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Kevin Rudd was the Prime Minister of Australia from 2007–2010 and in 2013. He was also the nation’s foreign minister between 2010 and 2012. After leaving government, Rudd became a senior fellow at the Kennedy School at Harvard University, where he researched U.S.-China relations. In 2015, he became president of the Asia Society Policy Institute. Today, he is the president and CEO of the Asia Society, and based in New York. Rudd graduated from the Australian National University and is fluent in Mandarin. In this lightly edited interview from late March, we discussed Ukraine, Xi Jinping and his recently published book, “The Avoidable War: the Dangers of a Catastrophic Conflict between the U.S and Xi Jinping’s China.”

Q: In the wake of the joint statement made by Vladimir Putin and Xi Jinping in Beijing in February, followed by Russia’s invasion of Ukraine and what would appear to be Beijing’s tacit support of Putin, how should the world be thinking about China’s foreign policy at the moment? What is the China calculus, with regard to its relations with the U.S. and Russia?

There are several driving factors in the China calculus. One is structural, that is the Chinese deep calculus about the importance of the Russian Federation to their long-term strategic national interests. To break that down further, the Chinese say that under Deng [Xiaoping], “We had to pivot to America to deal with the Soviets. Now we don’t, because we have a benign relationship with Moscow. That’s good. Second, because we have a benign relationship with Moscow, we get to dedicate the bulk of our strategic energies to dealing with our principal regional and global adversary: the United States.” The third part of the calculus is that the Russians are useful around the world; that is, they’re an American distraction; they’re serious in the Middle East and in Europe, but they’re also a tag team operation with China in the UN Security Council, so right across the global policy agenda.

And there is one final structural factor, which is that the Chinese are deeply analytical about their long-term demand for a secure supply of commodities, not just hydrocarbons but also agricultural commodities. And not just wheat, but things like timber. So that’s a powerful set of interests, which is why they want to be as supportive of the Russians as they can. 

There’s also, of course, the extraordinary personal chemistry between the two authoritarian, great men of history [Xi Jinping and Vladimir Putin]. And I don’t believe this is fully understood in the collective West, but I’ve picked this up from various Chinese and Russian officials I’ve spoken to over the last seven years, who have described the nature of this relationship. They [Xi and Putin] don’t call each other “best friends in the world” for fun. Chinese leaders certainly don’t do that. This is unique, and it’s driven by this view that the two of them have that democratic, color revolutions at home are driven by the United States and the collective West. That’s why they despise the order which the United States represents. That creates a bonding piece of chemistry between them, based on my understanding from the officials who have been with them over the years; and they tell me we underestimate this at our peril. The great men of history stuff, I think, comes second. And you can be a great man of history and have another great man of history, so long as your national interests don’t happen to be in conflict. Now they’ve been sufficiently separated, in terms of those interests, with the resolution of the [China-Russia] border way back when, under Deng and Gorbachev.

What happens now that much of the western world has denounced Russia’s invasion? Beijing, in fact, was seeking to make inroads into Europe. How do things stand now, post-invasion?

China’s calculus now is obviously influenced by the predisposition to support Russia that we’ve just spoken about. That won’t disappear in the light of current events, or prospective events on the ground in Ukraine, as the battle goes badly for Vladimir Putin. But new factors enter into the calculus. For instance, those in the Chinese leadership who are worried about Xi Jinping getting out ahead of his skis on both Putin and Russia, are probably too frightened to tell him that that’s the case, in my judgment. Or they are failing to at least tell him sufficiently candidly. And by the way, that explains why President Biden has wanted to talk to Xi Jinping directly. And why you’ve had a series of leaks by the U.S. intelligence community, perhaps to make sure that there is public reporting on this, which is news that gets taken back into China, so the leadership gets to read it and consider the consequences. So we need to understand that one of the factors in the calculus is the extent to which Xi Jinping actually knows it’s going really badly on the ground. 

… China explicitly blaming the United States for what Russia has done, is remarkable. This has, for the first time, unmasked a side of China’s hard security policy that Europe had chosen not to see in the past.

