It is a great pleasure to be back at Brookings.
It is always a pleasure to be at one of Washington's oldest and most distinguished think-tanks.
I would like to acknowledge John Thornton, Chairman of Brookings and Strobe Talbot, President of Brookings.
John's thoughtful contribution on China in recent editions of Foreign Affairs magazine, his direct support for the China Centre here at Brookings and his role as Visiting Professor at Qinghua University in Beijing all fall within the best traditions of contributing to American public policy debate.
Strobe Talbot of course is synonymous with scholarship on the Soviet Union of the past and the Russian Federation of the future.
Substantively speaking, these guys cover the ground between them from Petersburg to Peking - standing as a colossus astride the great Eurasian landmass in the great tradition of Brookingsonian expansionism!
Brookings has also been kind to me over the years in opening its doors to its rich array of scholars, researchers and public policy professionals for which I thank you.
The Australia-US Alliance
One hundred years ago this year, President Teddy Roosevelt's Great White Fleet arrived in Sydney.
Thousands stood on the harbour foreshores to catch a glimpse of 384,000 tons of white-painted steel gliding through Sydney Heads.
The American Fleet was, of course, given a warm welcome - not least because we Australians are always up for a party.
The British, the truth be told, were not entirely happy about this level of interest, on the part of their recently federated colonies in Australia, towards this visit by the blue water navy of their former rebellious colonies in America.
Less than a century before, of course, the British had left their own particular calling card on the city-scape of Washington in the war of 1812.
We Australians always also spot an opportunity when one comes along.
First, the Australian Government set about leveraging the Great White Fleet's visit to sway the Australian parliament to fund the building of our own Australian fleet.
And second, we then rejected London's suggestion that our fleet merely be incorporated as a squadron within the British Imperial Fleet.
And so was born the Royal Australian Navy.
And so I thank Teddy Roosevelt, the hero of San Juan Hill, for his contribution to the birth of our own Australian navy which soon will celebrate its own centenary.
US naval visits to Australia have continued ever since, in peace and in war, and your navy has always been welcome.
Our troops were soon to fight side-by-side for the first time in a World War.
In the Battle of Hamel on 4 July 1918 - ninety years ago - American troops first took to the field in battle in the First World War.
And they did so under an Australian commander, General John Monash.
The foundation of our alliance came into being in 1941/1942.
When Australia faced the real threat of foreign invasion, in the words of our Prime Minister John Curtin, Australia looked “to America, free of any pangs as to our traditional links or kinship with the United Kingdom.”
In the darkest days of World War Two, Australia and the United States stood together, fought together and died together to restore peace to the Pacific.
This was a critical turning point in Australian strategic thinking.
The next step was our formal alliance.
Signed in 1951, the ANZUS Treaty remains the bedrock of Australia's strategic policy.
Since then, our alliance has been supported by 12 US Presidents - Republican and Democrat - and 13 Australian Prime Ministers - Labor and Liberal.
Our alliance is based on our common values.
We are robust democracies.
We are prepared when necessary to fight to defend the values for which we stand.
Our alliance is also based on our common strategic interests.
For Australia and the United States, strategic stability in the Asia-Pacific is of crucial importance - both now and for the future.
We are both committed to market economies in an open global economic order.
Our alliance is steeped in history.
But it is also part of our framework for meeting the challenges of the future.
The purpose of my remarks today is to reflect on the continued importance of US global leadership; to reflect on the new Australian Government's foreign policy framework and to make some observations on how we both might engage China in the future and how we might shape together China's engagement with the global and regional architecture of the future.
US Global Leadership
My view of the United States' role in international affairs in the future is simple - I believe the United States is an overwhelming force for good in the world.
The US has used its political, military and economic power to provide the strategic ballast necessary to underpin the post-war global order.
The US vision for a post-World War Two international order began with the Atlantic Charter when Churchill and Roosevelt agreed that a new order should emerge from the ashes of war, based on the dual principles of political freedom and economic cooperation.
