>> rose: welcome to the program. tonight, a conversation about china with kevin rudd, former prime minister of australia and now president of the asia society policy institute. >> one final point if you're going out to 2040 is this-- china will have to, in order continue to emerge as a global great power have to deal with a raft of six or seven major challenges around the economy and its demography in that period of time in order for its rise to continue to be unabated. and that involves a range of assumptions, which assume that smart chinese leadership and a bit of luck prevail on the way through. but i'm into the realist business of how do you maximize the prospect of peace and

stability, and in asia, where my country is located, we really want to see the emergence of common narrative of the future between the two of them. >> rose: kevin rudd for the hour next. >> rose: funding for "charlie rose" has been provided by: >> rose: additional funding provided by: >> and by bloomberg, a provider of multimedia news and information services worldwide. captioning sponsored by rose communications from our studios in new york city, this is charlie rose. >> rose: kevin rudd is a form are prime minister of australia. he was in office from 2007-2010 and again in 2013.

he's also a former diplomat and fluent mandarin speaker. he became the first president of the asia society policy institute. i spoke with him recently at the asia society. we talked about china's premiere, regional and global ambitions as well as u.s. policy towards the region. here is that conversation. >> rose: i have heard lots of stories, people have come to my table and talk about how jingping is exercising power how he's planning to change china, but tell me about him your impressions of him, how he came to power who and what enabled him to become the president of china. >> the first thing to bear in mind with xi jingping is his family background. he is the son of a former politburo member. he was in deng's politburo after he returned to the political

stage, late 70s. after that xi jingping was entrusted by deng with a very important task. his task was to oversee the implementation of what's called the four special economic zones in china in the 19 it 80s. and that's what he set about doing. in other words, he was put in charge of what in china then was a highly controversial project. putting back into chinese history it's a bit like this-- those four special economic zones coincided with the 19th century treaty ports where foreign countries-- namely the british but a burn of others as well-- demanded exclusive access to these treaty ports and what the chinese described as the unequal treaties between china and the west. and so to go back to these after the revolution of '49 and then to say 30 years after that in '79, guess what we're going to

do? we're going to open the doors to these treaty ports to the west. the left of the chinese communist party said you're going to do what? this was not welcome news. this was the vehicle through which china's initial exploitation occurred in the internal historiography by the chinese communist party. so xi jingping was given this job, and as a result the four economic zones were eventually expanded in scope. the number of special economic zones grew, and in time, the policies adopted in special economic zones were adopted across the country. so in the economic reform tradition of china, his father represents what i describe as a liberal reform agenda. but the other thing to say about his dad comes the other way around. he was also a revolutionary commander for the red army in

the lead-up to the '49 revolution. and so he is a party loyalist. his father is a party loyalist. strong on the party's role in bringing about the revolution. strong on the party's role in holding the country together. so with his father you have this combination of a hard-line political supporter of the continued role of the chinese communist party on the one hand. but at the same time, someone who understands that china's future hinges on the continuing reform of its economy in a market direction. we might find this to be an enormous contradiction in terms. but that very much explanation in part the political world view and the economic world view of his son xi jingping. >> rose: and as a leader, what you have seen so far? >> i have met him a number of times. in fact when i was a junior woodchuck working in the

industrialian embassy in the 1980s, i first met xi jingping when he was vice mayor of one of the treaty ports, one of the special economic zones to the southeast of shanghai. he didn't know me, obviously, but i knew he was a significant figure in municipal politics then. rolling the clock forward to my meetings with him when he's been vice property prt and my discussions with him since he's been president of the country number one he's one of the few chinese leaders i have seen conduct all of his engagements with politics, a person speaks extemp rainsly.

