then finally, on the international system itself, begin to change the nature of the international system, and its institutional arrangements and value assumptions in a manner more compatible with China’s worldview. You see that already here in the Human Rights Council in Geneva, where China systematically, both in Geneva and New York, seeks with the support of Russia and others to begin to strip out the human rights provisions of various UN resolutions, and to replace them with state sovereignty rather than the rights of the individual. And that being a harbinger of a change to institutional arrangements more generally.

So I wish I could say all that in one sentence, but I can’t. But if you think of it as a series of concentric circles, starting with party power, that is a view that I reflect in what I’ve written, but no Chinese interlocutor, when I put this to them, has disagreed with me. Though it will not be written as such in its clinical terms, as I’ve just written in any Chinese source.

Status Quo

主持人

Thank you very much. That was fantastic and comprehensive. I was going to ask you a lot of questions about these 10 concentric circles. I can skip down quite a bit here in my notes and just move on. That’s fantastic. So you’ve laid out this wonderful, astute summary of what the current worldview is and what these 10 concentric circles are. I want to go, before we talk about some of the circles a bit more, I want to ask about things that have changed.

So this is the status quo that we’re seeing right now, that we’re observing right now, it seems fairly stable, but have there been notable shifts in this in recent years? What are some of the things that have changed and were different than how you’ve been describing them before? You mentioned economic policy, of course, or there’s been a notable shift. Are there other areas where you see the Chinese worldview evolving?

陆克文

The worldview I’ve just described is the Xi Jinping worldview. So I’ve seen that emerge since really 2013. For my sins in the think tank that I run in New York, I have to read all this stuff.

And remember the Chinese system, while opaque to the rest of the world, the Communist Party with 95 million members has to talk to itself as well. And the method of discourse internally within the party is often conducted ideologically. And so what I’ve just reflected has gleaned from the principles which are evident in China’s internal literature, but not classified literature, with one or two exceptions.

What’s changed since he took office? The big one is what we’ve just touched on. And the surprising one for me is item three, which is the model for economic development. There’s an interesting question which arises from that. If you have had a successful economic model for 40 years, based essentially on this, labor-intensive manufacturing for export, plus increasing opportunities for the Chinese private sector against a retreating state-owned sector, plus a decreased role for state planning, plus greater economic integration with the rest of the world, with both trade and investment flows and integration with global supply chains, both inwards and outwards. And if that’s produced for you double-digit growth for 40 years, then why would you change it? Not a bad question, even though I’ve just asked it myself.

主持人

Would you care to answer it as well?

陆克文

Yeah, I’m going to try and answer it. Because I’ve tried to figure this out, which is why do that? Now, economists will answer the question. You get to a point in the economic development cycle where you actually have to flip and you have to move from labor-intensive manufacturing for export, for example, because labor costs go up, and as a consequence, models have to change. So they did this on paper in what’s called the decision, the jue ding, of 2013. And this was one year into Xi Jinping’s rule. But they identified a new economic growth model, which was along these lines, which is, number one, greater productivity growth; number two, an explosion in the Chinese services sector beyond manufacturing; number three, on top of that, even greater space for the private sector, based on the principles of competitive neutrality, to occupy more of the space occupied by the Chinese state-owned sector; four, less reliance on the infrastructure built in the country to generate growth, which had been another large part of the model phase one; and five, maximize your integration further with the global economy. In other words, it was still within a market frame, not a statist frame. It was the next stage of what’s called market economics, given the structure of the Chinese economy.

So we all looked at that. And we said, this is sensible, it’s reformist, it will make China by the end of the 2020s the largest economy in the world.

So why did they change? Politics. Because remember I said before it’s a Marxist-Leninist party. If you apply a model like that over a long enough period of time, you create a whole bunch of new elites in the country who are independent of party control. The entrepreneurial class, typified by Jack Ma, the head of Alibaba, the larger-than-life Jack, I know him well, head of what was one of the largest companies in the world until the Chinese Communist Party killed the stock price.

Xi Jinping looked at this long and hard and said, these guys are ultimately a challenge to the absolute control of the Chinese Communist Party. And as a consequence, if I look carefully at the ideological unfolding of Xi Jinping’s last five years in office since 2017, coming out of the 19th Party Congress, you see this range of new measures which are much more restrictive towards the private sector. Party committees in private firms, the so-called mixed economy model whereby you’re a successful private firm, sir, you’re running a state-owned enterprise, madam, I think we should merge you, which would of course make you unhappy and may make you happier. Or, there’s a non-performing state-owned enterprise over here, a brilliant private firm there, you can merge so that you can use your profitability to offset the losses of this state-owned behemoth. A new invigoration of industrial policy writ large, a new reinvigoration of planning writ large, and on top of that again, certainly in the last year or two, what’s called the Common Prosperity Agenda, Gong Tong Fu Yu if you speak Chinese. And what that is code language for is wealth redistribution from the entrepreneurial class to workers.