There then followed the San Francisco Conference that gave birth to the United Nations.
The Bretton Woods Conference that created the IMF, the World Bank and led to the GATT.
And then the Marshall Plan to save Europe.
We should not forget the importance of these institutions.
We should not forget that these institutions provided the framework under which the world has developed and prospered over the past six decades.
Nor should we forget that US global leadership gave rise to these institutions.
Half a century later, various of these institutions are under strain and are in need of reform - reform that once again must be driven by US global leadership.
In the Asia-Pacific region, this ballast has been provided in part through the US alliance system with Japan, the Republic of Korea and Australia.
This strategic stability has allowed the countries of the region to focus on economic development.
Countries have been able to focus on competing for market share rather than competing for local or regional strategic superiority.
This has allowed the Asia Pacific region to lead the world in economic development over the past three decades.
The United States has been less centrally involved in the evolution of East Asian and Asia-Pacific regional architecture.
There is no US-led NATO equivalent in the region.
We have ASEAN - a home-grown body that has made a remarkable contribution to establishing stable relations between the countries of South-East Asia.
We have APEC that Australia, Japan and Korea were instrumental in developing.
In the security space, we have the ASEAN Regional Forum - still the only body in the region that brings all the major players together to focus specifically on security issues.
More recently we have seen the emergence of other ASEAN-based bodies - the 10 plus 3 mechanism that began with an informal summit in 1997 and was institutionalised in 1999.
And, most recently, we have seen the East Asia Summit that crucially brings India, Australia and New Zealand into a dialogue mechanism with the countries of East Asia.
Notably, three of these bodies exclude the United States altogether - making it more difficult therefore for the US to engage directly in the reform of these institutions although there are other opportunities for the United State to become more directly regionally engaged.
This presents some complex challenges for the future that need to be addressed.
Australian Foreign Policy
The new Australian Government is committed to building a strong, prosperous and outward-looking Australia.
Our strategic goals are to maximise global and regional stability and ensure the global economy remains open.
Through this, we believe we can enhance our economic prospects - not just for Australia, but for all nations.
We approach our task as a nation that is fully committed to global engagement.
We are the 15th-largest economy in the world.
Our stock market is valued at over one trillion US dollars - three times the size of Singapore; and around half the size of the Hang Seng (which includes of course many mainland China-based companies); and responsible for more foreign listings each year than any other Asian bourse.
Because of superannuation policy reforms we undertook in the 1990s, we have developed a world-class funds management industry that has the world's fourth-largest pool of funds under management.
We are a major supplier of energy and resources to the major economies of North Asia - China, Japan and the ROK.
Our resources exports to India are growing and will continue to grow into the future.
Our military budget is the 11th largest in the world.
We have a sophisticated foreign policy establishment deeply enmeshed with the countries of Asia and the Pacific.
We are a country therefore with both global and regional interests.
In the prosecution of those interests, our foreign policy has three pillars: our alliance with the United States; our membership of the United Nations; and comprehensive engagement with the countries of Asia and the Pacific.
Some might argue that these are mutually exclusive propositions.
I regard them as naturally reinforcing.
To prosecute them, the Government intends to deploy what I have described as “creative middle power diplomacy” - both globally and regionally.
This means for example that you will see Australia being more active in the global efforts to meet the challenges of climate change following our ratification of the Kyoto Protocol within a week of taking office.
This means we will be doing more to work with our partners around the world to get real progress against the Millennium Development Goals - particularly among the Pacific island nations.
Last month I visited Papua New Guinea and I announced that Australia would seek to develop what I call “Pacific Partnerships for Development”.
Under these agreements, Australia and our Pacific partners will set mutually agreed development outcomes.
In return, Australia will be prepared to offer more development assistance.
The strategy is to provide better assistance targeted at real progress against measures of health, education and basic economic infrastructure.