he is enormously steeped in the history of his own country, in the history of his own party in the country. there is a profound historical frame of reference which affects i had current world view as well-- namely, that china having been first occupied in the modern period by the british after the first opium war, when hong kong was seated, through the defeat of japanese more than 100 years later, through what is called the humiliation, the foreign humiliation of the west plus japan. this is burned into xi jingping's world view and the need to cause china to go through its own national reawakening, it's own national renaissance, the own national rebirth. and this is a core part of what

he describes as his dream for china's future to bring china back to a respected place in the global council of nations. the last thing i would say about xi gin ping as a person beyond his self-cches, not self-confidence, not using notes, his historical frame of reference, he is a deeply committed party loyalist himself. so many in the and west in the u.s. as well assume that because of what we've seen in china when deng wore the cowboy hat when he visited china with jimmy carter -- >> when he visited houston. that's right. when as i understand is in a state called texas. i'm beefing up my american knowledge as we go by. the bottom slien we often assume since deng in the cowboy hat and the ups and downs of tiananmen

square, that essentially there's a slow evolution of an open economy creating a more open society and a more open political system in china. under xi gin ping the opening of the economy will continue. there will be a continued openness of society relative to a maoist past. but his political frame of reference is very much a conservative party view. and, therefore, what he will seek to advance-- and i think it is his world view-- is what he calls the china model, the china development model not a liberal capitalist model. it's more of a state capitalist model, and i think it's very important in that we in the collective west understand that. >> rose: what do you think misconceptions are among western leadersleaders about him and his intent? >> i think there's always a predisposition on the part of any nation state looking at

another nation state to think the worst. that's basically how dip lomats keep in business. and i've been one of those in an earlier professional incarnation. and themselves and intelligence agencies and defense departments have about them this view as a nation state whatever that country over there says is one thing. we are paid professionals to assume the worst-case scenario. and so often you see that around the world in relation to china. i think the largest pis meracception is this-- that somehow china has a growing military capability and military ambition to occupy in time part of its region.

the bottom line is that whatever negative things you can say about the chinese tradition, it is not a substantial part chinese tradition at all, as it was with the europeans, to say, "well, now we've got all this weg and power. how do we go and conquer the next bloke's territory or the next one's or the next one's." there's a view that frankly there's enough to messenger here under heaven, the middle kingdom, to not require us to go out there and do what the british did and french and everyone else did conquer the other half of the way. >> rose: we have seen here clearly in the 21st century a rising power which began in the previous century but is coming full stride. and we see a country that has not yet decided that it's a stakeholder in the world but seems to want to increasingly be

perceived as such. >> what are they up against and can they actually make it work. >> rose: right. >> and as a consequence of that, where do they think they're going? a lot gets lost in translation when dealing with our chinese friend. and you mentioned the world before, stakeholder, which is bob zoellick, who is a good friend of mine and the head of the world bank in days past, and it's to see jim wolfertson here, the previous head of the world bank bob when he was deputy secretary of state coined this phrase that china should become a responsible global stakeholder, which led to two lines of mistranslation in chinese. one around barbecues, like i'm going to hold a stake and what the hell does that mean? ( laughter ) that wasn't what bob had in mind. and secondly, as in stake, putting a stake through someone's heart, stake. >> rose: they were confused when they heard that.

>> this was not a good word, and basically there was a long pause as china tried to work on what bob was on about. the concept is a strong concept, but that's just how things get lost in translation. and i suppose on that core point it's worth understanding this-- we have an expectation that in the collective west, in the u.s. that chine china will increasingly follow and comply with the rules of the global system, that we, the collective west have evolved for ourselves in the post-45 period to which the chinese would say. that's terrific. we weren't even there then. thank you very much, guys. sowhich we say "but you were." china was one of the victors in '45, to which they say legitimately that was the k.m.t., not us. so their view is that the global rule-based system should be the subject of continuing review and