So all of that has been his ideological correction to bring about a more equal China in his ideological view, but frankly, to bring the entrepreneurial class under political control. That, I think, is the essence of the agenda.

Reframing

主持人

And if we try to reframe what you just said in terms of the concentric circles, it is making changes to the third circle, if I remember correctly, economic policy, because it would serve achieving number one and two.

陆克文

Exactly, because three ultimately conflicts with one. And whereas they sustained the ambiguity of that during Xi Jinping’s first term, 2013 to 2017, the quote, to use the Chinese communist term, the contradictions, the zhuyao de maodun within the ideological framework of the party became too acute in Xi’s analysis, and hence the adjustment back towards the party, back towards the state, back towards state-owned enterprises and less accommodating of the Chinese private sector.

Where all this rolls onto is the present, by the way, which is Chinese growth numbers right now in the first six months of this year, because the factors I’ve just described plus zero-COVID lockdown are now bumping along the ground at somewhere between zero and two percent. Now, this is unprecedented in post-92 Chinese economic history, but it’s therefore creating a whole bunch of new tensions in central Chinese politics as we speak. But it is classically the clash between three and one.

China’s Influence

主持人

I think there would be a lot more to talk about here. I want to move on to a slightly different topic, which is how China exerts or tries to exert influence around the world to share its worldview and promote it. You mentioned a few things before. You mentioned the Human Rights Council in Geneva where that’s visible. But to me, it seems when I look at China’s initiatives to sort of influence the world in recent years, honestly, most of them seem to have fallen flat. So the Belt and Road, which a few years ago was sort of hailed as this all-encompassing concept, I haven’t heard from it recently. It’s still there, I know, but it’s not something that seems to be advertised ever so strongly from Beijing. We’ve read so much about Chinese tech companies sort of taking over from Apple and Google and Microsoft, and honestly, many of them have been quite hampered by the restrictions that have been placed on them, mostly by the U.S. government. There is, it seems to me, very little Chinese soft power to speak of. In Europe, there was the 17 plus 1 framework where China tried to get the Eastern European countries on its side, and that seems to have failed. So wouldn’t we have to conclude that all these Chinese attempts to influence the world in its way and to make the world come closer to China have actually failed?

陆克文

As we say in the classics, yes and no. Let me give you the no first, and that is, what’s China’s global strategy? In a nutshell, in achieving many of the mission statements that we ran through before in the 10-part worldview, or at least the international dimensions of the 10-part worldview, are through China becoming the indispensable economic partner of us all.

China is now, I think, Switzerland’s third largest trading partner. It’s Australia’s largest trading partner. I mean, about 35 percent of Australian exports go to China. China, I think, is the largest trading partner of any significant economy in Asia. Became Germany’s largest trading partner last year.

So the Chinese grand strategy, if I could put it in a nutshell, is to achieve 1 through 10 above without ever firing a shot anywhere, but by becoming the indispensable economic partner of us all so that ultimately our national economic well-beings and by extension our corporate individual well-beings are dependent on our access to the Chinese market, access to the Chinese financial services market, in the case of Switzerland, the United States, and some of the Europeans, etc.

Because that ultimately produces what is almost said explicitly in the Chinese internal literature, using in Xi Jinping’s term the “gravitational pull” of the Chinese economy to leverage foreign policy compliance from the rest of the world.

And if you look at it, up until about 2017, this was going not too badly. China was not being, there was no, until that stage, not much by way of wolf warrior diplomacy, “戰狼外交”, there was a reasonably effective strategy around the world and then with the 16+1 as well. As China with the BRI and infrastructure projects across many of the East Europeans, etc., was seen as increasingly the indispensable economic power, both in trade markets but also in capital markets as it began to become a much larger player.

So I think what’s gone wrong from the Beijing perspective is classic overreach. That is, and this I think is Xi Jinping’s core failure, is that he, from the internal critique within the Chinese system, has gone too far, too fast, too hard, too early.

That is, rather than just waiting for these processes to take their natural course over time, in the tradition of “Deng Xiaoping”, which is always to kick the can down the road and to allow these things to evolve organically, having taken core decisions, which is to open the Chinese economy, grow it and then just see what the hell happened after that. It wasn’t a bad strategy when you think back on it. To one which says, “Oh, you’re giving us some trouble, you’re criticizing our human rights performances in Xinjiang. Well, let me tell you what we’re going to do to you.” And so when I see the range of bilateral coercive measures against the Norwegians over the Nobel Prize, against the Swedes, over the Swedish national who has been incarcerated in China, the European Union, over the sanctions placed on the members of the European Parliament who objected to Chinese human rights practices in Xinjiang, through to the Australians, the massive tariff impositions against probably a third of Australian exports to China, probably a $20-30 billion loss in Australian exports. So against the Republic of Korea, over Korea’s decision to deploy THAAD systems, that’s theater anti-ballistic missile defense systems, targeted against North Korea, not against China. The Chinese objected to it for their own strategic reasons. Then Kia and other Korean car sales plummeted in China by huge numbers. And so these patterns of coercive Chinese economic diplomacy and then direct war-forry diplomacy, which is Chinese ambassadors taking to the airwaves around the world and attacking various countries for doing X, Y, and Z, A, B, and C.