More broadly, our foreign policy intention is to prosecute a more activist foreign policy in partnership with our allies, friends and, through the UN, the wider community of nations in areas where we believe we can make a difference.
For too long, our voice has been too quiet in the wider councils of the world.
Our Alliance with the United States
The first pillar of our foreign policy is our alliance with the United States.
I am committed to deepening our strategic engagement with the United States.
Closer engagement with the United States gives us the tools to better meet the security challenges of the future - both regional and global.
The threat from terrorism is still alive and well.
The war in Afghanistan is a crucial front in the fight against terrorism because it was from there that the insidious attacks were orchestrated against this country nearly seven years ago.
We cannot allow Afghanistan to again become an unfettered safe haven for terrorists.
This should be a concern for leaders around the world - in Europe and in Asia as much as it is here in the United States.
We have a responsibility to help the people of Afghanistan build a stable future for themselves.
Published surveys have recently shown that the people of Afghanistan strongly support the US-led action in their country to rid them of the Taliban.
That is why in Bucharest I will be arguing in close cooperation with the US Administration for a more coordinated military and civilian strategy for Afghanistan.
The Australian Government is committed to Afghanistan for the long haul.
But we must have a common strategy with credible burden-sharing if we are to prevail.
Consistent with my commitment to the Australian people, we are changing the configuration of our involvement in Iraq.
Our ground combat troops will be withdrawn but our air and naval elements are remaining and we are significantly increasing our civilian aid program.
I also want to see greater practical cooperation between our militaries.
Importantly, this means making it easier for trade in defence goods between us.
I hope that the Defence Trade Cooperation Treaty will be able to pass the Senate here in Washington soon.
My vision for a closer relationship between our two countries extends beyond the realm of strategic cooperation.
We also need to expand our economic relationship.
We already have the Free Trade Agreement that provides a framework for further development of the trade relationship - especially in services.
I was pleased on Saturday to announce with Christopher Cox, Chairman of the SEC, that Australia and the United States would commit to developing a pilot program for mutual recognition between Australian and US securities regulatory regimes to enhance capital flows between the two economies - a global first for both the SEC and its Australian equivalent ASIC.
In the current climate of global financial instability, it also crucial that Australia and the United States (and our other partners around the globe) work closely together to coordinate responses.
That is occurring through both multilateral and plurilateral mechanisms like the Financial Stability Forum (FSF); the G20 and the IMF.
In my meetings on Friday with the President, the Chairman of the Federal Reserve and the Secretary of the Treasury, responding to the financial crisis was a central focus of our discussions.
We agree that the global nature of the problem demands a global response - based on greater global transparency.
The great thing about the Australia-US relationship is also the depth of the personal ties.
More Australians visit the United States every year than anywhere else other than New Zealand.
Nearly half a million people make the trip each year.
And about the same number visit Australia from the United States.
Later today I will be witnessing the signature of an “Open Skies” Agreement between Australia and the United States.
It is a new era in the aviation links between us that began in 1928 when Sir Charles Kingsford Smith and Charles Ulm made the first aerial crossing of the Pacific from the United States to Australia.
Its aim is to make it easier and cheaper for even more people to make the air journey across the Pacific to add more strands to our ties.
Membership of the United Nations
A second pillar of our foreign policy is our membership of the United Nations.
The Government is also committed to increasing our engagement with the United Nations.
The United Nations and the UN Charter are central to a global rules-based order.
Australia is a foundation member of the UN. We are proud of the role we played in its establishment.
Particularly the part we played in the drafting committee for the UN charter.
We are also proud of the part we have played in UN Peacekeeping Operations over the years.
Today we have people serving in UN-led or UN approved peacekeeping operations around the world in Sudan, Sinai, Solomon Islands and East Timor.
We are currently the 12th-largest financial contributor to the UN's peacekeeping operations.
On Saturday in New York I met the UN Secretary-General, Ban Ki-moon.