reform. and as i look at some of the more recent speeches of xi gin ping he's quite sharp on the subject that the rules of the system need to be reformed in a manner which makes the system more just and equitable between states. that, i think, is a big challenge for us because we it's collective west-- much of the developing world have accepted the status quo with the rules of the sp system as they exist. china is saying something quite different. we don't know the answer to it yet which is we're engaged in the business of reform ago to use their terms-- changing-- to use their terms-- the rules of the system over time as our power grows. >> rose: the obvious example of that i presume is the reserve currency, the dollar is the reserve currency. what else? >> if at this stage their public pronouncements on all of this it's still a little opaque. let me give you one clear

example. there's been a great debate across the world in the last six months or so about china's decision to establish the asian infrastructure bank. of course, the response from the u.s., the west, and the rest has been along the lines of, "well why the hell do we need that? we've got the asian development bank." we have a system of multilateral development banks around the world, ultimately with their parentage in the world bank, and these are run along international rules, and it's all gone fine and dandy thank you very much since the days of britain woods. to which the chinese say, no not really. so they've gone out there and established their own asian infrastructure bank to which we have objected. in order they're establishing an institution outside of the u.n. and outside of britain woods. it's initial paid up capital is intended to be $100 billion so it's not going to shake the earth in one go, but i wouldn't

be surprised at all if it continues to expand. my end view, for what it's worth bthat is given the global investment of infrastructure deficit around the world and developing asia, multiple sources of capital should be welcomed into the system. so long as the governance of these institutions is along professional governance lines. we haven't raised objections to a thing called the islamic development bank in the past that though it praits extensively across the middle east. i think we need to be careful to just saying no it to any chinese initiative on the condition that governance sas you would expect of a properly formed financial institution. >> rose: what about militarily? >> they've got a lot of those. it's a phenomenon which unfolding. the chinese military expenditure in terms of annual growth has outpaced that of the united states for arguably the last 25 years. and with an --

>> annual growth. >> annual growth, and with increasing intensity. but if you look, for example, at some of the international data released on this, say that put out by the stock hiem international peace research institute, which largely regarded as a fairly neutral credible, global institution assessing the hardware of each country's military in the world they would probably put china's total aggregate military expenditure at about one-quarter, to one-third, at best, of the united states, in quantum. but we need to be mindful of where that heads in the decades ahead. but even the chinese military planners do not ceive of a realistic point in the conceivable future where the aggregate capabilities of u.s. conventional power could ever be surpassed or equaled by that of china. mind you, charlie, their view of their foreign policy role is

somewhat difference. they see themselves as having expanding foreign policy footprint around the world and around asia in particular on the back of their enormous economic power. and that's happening as we speak. >> rose: how is the military somehow part of that? are the expansion of chinese interests? >> if guto the military, let's start this in the narrative frame. the core interest which xi gin ping has in is to make sure the military modern sophisticated, of engaging in and prevailing in a military cop conflict and nand around the military. the first function of the military is protect the party under that country under the party and state constitution. always important to bear in mind. the contingencies for which the chinese military plans, are

primarily those associated with the long-term scenarios for the recovery of taiwan to the main's tender embrace. the chinese wish to achieve that by diplomatic means but if that doesn't happen, then under those circumstances, their war gaming is around how do you secure taiwan, and, therefore, defeat a u.s. military or naval action in the taiwan straits >> rose: is the outlook for china less today than when they were growing at 10% for all those 18 or 20 years, and-- or was it to be expect as they got large ethe base was large ethe growth would slow down.

>> i think any of us who are students of economic history know an expanding economic economy engaging in trade for the first time will have extended, and rapid growth as you did with the history of the continental united states and its continental economy when it began exporting and trading with the rest of the world in great volumes itself from the 1870s effectively becoming the largest economy in t world. this is natural and slowly with a maturation, the economy as you move from developing to developed status, the growth rate narrows to an historical medium like 2% to 3%, like your economy and the australian economy. so the chinese in their planning have been absolutely fixated on how do you actually transition a rapidly expanding developing economy into a long-term sustainable growth as a developing economy while avoiding what they call the middle-income gap, and trap i should say in the middle.

