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Asia Society CEO and President Kevin Rudd discusses the Belt and Road Initiative and the changing dynamics of US-China relations

HOUSTON, September 20, 2021 — Asia Society Texas was honored to host Kevin Rudd, President and CEO of the Asia Society and the Asia Society Policy Institute, for a discussion on China’s Belt and Road Initiative (BRI) in partnership with the Harvard Business School Club of Houston. Rudd spoke with the moderator Charles Foster, chairman of Foster LLP and life director of the Asia Society Texas Center, regarding the concerns and criticisms surrounding the BRI, and the economic and security implications it has raised for the United States and Western nations in the context of the changing balance of power between China and the United States

Differing views on the Belt and Road Initiative

Rudd began by explaining China’s thesis for launching the BRI, which was to establish the basic economic infrastructure that would lay the long-term foundation for economic growth across Eurasia. For Beijing, Rudd said, this would achieve three goals: (1) create huge business opportunities for Chinese infrastructure companies; (2) create long-term economic partners for China; and (3) stabilize a region where Islamist militancy, according to China, poses a threat to China’s security. Rudd pointed to the scale of the BRI, which translates into between $1 trillion and $3 trillion of Chinese investment globally and dwarfs all other similar infrastructure investments, such as those of the European Bank for reconstruction and development or the US BUILD Act.

However, Rudd also highlighted the criticisms that the BRI faces, such as the debt exposure of beneficiary countries, the quality of the products built, the lack of transfer of skills through the projects, the lack of financial transparency and potential security and military threats posed by the Chinese. – infrastructure built. He noted that some criticisms were perhaps more justified than others, noting in particular his concern about countries like Sri Lanka, which have fallen behind in BRI repayments due to the pandemic, and the resultant influence for China in demanding repayment in other forms – such as in the form of a 99-year lease on a Sri Lankan port. Rudd said Australia has expressed concern for nearby Pacific island nations, which have been similarly exposed to Chinese debt through the BRI over the past 5-7 years, and the potential threat to the security that this could pose if China used the debt for military purposes. .

The evolution of power relations

In light of these security concerns, Australia, the United Kingdom and the United States this week signed an agreement on the shared development and operation of nuclear submarines, called AUKUS. Rudd noted that the deal happened amid the complex dynamics of the shifting balance of power between China and the United States in East Asia and the Pacific. He explained that China had shown increasingly assertive security behavior under current President Xi Jinping, particularly over the past four years, when the United States was considered to have withdrawn from the world stage.

According to Rudd, the dynamics in the region tend to go in one or the other of two directions: either countries will join other powers (for example, the United States) to help counterbalance the influence China’s growing power, or countries will “walk in march” with China given its growing power in China. the region and around the world. The former now includes Japan, Australia and India, which joined the United States in forming the quadrilateral security dialogue, while the latter includes Laos, Cambodia and Pakistan. Rudd said a number of other countries, such as Myanmar, Sri Lanka, Thailand and the Philippines, continue to watch the changing dynamics and remain without engagement between China and the United States for the time being. United States, choosing to collaborate strategically with them.

The future of US-China relations

Faced with the changing realities of the US-China dynamic, Rudd spoke of the need for the two governments to assume a new framework for the relationship. He suggested what he calls “managed strategic competition”, which is based on three main principles: a private agreement on both sides regarding their impassable red lines and how to monitor and enforce them to avoid crises and war. ; beyond these red lines, strategic competition between the United States and China on all other aspects, including trade, technology and human rights; and strategic cooperation on defined issues where the two countries share a national interest, such as climate change and global debt management.

Specifically, Rudd also encouraged the United States to seriously reconsider its economic and trade strategy and stressed the importance of implementing a pan-Pacific free trade agreement (such as the CPTPP) to counter the gravitational pull of the market. Chinese. The sheer size of China’s economic clout, Rudd explained, will ultimately cause the region to be much more accommodating to China’s long-term foreign policy and national security interests.

Despite the current challenges, Rudd noted that he’s optimistic about the future of the relationship. “It’s a very uncertain century ahead of us,” Rudd said, but in his view much of China’s behavior is now driven by domestic politics and Xi’s strategic deployment of nationalism against the United States. to secure re-election to a third – and possibly life – term in November 2022. If Xi is reappointed, Rudd said there could be a new opportunity for managed strategic competition to deliver what he described as guardrails to the competitive relationship – those that can prevent escalation into an avoidable war.

Business and political programs are funded by the Huffington Foundation. Special thanks to Bank of America, Muffet Blake, Anne and Albert Chao, ConocoPhillips, ExxonMobil, Nancy Pollok Guinee and United Airlines, main sponsors of the Business and Policy programs; Nancy C. Allen, Chinhui Juhn and Eddie Allen, and Leslie and Brad Bucher, main exhibition sponsors; AARP, Sterling Turner Foundation and Wells Fargo, lead sponsors of Education & Outreach; and Mitsubishi Corporation (Americas), sponsor of the Japanese series; and Regions Bank, title sponsor of the internship program. General program and exhibit support is provided by The Brown Foundation, Inc., The Hearst Foundation, Inc., Houston Endowment, Inc., City of Houston through Houston Arts Alliance, McKinsey & Company, Inc., National Endowment for the Arts, Texas Commission on the Arts, and Vinson & Elkins LLP, as well as Friends of Asia Society.

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