I told him that Australia was committed to reinvigorating its engagement with the United Nations.
I also told him that Australia would, in 2012, be seeking a seat on the UN Security Council for the 2013-2014 term.
I also discussed with the Secretary-General the situation in Darfur.
I said that we wanted to see Darfur again raised in the Security Council.
The Government in Khartoum has been less than helpful to the UN and we need to do more to get an effective response underway.
A response that provides real security to the people of Darfur.
I said that Australia was committed to providing further humanitarian assistance and was considering whether we could make a modest military contribution to Darfur to supplement the police and military personnel serving already under the UN Mission in Sudan.
The world cannot simply stand idly by while the people of Darfur continue to suffer.
I also informed the Secretary-General that Australia would be increasing its official development assistance budget to a level of 0.5 per cent of GNI by 2015.
A particular focus will be working to get real progress against the Millennium Development Goals.
We are already at the half-way point on the time line established in 2000 for the MDGs.
Progress has been mixed at best.
We need to make sure that all our efforts are delivering results.
We want to be part of the global solution on poverty.
We do not want to just be intelligent and well-informed descriptors of the problems.
We want to work at a practical level with our global and regional partners to deliver real progress against these goals on which we all solemnly agreed back in 2000.
I said to the Secretary-General that Australia was ready to make a strong contribution to reforming the United Nations to make it more effective.
In this, the role of the United States is also critical.
Just as the United States drove the establishment of key international organisations, reforming those same institutions will require active US engagement.
It is the same for the WTO.
US leadership will be crucial to getting a breakthrough so that we can get an ambitious outcome to the Doha Round of talks this year.
Other institutions also have to meet new challenges.
The IMF has a real opportunity to play a leading role in the response to the current financial crisis.
The World Bank, like the United Nations, would benefit from reform and I support the reform proposals currently being advanced by Bob Zoellick.
Engaging the Asia-Pacific Region
A third pillar of Australia's foreign policy is our engagement with the Asia-Pacific region.
The aim of the new Australian Government is to develop closer bilateral and regional relations with our neighbours.
Australia has an exceptionally close relationship with New Zealand.
This is based on common security concerns and common action in our immediate region in the South Pacific.
It is also based on the strength of our economic relationship reflected in our Closer Economic Relationship which has now operated for a quarter of a century.
Within the region, Australia has a long-standing and close friend and partner in Japan.
There is a strong economic strand to our relationship - Japan has been our largest export market for 40 years and Japanese investment provides many jobs in Australia, particularly in the manufacturing sector.
We also have a close and deepening strategic engagement. Bilaterally, Australia has in recent times strengthened our defence cooperation with Japan.
There is also the important trilateral element to our cooperation. The Trilateral Strategic Dialogue between Australia, Japan and the United States is an important mechanism that allows three close partners in the region to discuss the interests we share, the challenges we face and deliberate on appropriate responses to the same.
Australia also has a close relationship with the Republic of Korea.
Korea's economic rise in the 1970s and 1980s was a remarkable achievement.
This led to a close relationship between our two countries, particularly in the supply of natural resources.
Korea's global giant steel company, POSCO, is one of Australia's largest single customers.
Our relationship also has a strong military component.
Under UN forces, Australian soldiers, sailors and airmen fought in defence of South Korea in the Korean War.
Security on the Korean Peninsula remains important to us today.
I look forward to working with the new Administration of President Lee on our shared economic and strategic interests.
In South East Asia, Australia has a number of vital partners.
Indonesia is our closest ASEAN neighbour - and now a fellow democracy.
It is also the world's most populous Muslim nation.
Indonesia has achieved remarkable things in the past 10 years - it has made the transition to democracy, embarked on economic reform, and been a solid partner in the fight against terrorism. Indonesians - like Australians and Americans - know the pain of terrorist attacks on their people.
Indonesia is also a partner with us in the region.