hence, the growth strategy, or change in the growth strategy you just referred to, charlie. here's the kicker, though-- on the way through can they sustain growth at sufficiently high lestles to provide the buffer necessary for the transformation to occur? and that's been really tough. one, global demand has been so flat. look at europe at present, one of china's principal export market. look, until the last 12 months at the united stat china's other export market. net exports have turned out to be, frankly, a minor and even negative contributor to chinese growth. so what they've done historically to try to fill that gap is pump prime by engaging in massive capital projects which has had the unfortunate consequence of creating asset bubbles in the property sector. >> rose: in real estate. >> real estate and let's call it redundant state construction. i give them, the government credit as growth slows not to

engage in that on the way through. but there are some seeds of frankly, i think of a positive nature to look at with china's growth. the one piece of data which has emerged in the 12 months or so since they adopted the new blueprint for long-term economic reform moving from manufacturing and investment to the services sector and consumption, and that is the phenomenal increase in new business registrations. a phenomenal increase. now, this has been achieved in part through some regulatory changes which don't require you to mortgage your life, your wife, and your house if you want to start up a new business, and that's been welcome. but as a result, the big driver for growth, which they hope will take place in the future, is through an emerging smawm-business sector, greater opportunity for private firms and if the reform goes according to plan, a contracting size of the standard enterprise sector

relative to private firms. >> rose: leveling the field out a little bit? >> through their own domestic and better neutrality laws. and that's another-- i went through a list of what could go wrong and i would tick most of those boxes that you raised, including this one and that is the real question for the leadership now is will they continue to shrink the state and enterprise sector given many of these just suboptimal economic performance and distorting resource allocation within the economy is will they bite the bullet and allow that sector to further contract and yield more space to private firms? or does that create too much of a political problem because the state-owned sector of the economy becomes too small, and their ability to affect decisions on the ground is reduced as a result. >> rose: what is the threat to the future of the communist

party and what might be a threat? or where is their paranoia justified? >> this is a very, very deep and searching question. let me hazard a couple of answers. if you're looking at the world from jonathan xi jinping's perspective the number one priority stated or unstated is keeping the party in power. so what are they, therefore mindful of? they're very mindful of threats to the party's absolute position within. and, therefore, what you are seeing increasingly is a tightening of the environment from the perspective of the activities of universities, the activities of cultural dissidents, the activity of political dissidents. this is occurring as we speak.

the second source of concern is through the emerge ebs of alternative centers of power. that's why the chinese authorities will look with great skepticism at the emergence of religious organizations in china which, from their perspective become potentially significant sources of dissent. not all but some. and that leads me to my third point is they are very much focused on the separatist tendencies in shinggon and what i would describe as a great crescent of instability brought about my violent jihaddism. so if you are putting together the hierarchy of concerns, it would be that, and then finally, a deep view held within china is

uncle sam is out there actively fermenting a lot of this. and that uncle sam is also engaged in a de facto policy of containment to prevent china's rise and emergence as well. these-- and i'm not going into the rights and wrongs of them at the moment. i'm seeking to describe. if i was saying that's what animates china's internal party concerns about their ability to sustain their party, they are big, big concerns, together with the environment and your ability to breathe the air in beijing and together with the sustainability of economic growth. >> rose: and they're spending a lot of money on oomentive-- the search for alternative source of energy. >> that's true. if you look at the sea change in china's environmental policy in the last three or four years-- i remember sitting in the room with president obama and chancellor america expel about 20 other global leaders in koppen hang an about five years ago as we tried to bring about a

an agreement, and i went to copenhagen-- i have the t-shirt "i survived copenhagen--" that's a comment on australian -- >> there is life after being a prime minister. >> yeah, it's political exile in the united states. ( laughter ) and it's ad if place to be in exile. when i contrast the position chinese negotiators took then on climate change which was basically a collective nyet, to where they are now the shift has occurred because the chinese have calculated that the combination of plain old air pollution and its partner this crime greenhouse gas emissions, resultingresulting in longer term climate change, that the science is

