Asia & the Pacific

The Asia Policy Institute recently released a collection of speeches by its President and former Australian Prime Minister Kevin Rudd about the rivalry between China and the United States. In his forward to the collection, Graham Allison explains why relations between the two countries have become "the defining issue of international relations in the 21st century", and why Kevin Rudd is uniquely equipped to provide insight into them. Read on for both the full introduction and the full report.

"Within the covers of this book, long-time China watcher and former Australian Prime Minister Kevin Rudd has provided an analytic snapshot that would normally only be available to the president or prime minister of a major nation. In substance, it would be the envy of the best professional intelligence agency."

THE YEAR before he died in 2017, one of America’s leading twentieth-century strategic thinkers, Zbigniew Brzezinski, sounded an alarm. In analyzing threats to American security, “the most dangerous scenario,” he warned, would be “a grand coalition of China and Russia…united not by ideology but by complementary grievances.” This coalition “would be reminiscent in scale and scope of the challenge once posed by the Sino-Soviet bloc, though this time China would likely be the leader and Russia the follower.”

Graham Allison, Douglas Dillon Professor of Government at Harvard Kennedy School, said in an interview with Bloomberg that China is rivaling the U.S. in virtually every domain. Because of the dynamic between these two powers, Allison warned that the future will be "extremely dangerous."

Booms and busts in international capital flows and commodity prices, as well as the vagaries of international interest rates, have long been associated with economic crises, especially – but not exclusively – in emerging markets. The “type” of crisis varies by time and place. Sometimes the “sudden stop” in capital inflows sparks a currency crash, sometimes a banking crisis, and quite often a sovereign default. Twin and triple crises are not uncommon.

The primary focus of this year’s Federal Reserve Bank of Kansas City symposium in Jackson Hole, Wyoming, which convenes the world’s leading central bankers, was not explicitly monetary policy. Fed Chair Janet Yellen’s opening remarks emphasized the changes in regulatory policy that followed the 2008 global financial crisis, while European Central Bank President Mario Draghi’s luncheon address dwelled on the need for continued reforms in Europe to sustain the eurozone’s recent economic recovery.

Chinese analysts, from President Xi Jinping on down, have nominally rejected Allison’s pessimistic analysis. “There is no Thucydides Trap,” Xi has argued, claiming that he had devised an alternative “new type of great-power relations” that would avoid war by recognizing that each Asian giant had its own legitimate interests. More recently, he has shifted to arguing that “China and the U.S. must do everything possible to avoid [the] Thucydides Trap.”