As the biggest country in South East Asia, it plays a natural leadership role.
Bilaterally, our cooperation covers nearly every conceivable field from working against people smugglers to closer security cooperation under the recently signed Lombok Treaty.
We also work with our other friends and partners in South East Asia including Malaysia, Singapore, Thailand and the Philippines both bilaterally and the through the ASEAN mechanisms.
For us, close engagement with region, particularly in building an open inclusive regional architecture that can underwrite stability into the future is crucial.
Elsewhere in our region, we are witnessing the rise of India.
I want to see Australia and India develop closer relations at all levels.
I am committed to developing a broad-based relationship with India - political, economic as well as embracing a more substantive security dialogue.
Australia wants to see India included in regional bodies.
India's inclusion in the East Asia Summit adds a crucial dimension to the EAS.
And we strongly support India's membership of APEC.
This question of the adequacy of our existing regional architecture given the demands of the future is also one that will require our common efforts.
China
The dynamic change-drivers in the Asia-Pacific region are clear to everyone.
One of the biggest drivers of those changes is the economic emergence of China over the past 15 years.
China started its domestic reform and global opening process 30 years ago this year.
The first steps towards economic reform were measured.
There have been setbacks along the way.
But the results that have been achieved over the longer-term have been unmistakable.
The living standards of the Chinese people have been lifted dramatically.
In the process of developing itself and its people, China has made a critical contribution to global economic growth.
It has become a trading power and is now becoming an investment power.
China holds nearly 500 billion US dollars worth of US Treasury bonds - a second only to Japan's holdings.
The economic transformation of China has seen a big shift in the personal choices available to Chinese people.
Human rights remain a real problem as demonstrated by the recent violence in Tibet - problems that require dialogue and restraint.
China's legal system is still developing.
It has come a long way from the turmoil of the 1970s.
But in a globalised world where intellectual property needs protection, a full functioning, transparent and independent legal system is crucial for investor confidence.
We have to recognise that China's leaders face staggering challenges domestically.
A recent Brookings research, co-authored by my friend Jeffrey Bader, note for the upcoming Presidential election noted the scale of the challenge.
* Per capita GDP is still only $1600.
* The population is ageing and there are big inequalities between the coastal and western regions and between urban and rural areas.
* Air pollution is a major problem.
* Lack of water is a serious problem in northern China.
* And China has to cope with moving up to 13 million people a year into urban centres - the biggest urbanisation movement in the history of the world.
China's leaders recognise that they cannot make progress against these significant international challenges in a hostile international environment.
So China's focus has been on stability.
In this context, the single most important element of China's foreign relations is, of course, its relationship with the United States.
Since the Nixon visit of 1972, the United States has been actively engaging China.
On Friday, in my discussions with President Bush, I commended the Administration's handling of the China relationship.
The wide range of new senior dialogue mechanisms gives Washington and Beijing channels to deal with emerging challenges before they become problems.
An important development in US policy towards China was in 2005 when then Deputy Secretary of State Bob Zoellick outlined his concept of China as a responsible global stakeholder.
His argument was that China has benefited from the current global international order - in both economic and security terms.
And, as a growing power, China should be more than just a passive member of the international order, it should work actively to sustain the system that has enabled its success.
Bob Zoellick's logic is powerful.
It points to the interests that China shares with other members of the international community.
China's own approach is to publicly emphasise its focus on its economic development and the priority it therefore places on a stable global order.
China has variously articulated its approach as one of “peaceful rise”, “peaceful development” or more recently that of a “harmonious world”.
The idea of “harmony” is not new in the Chinese body politic.
In the early 1900s the Chinese thinker Kang Youwei wrote about “the great unity” or “the great harmony” and proposed a future utopian world free of political boundaries.
It is worthwhile thinking through how we might try and draw these differing concepts of “responsible stakeholder” and a “harmonious world” together.
The idea of a “harmonious world” depends on China being a participant in the world order and, along with others, acting in accordance with the rules of that order.