within in china. they know it's happening. they see evidence of it. and if to start with you only had 10% to 12% of your country constituting arigable land and that becomes degraded through the absence of water or pollution into the soil or other factors, this has brought about a sea change in chinese policies. and the world will wait with anxiety, i believe, to see whether these policies work because china is now by a country mile, the world's largest emitter of g.h.g.s. >> rose: what ought to be a constructive american policy towards the rise of china that would serve both countries? >> i've been to china about a dozen times, been to washington a lot talking to the administration, and chatting to leaders and those who advise them behind the scenes. i think there is a way through this, and it might sound naively

optimistic from a happy and sunny country like australia but there's a basis for my optimism. if i was to give it a name charlie, it would be both sides to adopt a posture of constructive realism. what do i mean by that? one pbe absolutely realistic or realist about where at this stage the two countries cannot agree on fundamental geopolitical questions political values questions, and some others as well. but also agree on a mech mechanism by which those fundamental differences can be managed, short of conflict. that's the realist bid. the constructive bid is, the other side of your brain, engaged in, hang on. there's a whole bunch of stuff which we and the chinese can work on together in order to

advance not only our national interest but bilateral interest and the world interest. that list is formidable. we have been talking about the change-- or sea change of china's position on climate check, from the world's largest emitters-- or two largest emitters it's people's republic of china and the united states of america-- they will decide between them with the conference on climate change. india will also be critical. but that is one illustration of constructive engagement. and the second in the asia pacific region is how do you involve an institution in that region which is capable of frankly, step by step confidence and security building measures with each other. like working together on natural disastersdisasters in a more effective way. like elaborate protocols to not allow a minor sten at sea which one submarine whacks into

another or an airplane whacks into another by accident because of the density of the hardware flying out around there, how do you prevent that. for example the pilateeral investment treaty between the u.s. and china because that will be good for both economies. and if you start investing in one of the other's economy, guess what? you have a big interest in the other person's economy succeeding because you have a bunch of cash there and it helps if they succeed. so that's what i describe as the constructive dimension. the final dismengz to have in the back of our mind a view that if i develop sufficient political capital and diplomatic capital from the things that you work on together constructively over time, that as circumstances allow, you draw on that capital to solve some of the unfixable problems in the first box-- let's call it the realist box of

differences. so these three elements, i believe, you can hold together in a common strategic view on the long-term relationship. often what we do, though, because we're human beings is we go to one side of the brain ask say problems, difficulties clash of civilizations. thank you it, huntington. off to conflict and worse. and the others which can be pie in the sky by and by people, isn't it wonderful? we're all hand holding and doing great things together and let's just forget about the development of our respective navies facing each other off each day. we need a view that embraiss both rates. i think we're capable of doing that and the mechanism is starting to evolve between president obama and president xi jinping, i think gives us an institutional capacity to work over time. >> rose: how is that relationship? do you think it's a healthy relationship between the two a

comparison to the relationship with the prime minister of israel? ( laughter ) >> i'm not even going to go there, charlie. but between president obama and president xi jinping, i think the truth is when president obama invited xi jinping to the first working level summit held in california last june, june of '13, i should say-- it was a start. and i think most people would say it wasn't necessarily the biggest backslapping start that you could have had to bilateral summitry, but then again when you're dealing with china and the united states you can't really expect that. then i think it's fair to say that the relationship went to a significant series of problems between that june and the november just past, which centered around the east east china

sea and the south china sea. but what i find interesting in this most recent summit in beijing, the two leaders spent at least eight hours, nine hours talking to each other with a very limited number of people around the table-- we could fit them on the carpet, too. and my advice is that the two leaders really got down to some tin tack its on these questions of "are you, america, trying to destabilize us domestically? are you really containing us? how do you give evidence of "a" and "b" above?" and frankly i know enough about international relations that unless you get down to some tin tacks like "do you want me to disappear or not?" unless you're dealing with those you can't get to the second levels of effective cooperation. so my sense is that there there is a working lel level of respect now between the two presidents which

