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China is quickly accelerating towards an economic collision point with the rest of the world, according to recent comments from former Prime Minister Kevin Rudd.
The former PM and former US ambassador made the comments during a discussion with Harvard scholar Graham Allison at Harvard’s John F Kennedy Jr Forum at the Institute of Politics earlier this month.
Rudd has previously spoken at the Harvard Kennedy School and followed up with the most recent discussion about strategic competition, China’s changing economic model, deterrence and the People’s Republic of China in general.
The former PM spoke about the People’s Republic of China’s forecast domination of the entire industrial and technological ecosystems across artificial intelligence, aerospace and biotech.
“I think there’s been a fundamental transformation… in China’s macroeconomic model, or more precisely its economic development model,” he said.
“From China’s accession to the WTO through to about 2012, you saw a China increasingly integrated into the global economy, based around broad market principles, imperfectly adhered to, and often relying on the WTO dispute resolution mechanisms when conflicts arose.
“What did that orthodoxy generate? A decade and a half of double-digit growth for the economy writ large. What we’ve seen in the last decade or so under Xi Jinping is a conclusion that this reliance on the market economy… was producing unbalanced and unfair development. There’s a big ideological rupture in China’s economic model around the mid-teens, somewhere between 2015 and 2017.
“One reflection of that has been the Made in China 2025 strategy, launched in 2015, where Xi Jinping said that to compete effectively against the US, the West and the rest in the future, we need to dominate the technology stack, not just the AI stack.
“If you look at the 10 technology targets he announced in 2015, we all looked at them and said, “By God, that’s ambitious.” Where is China on biotechnology? Information technology? New materials research? Aeronautical engineering and jet engines? Renewable energy? They’re all listed.
“After 10 years, if you did the report card on where China got to against that techno-industrial strategy, you would have to award Xi Jinping seven out of 10. Frankly, they went from nowhere to somewhere big in the space of a decade.
“With artificial intelligence, what you see in China’s medium- to long-term technology plan is an absolute determination to do the same across the AI stack, including compute and semiconductors, where China is probably now four or five years behind the US.
“Then there is the determination to do the same in quantum and nuclear fusion: the two huge game changers of the future, both in terms of energy and what quantum does to compute and AI writ large.
“For a nation with an engineering culture, turbocharged by a Marxist-Leninist ideology which holds that these material factors of production can be driven hard through the interventions of a Leninist party to turbocharge aggregate economic success against the US, the West and the rest, that’s the strategy.
“Can we compete against it? China has declared a global techno-industrial strategy. Because of Xi Jinping’s parallel concern about national security, and therefore national economic security, and his aim of making China invulnerable to external assault at a time of crisis, the resolution is for China to dominate each production chain in technology, advanced manufacturing and general manufacturing.
“China now represents a third of global manufacturing output. By 2030, on current trajectories, it’ll be at least 40 per cent, and rising.
“The rest of the world is saying this is too much. The United States, for a decade now, has started pulling up the tariff wall against what it has concluded to be subsidised Chinese exports to the rest of the world, taking out manufacturing across the US, the West and increasingly Southeast Asia.
“Will the Europeans now act? Will the Southeast Asians act? The big growth driver at present in the Chinese economy, given the enormous resource concentration in this techno-industrial strategy, is net exports.
“For those reasons, I think we’re on something of an economic collision course, and there will need to be some correction by the Chinese economic system. Otherwise, the vulnerability everyone collectively signs up to is that whatever you need in the future can only be delivered through the Chinese global factory. That is a risk China would not accept for itself, and nor will the collective democratic world accept for itself.”
The former PM also further elaborated on the topic of artificial intelligence and the concept of ‘new quality productive forces’ within China.
“Xi Jinping’s theory of artificial intelligence is fascinating for those who follow the Chinese debates. It’s called “new quality productive forces”. If you look carefully at the ideological literature and the party’s theoretical journals, including articles written by Xi himself, he sees this set of technologies as radically transforming China’s ability to compete and then leapfrog the US, the West and the rest,” he said.
Former PM Rudd concluded the talk with a discussion of spirituality and imminent consequences regarding the death and reincarnation of the Dalai Lama.
“Tibet, which of course is not a sensitive subject… The history has been complex, tortuous and difficult,” he said.
“(We) will come to a new crisis point when the Dalai Lama dies. He’s already 90. What happens with the reincarnation at that point?
“China has indicated that the reincarnation will occur within China. The Dalai Lama has said it will occur outside China, presumably in Dharamsala, where the Indian government currently hosts the Tibetan spiritual leadership in exile.
“I would hope that, on this question of religious dignity and autonomy, we can find a way through for the future, given the depth of Buddhist sentiment which still exists across the entire Tibetan culture and civilisation, and in a manner which doesn’t erupt in violence. I don’t know where the landing point is. But there must be a way through on this one.”
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