This I think has been a reflection of the new line under Xi Jinping, and I would agree with you. It has not advanced China’s interests.

So therefore when I say yes and no, yes, the strategy about being the indispensable economic partner of everybody continues. No because there’s been political overreach by the regime at the same time, particularly in the last several years.

Criteria

主持人

At the very beginning when I asked why should we even spend time to understand the Chinese worldview, you made a very compelling case and you also said it’s not just purely an intellectual exercise, this stuff matters. So I want to talk a bit about that as well. We’ve talked a bit about what the Chinese worldview is, now let’s talk about what we make out of these insights. How can we, how can a country like Switzerland, but also other European countries, other countries in general in the world, create effective China policies based on that understanding? And I always feel it’s good to sort of look at good examples. So when we look around the world and if you have to sort of rate different countries for their recent approaches to China, who’s top of the class? So who’s an example that you would point as like, this is a country that’s done very, very well in engaging China in an effective, from the country’s point of view, way. Which country’s doing really, really well vis-a-vis China right now?

陆克文

Well, let me use some criteria first, because rather than me just being subjective, let me try and give you an objective set of criteria in terms of who’s done well and who’s done less well. What are the criteria in my perspective of an effective China strategy, given all the constraints that we’ve just referred to?

Number one, in your dealings with China, never take a backward step on adherence to universal human rights as defined in the Universal Declaration of Human Rights of 1948. In other words, this is not an abstract thing. It’s not just what the Americans think or what pops up out of a Republican focus group somewhere in Boise, Idaho. It’s the UN Universal Declaration 1948, to which China is a signatory and a ratification state, something it’s not moved away from post ’49. And China in fact subsequently became a signatory state, though not yet a ratification state, to the International Covenant of Civil and Political Rights. So the key thing on the human rights question is, anchoring the position we take with China on human rights in international law. And these are the two covenants which China has signed up to. Not some abstraction in the back of our collective Western minds, if you know what I mean.

And a quick point on the Charter itself. That is, sorry, the Universal Declaration, drafted in ’48 by Eleanor Roosevelt, but on her committee, senior Indian and Chinese officials at the time, reflecting other worldviews and other democratic and semi-democratic worldviews at the time. This was not just a Western invention, the ’48 Convention. It would never pass today, for God’s sake. The fact that we got it through in ’48 is a minor miracle. But it’s there, it’s in the fabric of international law.

Second principle is not applicable to Switzerland, which is neutral. But for those of us who are allies of the United States, never take a backward step in saying we’re allies of the United States. For all the American predisposition for episodic craziness, look at Trump. How did that happen? Okay. That was a walk on the wild side for all of us. For those of us who are European and Asian allies of the United States, it’s not just in our DNA, it’s not just a question of identity, but it’s also part of the stability of the post-’45 global order.

And so when the Chinese have said to me, and I’ve been Prime Minister, “Why the hell, Kevin, are you still an ally of the United States? Cold War’s over, et cetera.”

I said, “Well, it may be of interest to you, comrade, that the reason we’re allies of the United States was that the Americans defended us against the Japanese in 1941. Had nothing to do with you. In fact, we were allies in the Second World War against Japan. But it is now so much part of the Australian DNA because of this combined wartime experience that it won’t change.”

Principle number three is to maximize your economic engagement with China to mutual economic advantage. These are principles for how you engage China today.

Principle number four, maximize our collaboration with China and institutions of global governance, G20, UN, UN Framework Convention on Climate Change, other institutions, the World Bank, et cetera. Because China is so big and can be so constructive in the way in which they are engaged in these institutions, we should be maximizing that.

And number five, if you’re going to pick a fight with China and you’re not a superpower, the axiom I would apply is an inelegant one, but it would be like this. Hunt in packs. Don’t be a lone wolf because lone wolves will get boom. So if you’re going to have a disagreement with China, as, for example, the conservative government of Australia did most recently on calling unilaterally for an independent investigation of the origins of COVID in Wuhan in 2019, 2020, something I fully support. But pragmatic diplomacy suggests you’d wait a week, get on the telephone and you’d ring up another 20 or 30 democracies around the world and say, why don’t we make this a joint day march together rather than just saying, well, I’m the Australian government. I’m just going to go out there and say this myself. And so that’s 20 billion dollars with a tariff punishment later.

So now against those five principles, who do I pick? Japan. Japan has managed the complexity of its own historic relationship with China, applied those principles pretty robustly. The economic relationship is still strong. They still collaborate in institutional arrangements. Japan doesn’t take a backward step on human rights and certainly in all of its alliance with the United States. And for example, whether it’s with the Quad, where Australia, Japan, India and the United States are together or other institutions, is constantly, as it were, building collaborative partnerships with others in common positions to take in relation to China. So I think the Japanese have shown a lot of wisdom in how they’ve managed a complex relationship.