for the remaining two years of obama's term i hope we can turn into more. >> rose: a couple of more things about the trip to annenberg, much was made, in the press, about the fact the first lady did not accompany the president and that the chinese took-- were not pleased by that because the president's wife, the general, had come with him. >> well i have a slightly different take on that. i spoke to the chinese at length before annenberg and a lot after annenberg-- a lot of travel to beijing last year. and i think-- and therese, my wife and i know the president and michelle reasonably well and the reality is that they've got two young kids, and there were -- >> the chinese understood? >> the chinese are very family people. they understand when you've got kids, and younger kids and from memory i think one of the kids had a birthday or some family

celebration at the time. but here's the other point is that neither president xi jinping nor his wife had explicitly or expressly or solely come to the u.s. they had been visiting latin america, and there was a working level visit on the way through. besides if there was any difficulty arising from it, i think michelle obama's and the kids' subsequent visit to beijing as their host i think smoothed the way. i don't think that's a problem. the key thing, the chinese leadership, is the tin tacks of the one relationship in the world which fundamentally matters to their future, and that's this one the united states. >> rose: and what are they prepared to do to make it better? >> well, i think their first step in that direction will have been to see the president's

priority, since his reelection, bringing about a global agreement on climate change. the chinese if i was to give you an example said okay we've decided for national reasons to act on climate change. we're going to announce a peaking year when our aggregate emission, carbon emissions will peak. and, two we'll give you an indication as to what that quantum will be. the chinese could have announced it unilaterally, they could have announced it at the copenhagen conference itself or the preparatory meetings run through this year or the u.n. general assembly. but i think as a significant gesture to the president and the intensity of the two-way negotiations between the two they chose to make this a core part of the announcement of the outcomes of the president's visit in november. so that's a discretionary

decision. stay substantive level i think it's really important, at the viscera of the military relationship is the agreement on two transparency initiatives between the chinese armed forces and the united states armed forces on how to prevent and manage incidents at sea or incidents in the air. now, we've been chipping away at that for decades. the united states had an agreement with the old soviets on that dating back to the 70s, i think. it may be even a little earlier. put we've never been able to crack that between the u.s. and china. so finally the two militaries are able to come together on that, and i think that is potentially one of a number of stabilizing elements which lie ahead of us, for the u.s.-china relationship. >> rose: how do they view russia? >> well, as tip o'neill famously reminds us here in this country, all politics is local. and i imagine an active conversation between xi jinping

and vladimir putin is about what they would both describe as the color revolutions of eastern and central europe. and the extent to which they have concluded that either the europeans or the americans or the collective west were explicit in that. in order -- complicity in that. in other words, aimed at toppling governments and their political systems. that is an active element of the conversation. i think that's true as are their respective attitudes towards the sense org of censoring of the internet in their respective countries as well. i think the relationship between china and russia is a deeper complexity. and sometimes in the cut and thrust of what is happening today we lose sight of the strategic shifts. but what did nixon do? well, you and this country know better than i but i studied it from afar as a kid upon. he fundamentally rewrote the strategic rule book by engaging

china strategically and militarily against a common soviet adversity. and this fundamentally altered the strategic equation, and was one of one element one of many elements, that began in '72 and the soviet union collapsed in it '91. that's one of a number of elements which frankly, rattled the preexisting concept of the strategic status quo. what worries me, though, as we hook back at the u.s.-china relationship since '91 and the collapse of the soviet union, is that we hadn't and haven't put in sufficient strategic effort into stiewght constituting a new long-term strategic rationale for the chinese-west relationship. the soviet union collapsed. that happened in 90-91.