I suspect he knows it’s going badly. But he may not, until quite recently, be fully apprised about how to think about the second element of calculus, which is that the [Beijing] foreign policy establishment is likely horrified by this undoing of the patient work of the last 20 years in Europe — which has been about how Beijing decouples Europe from America. As far as China is concerned, a lot of progress has been made. If you look at the whole European doctrine of strategic autonomy, or the extent of the Chinese economic footprint right across Europe, with China becoming Germany’s dominant trading partner, and the German historical policy idea of “we make friends through trade,” — that’s all been a consistent strategy, at least for the last 20 years, and not just the last 10 years under Xi. But what you now see, by virtue of that extraordinary statement of February 4, the joint declaration whereby China explicitly takes a position against NATO expansion and explicitly endorses Russia’s “legitimate security interests,” and China explicitly blaming the United States for what Russia has done, is remarkable. This has, for the first time, unmasked a side of China’s hard security policy that Europe had chosen not to see in the past. And so the Chinese are beginning to become aware of how much damage has been done to their strategic interests in Europe, which, as you know, is primarily about finding an alternative long-term and reliable market for Chinese goods and services, and possibly even a source of technologies that China needs, which the United States — increasingly through decoupling, in Beijing’s calculus — would not be able to provide. 

The other mitigating factor is that China may have been surprised by the 141 votes in the [UN] General Assembly [on a resolution calling on Russia to end its invasion of Ukraine]. And that goes to the G-77. When you have leading African ambassadors and Latin American ambassadors, and the Singaporeans, for example, taking a position on sanctions and supporting Western sanctions for the first time, sanctions not endorsed by the UN Security Council, China would look at all that and say, “That’s much bigger than we would have thought.” So these reality checks, I think, are slowly working their way through the Chinese system. 

But here is my view in terms of calculus as of this day [in March 2022]: Xi Jinping will not wish to do anything which will be interpreted by Putin as pulling the rug from underneath him. They certainly wouldn’t do so explicitly in terms of their political and diplomatic language. But if Xi Jinping and the Central Military Commission in Beijing begin to form a conclusion that Putin may lose on the ground militarily, or not win sufficiently in Ukraine, then the calculus may change. And at two minutes to midnight, you may see a flurry of Chinese diplomatic activity, to orchestrate the ceasefire and perhaps even a partial Russian withdrawal, in order to recoup some of the losses China has suffered in the international community’s eyes, and in European eyes in particular. So don’t rule that one out. Today, if I read the reporting correctly, with [Ukraine’s president] Zelensky, having now written directly to Xi Jinping seeking Chinese intervention, this is a very intelligent move by the Ukrainians to make it harder and harder for China to remain on the neutral fence, a pro-Moscow inclined neutral fence. And so where does this land? It’s all going to be determined by events on the ground in Ukraine. But there is now a question mark in the Chinese mind, but not a conclusion yet that they should radically shift policy.

Russia has been hit by the most severe economic sanctions any major country has witnessed in nearly a century. There could also be ramifications for China, particularly if there is an effort to evade western sanctions, or to aid Russia. How do you expect Beijing to deal with this situation, recognizing that Beijing has often railed against the U.S. use of economic sanctions, and the threat of them?

This is where the rubber really hits the road. Up until now, the Chinese have been in de facto compliance with all sanctions currently imposed by the U.S. and its allies against Russia. And there’s a reason for that. China remains vulnerable to the dollar-denominated international financial system. Not just SWIFT, in terms of the plumbing of the system, but frankly, in terms of cross-border dollar-denominated transactions, both on the trade account and in the capital account. And, shall we say, equity markets more generally, as well as portfolio investments or foreign direct investments. So the Chinese calculus of this would have been swift and acute: That is, “We don’t want to risk that.” 

Would they breach [the sanctions] in a clever way? If they believe they could get away with it. We only have to look carefully at how China managed the UN Security Council when it imposed sanctions against North Korea. We understand that the Chinese system is well versed in creativity. It’s unclear what form or shape that would take without the whistle being blown, given the stakes are high. I don’t know. But there’ll be work done on it. And when I look carefully at the subtext of Biden’s statement going to Europe today, part of it deals with how do we further tighten the sanctions regime against Moscow, so that all bases are covered. There’s an emerging analysis that I’ve seen in some reports that we still have a limited number of Russian financial institutions who are still outside the scope. So the Chinese will work, in my view, to prevent the whistle being blown against them, because they can’t risk it. 