Otherwise, “harmony” is impossible to achieve.
Therefore, there is on the face of it a natural complementarity between the two philosophical approaches.
And a complementarity that could be developed further in the direction of some form of conceptual synthesis.
In a political and foreign policy system as large and as complex as China's, this provides a potentially useful framework to start bringing together these world-views.
Differences of course will continue - but common ground, where found, should be consolidated, developed and if possible built upon.
What we should consider, then, is a course of practical action that may assist in building on the complementarities already inherent in the two approaches.
Specifically:
* We should welcome any efforts by the United States, China, Japan and others to extend the Six-Party Talks mechanism into a broader security mechanism - one that would later be broadened to include other countries. Given Australia's strong economic and strategic interests in North Asia, we would see ourselves as a participant in any such mechanism at the earliest opportunity. But the opportunity should be taken to advance a broader regional security mechanism that may help remove some of the brittleness that might otherwise characterise security policy relationships across what remains a strategically fragile theatre.
* Second, the ASEAN Regional Forum may provide a mechanism to develop greater regional cooperation on humanitarian responses to natural disasters and to questions of energy security and stability of energy supply, including through open sea lanes of communication. This would provide a further institutional mechanism for engaging China constructively and non-confrontationally in some of the broader security policy challenges of the region.
* Third, China should be encouraged to play a more active role in bringing the Doha Round of WTO talks to a successful conclusion. China as a global trading power has a vested interest in so doing.
* Fourth, China could also be encouraged to play a more high profile role in climate change negotiations. As a major economy, China's participation in efforts to find a solution to global action on climate change will be crucial - as we negotiate the torturous Bali Road Map to its conclusion in Copenhagen in late 2009.
* Finally, as China makes the transition from development assistance recipient to donor, it should be encouraged to work with other donors to develop appropriate OECD-consistent norms for development assistance delivery. Having made the transition, China's experience would be invaluable to other developing nations. For Australia, getting development assistance to the Pacific island nations on a stable footing is crucial - and we would be happy to partner with China in some pilot projects.
In short, we look to China to make a strong contribution to strengthening the global and regional rules-based order.
There is no simple one line answer to the question of how we should seek to engage China.
It is a huge country, with complex global, domestic and historical currents that influence its policy decisions.
But one key is to encourage China's active participation in efforts to maintain, develop and become integrally engaged in global and regional institutions, structures and norms.
At the same time, we have to also recognise that China is rapidly increasing its military spending.
China is developing its inter-continental ballistic missile force and other shorter-range rocket forces.
China's maritime capability is also expanding.
We should not at one level be surprised that a more affluent China seeks to spend more on its military.
But China also needs to be aware that its modernisation drive does have an impact on the region.
It is in part a question of transparency.
It is also in part a question of uncertainties concerning long-term strategic purpose.
We must remain vigilant to changing strategic terrain.
But strategic vigilance must not be allowed of itself to become a self-fulfilling prophecy.
There is nothing pre-determined about US-China conflict in the future.
We decide the future by our actions today.
And we need to give ourselves the best chance to choose the best future.
We need to have:
* strong regional and global institutions;
* a China that is positively engaged in those institutions as a “responsible stakeholder” contributing to a “harmonious” global and regional order;
* and continued good management of China-US relations by both sides.
For Australia, the single core question of whether ours will be a Pacific century rests on the long-term management of this most critical relationship.
Our predecessors in 1944/45 faced great challenges in building an international order out of the ruins of the last global war.
But out of their actions arose a stable international order built on the United Nations, Bretton Woods institutions and the continued strategic ballast provided by the United States.
That order has delivered remarkable prosperity and stability for more than half a century.
Our mission for the century ahead must be to enhance that stability and prosperity by meeting the challenges that lie now ahead head on. Rather than pretending these challenges might go away.
Australia stands ready to assist in dealing with these great challenges of the future.