but when i look there is not evidence for the new strategic rationale for the china-u.s. relationship. so leave that to one side. and then you roll into the present. >> rose: you're describing this as missed opportunities for the united states that it did not take that moment it build a new relationship with china that china would be more responsive? >> with a new global strategic rationale. >> rose: right. >> the glue which held china and the u.s. together during that period was a common position against the soviet union. to get the soviet soviet union what have you got left? well, we could make a lot of money together. that kind of held together for a season but there wasn't, shall i say, a grarnd strategic narrative capable of uniting these two great countries into a common endeavor for the future. maybe it would have been just impossible. i don't know. but what i do know is when you

start to see this fundamental rift emerge between russia and the u.s.-- the west and the rest, that it did not take long for a strategic corporation to emerge and strengthen between moscow and beijing. i think that's the other part of the strategic sandwich. >> rose: they have shown a little of that in afghanistan too, with interest in afghanistan. >> it's a complex question. the aspen strategy group conference was last august, and i went up and participated with this little paper i wrote that i think you'll find on a web site. just understand that both these vis have a very long view of each other, and the russian long-term view-- i 21 moscow last march to ask this question-- "what do you really think about china?" and they say "it's the best it's been in 450 years and how it will be in the next 10 years

we tonight know. >> rose: in it 20 40 what will china be and what will we be? >> this is a fundamental question for how we view these two countries' future and critically, what we do in the interim. of course, the conditionality attached to your question charlie, is on on the assumption of no policy change. and that is very important. i have that asab an assumption. if that is the case and we do not have policy change either in paige or washington, what i do worry about is an incremental slow drift towards one form of conflict or another. the alternative narrative out to 2040 is one where the two countries for their leadership much sooner rather than later develop a commoninar tef for their future along the lines of the principles i was seeking to

explain perfect, constructive real itch. here's here's what we disagree on, here's what we agree on. and develop the political capital to solve the hard ones over time. that way i can see frankly asking much better to guarantee the long-term peace and security of the neighborhood. upon this final point, if you're going out to 2040, is this-- china will have to, in order to continue to emerge as a global great power vto deal with a raft of six or seven major challenges around the economy and its demography in that period of time in order for its rise to continue. now, tonot it to be unabated. that involves a range of assumptions which assume that smart chinese leadership. a bit of luck prevail on the way through. but i'm into the realist business of how do you maximize

the prospects of peace and stability. in asia where my country is homeland securitied, we want to see the emergence of a common narrative. >> rose: i guess the prime minister said when he was here "no one doubts this is the asian century. what we don't know if this is china's century or india's century. how would you assess india's place. >> india's place is huge. this society, the asia society represents the potattle of the region and of its five subregions of which china is just one. in endia,ing and to some extent rising indonesia represent two other huge parts of the jig saw as well assaw,-- i think the world sits with baited breath to see if the prime minister succeeds. if you follow indian politicses.

they're good evening citizens of deli. the most recent said thank you very much it put not too far too fast. managing the program for a. the indian taems will require a high level of shood. that's perfect you encounter-- i think the world wants the prime minister to succeed, and i think the world-- it's one of the reasons the president of the asia society policy institute my first visit will not be to bakebut in fact will be to deli next month because we'll want to work as actively as we can have the endian federal government to make sure we can incorporate on their policy success. >> rose: what is your favorite chinese proverb and what does it teach us about chinese culture?

>> i presume that excludes all rude expressions. asia society is a family society. i think the one that it always captures my mind is a saying of mao's actually, because it represents in so many respects all that china now seeks not to be the case. mao, at the height of the cultural revolution, said the following: "there is chaos in heaven. there is chaos under heaven. the political situation is excellent." and mao the great revolutionary from the pre-49 period and the cultural revolution was into this business of permanent revolution. so if you were to look at the absolute an tis sis of that--