On the military stuff, here is my take: American diplomacy on the [Ukrainian] request for military systems has so far been effective. It would be a very bold and dramatic move indeed for China to move towards the provision of military equipment [to Russia]. On balance, it’s possible but not probable that they would do so, not least because of the reputational impact that would have for China in the international community and in Europe, but also because of the active risk of financial sanctions, as Biden warned the other day. 

But here’s the other factor: a deep Chinese calculus as to whether it would actually matter materially on the battlefield. Take today’s leaked intelligence reporting about Putin’s preparations for the use of chemical weapons. My instincts tell me that if Putin were to resort to the use of chemical weapons in the battlefield in Ukraine, it may be of sufficient seriousness to bring about a radical reappraisal in Beijing. That may be a bridge too far. I know where China has been in the past, remaining in support of both Russia and Syria, despite Bashar Al-Assad’s use of chemical weapons in Syria back in 2013. But using chemical weapons in Europe, in a war of aggression, even if China doesn’t want to describe it as such, may well be seen in the Chinese central leadership as a bridge too far. And if I was to hazard one guess right now, if there’s one communication now between the Chinese Central Military Commission and the Russian high command, it would be, “Do not do that!” I have no intelligence to base that on. That’s purely analysis.

Your book, “The Avoidable War,” has come out not just at the outbreak of war between Russia and Ukraine, but also at a time when there are hints or suggestions that war could be brewing between China and Taiwan. In a readout from a virtual meeting between Biden and Xi Jinping [in March], there was mention of Taiwan. As we know, there has long been the hint that Beijing could move on Taiwan and reclaim what it sees as its territory. How do you assess this situation? 

My hope is that the Chinese choose to differentiate between Ukraine and Taiwan theologically. And the practical world effect is on two or three levels. One, I don’t believe Ukraine has altered Xi Jinping’s personal timetable [on Taiwan] one bit. That’s driven by two factors alone. One, the balance of military forces in the Taiwan Straits between China on the one hand, and a combination of the United States, Taiwan and Japan on the other. And [Xi wants] China to be in a position where it is largely insulated from financial and economic damage from the inevitable sanctions regime which would flow. The problem is right now, from Beijing’s point of view, neither of those conditions are yet met. They don’t have a sufficient preponderance of forces in the Taiwan Straits, even though they win most of the desktop exercises on Taiwan; and they’re certainly still hostage to the dollar-denominated international financial system. That’s why I refuse to buy the argument that there is any sense of imminence about a military action against Taiwan, even if some armchair analysts conclude that somehow the United States is now tied down. It’s not. There is no active deployment of American military forces. They’re all still on station in the Indo Pacific theater. The Indo Pacific Command operates on a daily basis. 

The second factor is longer term. On the question of precise timing, the degree of Western solidarity and international solidarity around Taiwan, which you pointed to, does upset Xi’s narrative that the rise of the East and the decline of the West is inevitable, because they are incapable of rallying around any hard cause at all, because they’ve all gone soft; they are too dependent on the Chinese economy and too fearful of the Russian military. This will lead to some theoretical reappraisal [in Beijing] as to the odds they’re up against. 

But here’s the final point. If you look at the Chinese propaganda message in Asia, and most particularly within China itself, what’s the message that’s been given to the Chinese-speaking world? It’s been, “Well, look at Ukraine. The United States was not militarily prepared to stand by Ukraine in the field, because it was up against an established nuclear power, namely the Russian Federation. So where does that leave you guys in Taiwan?” That has been the propaganda message, which not many people in the West have focused on. So before we draw any hard and fast conclusions about what Ukraine means for Xi Jinping, we should understand that it’s a complex mix. Given how the Chinese decision-making processes work, I don’t believe this undermines the ultimate Xi Jinping timetable, which I see is much more likely to be late ‘20s, early ‘30s [of this century]. And while Xi Jinping is still in the harness politically, he gets to do what Mao failed to do, which is to unite the country, by 2049.

The Biden administration has suggested that China too could come under economic sanctions if it moved to favor Russia. But many analysts say it would be far more difficult to unleash economic sanctions on China, since it is more deeply entwined with the U.S. economy and the global economy. Is there any chance the U.S. would really sanction China?

Within the [Biden] administration in Washington, all these questions are under active consideration, with the spectrum being from mini-sanctions to maxi-sanctions, depending on the offense committed by the Chinese in violation of sanctions against Russia. If you went the full sanctions route, punishing China using the same mechanisms deployed against Russia, that does equal global financial and economic Armageddon. And the thing about Armageddon is that it’s pretty non discriminating in terms of national boundaries. And secondly, given the degree of mutual financial dependency, there is a degree of mutually assured destruction. Would the Chinese risk it and call America’s bluff, knowing that any American action would damage American interests as well? This will be one factor in the Chinese leadership’s ultimate calculus. 

I think it will depend entirely on the sub-measures that the Americans come up with. If you look at the different categories of financial and economic engagement, across the trade, financial markets and technology spectrum, it may be that you could reach for something which was unanticipated. Again, I have nothing to base this on, but you could close the remaining loop on the provision of semiconductors to China altogether and send a message to the Chinese system that way. I do not know. All I do know, and I suspect is the case, is that this work didn’t begin yesterday in Washington. They are likely looking not just at sanctions against Russia, but parallel work, I imagine has been underway for a long time now on a potential sanctions regime against China, if China was to form a strategic partnership with Russia on a continuing basis over Ukraine.

In light of what happened in February with the joint statement, and the longstanding alliance between Putin and Xi, and how each sees the U.S. as a bad actor on the world stage, what does this mean for the prospects of world peace? Many knew that Putin wanted to see the U.S. undermined around the world, but few really understood that Beijing – a chief beneficiary of the international rules based order — might also wish to see the U.S. weakened dramatically. Doesn’t that sound like globalization may be in the rear-view mirror and that decoupling of the world’s two largest economies could be on the horizon?

This is, in part, why I call it “the decade of living dangerously,” not just on geopolitics, but on geo economics as well, with an increasingly sharp ideological divide between the two world views. The best way to look at this is kind of as two sets of bookends in the Chinese worldview on separation from the American order. The first bookend would be Document No. 9, which was leaked from the Chinese system in 2013. It was Xi Jinping’s speech to the propaganda and ideological apparatus back then. If you wanted a clear statement of where Xi Jinping identified the political, ideological and security threats to the future stability of the Chinese regime at home and abroad, it’s Document No. 9. It is unvarnished Xi Jinping, his direct speech, and one that the Chinese [government has] never denied, though they were very grumpy about the fact that it was leaked. There you have the color of what I understand has been the basis of Xi Jinping’s bonding with Vladimir Putin. They share similar views on human rights, democracy, and the need to vigorously advance an alternative narrative about China’s own economic and political system — and to adopt a much more aggressive ideological policy overseas. 

The second bookend is an unreported speech by Xi Jinping to the Politburo, from about April of 2019. This is about the time that the Politburo was meeting after the first draft of the trade deal with the Trump administration bit the dust. Liu He had come back from Washington with a deal that was unsale-able to the Politburo and to the central leadership [in Beijing]. And the reported comments by Xi Jinping to that meeting were: “We are now in for 30 years of trouble with the U.S. administration as they seek to prevent our rise.” And though he did not say this [explicitly], if I look at his economic measures which have flowed from that time, that’s when Xi Jinping began to embark upon a process of decoupling from the American economy, on China’s own terms. That’s when you see a further redefinition of Chinese industrial policy. That’s when you see the re-emphasis of the doctrine of national economic self sufficiency. That’s where you see the doubling down on technology autonomy. That’s the genesis of this new rhetoric about the “dual circulation” economy. And that is apparently where they are making a public relations virtue out of what is essentially a national self -sufficiency, mercantilist doctrine thing. 