antithesis of this-- a progressive, orderly, system reform program under regular forms of political leadership with no great surprises on the way through, that's what the chinese are now seeking to do. and whenever you quote that phrase to china's friend, they literally freeze because they know what it was like coming out of the cold revolution. bochlei talked about mao and xi jinping talked about mao, yet most people believe the person he most rezem bems is xiao. >> i would agree with that. the day after-- the day or two after he became general secretary of the party or it may have been after he became president of the country he flew south in order to lay a wreath

at the statue to honor deng's contribution to the outside world ask and when he did so he was sievmently honoring his father who made a contribution in that sense. i think there is a deep reverence and respect for deng. i remember deng was a hard liner politically and frankly a big reformer economically. seek that market-based economic reforms were necessary for china's overall accumulation of national economic power and improving living standards of average chinese. >> rose: there seems to be in some circles that the chinese are-- to put it mildly-- displeased with the north kranz and my question is what are they prepared to do about that? >> yeah, well, that's a good and sharp question. the first part of it is true and the second part of it is hard to answer. on the first part it is beyond analytical doubt that there has

been a considerable rupture in the relationship between beijing and pyongyang. and that's because kim jong-un, the new leader of-- new-ish of the d.p.r.k.-- >> i was wondering how you were going to describe him. >> when kim jong-un early in xi jinping's period, decided to demonstrate his stated craft by letting off an underground nuclear test around the chinese new year in 2013, this made china really grumpy, like, super grume, capital "g" grumpy. what is xi jinping doing? he's saying our number one friert is to grow the chinese economy. for that we need regional stability and now we have this renegade neighbor out there trying to tbloa blowup the furniture. thank you very much for doing that. number two thank you very much for doing that on the chinese

new year. this has led to deep angst on the part of the chinese leadership, and to today kim jong-un has not been invited to china to visit, and the president of the south has visited beijing, and xi jinping has visited seoul. so this is happening. there's a deep rupture, and i've seen some receipt diplomacy from beijing trying improve that again and the north in turn is reaching out now to russia and other countries to try and obtain stronger diplomatic leverage more broadly and internationally. so your description of displeasure is correct. what can china do about it? look, i have a personal view on

this which horrifies most chinese and american strategists but let me put it anyway, and given that i'm working for the asia society and therefore, all collateral damagealize with me. and that is there is only one way we can deal effectively with north korea over time on the two big policies will of peace for reunification and deit nuclearization noargt neither of which can be separated from each other in my view, and that is for there to be a grand strategic bargain between china and the united states about how the peninsula needs to be governed in the future. what is the baselean concern about reunification, and the mirn truth south of the parallel find themselves bordering mainland china. american troops, american ally, and one thing toxic to our

chinese friend idea of the united states being on i a land border rather than just being a maritime problem from the is perspective of beijing. therefore, that has took dealt with. if you have arrive at a compact that diesel with the security of xi jinping and his regime, in some sort of confederation with the south, you might be able to cook with gas. that's an australian expression. it means you might be able to produce a result. >> rose: southern expression. >> is it? >> rose: yes. >> when i have used that it at harvard they look at me like i just walked off from another planet. >> rose: that's harvard's problem. ( laughter ) ( applause ). >> i've been around a conference table at harvard and they say

"please explain," when i say that. if you're look for what i think is an overall strategic context, that is possibly it. there's something about xi jinping's leadership style and absolute authority within the chinese political system which says big stroojic thinking like that should not be discounted. he sooz himself in the mode of china's great political leaders, and deng, you might recall, is the leader who did the final deal with the soviet union in the chaos of tiananmen in 1989, when gch visited what, did dengspgz co, in the middle of extraordinary outpufort of protest movement within the chinese capital he finally sealed the soaf-chinese border. and there is no disagreement on the border. it's been done. xi jinping sees himself in a

similar strong leadership mode so if ever there was a chinese political leader who could possible entertain a grand bargain on the peninsula it might be him. >> rose: that's a great way to end, a grand strategic initiative. on behalf of everyone here, thank you so much. eye pleasure. captioning sponsored by rose communications captioned by media access group at wgbh access.wgbh.org

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