That is what I see as the economic bookend to a process that began in 2013. In that six-year period, the intellectual journey undertaken by Xi Jinping, through the Trump administration, was simple: “I don’t just distrust these guys [from the United States] domestically, within my own country, I distrust their stewardship of the international economic order, because they’re cutting off my supply of critical technologies, and they are potentially going to impede my ability to trade in the world as well.” Therefore, the question for us to look at is to what extent is Xi Jinping, through the “dual circulation” economy model, already embarked upon what I would describe as decoupling with Chinese characteristics, on China’s own terms and on China’s own timetable, as opposed to the American assumption in Washington that that is a unique discretionary decision, coming from the United States itself.

Does it worry you that there is now a harsh image emerging about China in much of the West? It is beginning to look like engagement is dead, and that trust has been lost between Beijing and Washington. Where do we go from here?

There’s no longer any political and diplomatic capital left in this relationship. It’s now what I describe as bare wires exposed, the insulation has been ripped off. This is quite dangerous, in terms of, let’s just say, incident management. Crisis, conflict and war, in these circumstances, becomes more probable than not. That actually is the reason I am advocating what I call “managed strategic competition,” as a joint strategic framework for both nations. This framework is not based on trust. It’s based entirely on the hard calculus of national interests — that for much of the decade ahead, neither side has an interest in crisis, conflict or war by accident. And I don’t want to replicate what Christopher Clark, my Australian compatriot, described as sleepwalking into war [about the causes of World War I]. This is just what happened in July 1914, when no one thought World War I was probable, no one wanted it, really. But they proved incapable of preventing it in the failed diplomacy of that month, which led to the guns of August. So those are the sort of reasons which underpinned the logic of what I’ve put down here.

You obviously wrote a book, endorsed by Henry A. Kissinger, about how we might avoid conflict and war. Where is the optimism about our future outlook? How do we create a path that steers us away from the apocalypse? 

I have a pretty simple view of this: neither President has an interest in blowing each other’s brains out. At the same time, they have a mutual desire for continued survival. 

You’ve got realists in the White House and realists in Beijing, something like a managed strategic competition may just be able to help us navigate the decade of living dangerously. 

There’s a lesson to be drawn here from latter stages of the Cold War, particularly after the Cuban Missile Crisis. After that near-death experience, what emerged was a period of mutual deterrence, eventually detente, and then diplomacy through some guardrails in a relationship, which prevented a return to ‘62 in Cuba. My argument in this book, by the way, is that there are two alternatives for the future with unmanaged strategic competition, which is as dangerous as hell. Managed competition is a more rational approach, not based on kumbaya-ism, and not based on “I really do like the Chinese” or “I really do like the Americans,” and even less based on “I still think we’ve got some mutual trust here.” It’s based on none of those things. It’s based on a very baseline calculus, that it’s in our national interest not to go to war by accident, over the five or so big ticket items, from the Taiwan Straits to the East China Sea, the South China Sea to the Sino-Indian border through to cyber and space. Nonetheless, we are going to be vigorously competing against each other in all these other domains, everything from the military to the economy and technology and onto ideology. But it’s also in our national interest to continue to work with each other on critical stuff like climate change, because I’m doing you a favor, because if I don’t then we no longer have an environmental commons. So none of these things are based on emotion. And none of them are based on friendship, and none of them are based on trust. They’re based, in fact, on very realist premises. That’s why I put the proposal forward. And on your core question, I should conclude on this point. Am I on balance, optimistic or pessimistic? I wouldn’t be in this business unless I wasn’t, on balance, an optimist.

[Political scientist John J.] Mearsheimer is a pessimist who will tell you that being a hyper realist, we’re all ruined at the end of the day, so why bother? Let’s just buy popcorn and watch the world go up in flames. That’s not my view. My view is that politicians have agency and for the reasons I’ve just described. You’ve got realists in the White House and realists in Beijing, something like a managed strategic competition may just be able to help us navigate the decade of living dangerously. If we get through this decade, well, you never know. We could possibly get through another one as well. My mission in life is to get through this decade.

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