First, China is a one-party state that regards liberal democracy as its ideological enemy; second, whereas once this was a matter for China’s domestic political arrangements alone, as China becomes more powerful strategically, economically and technologically, and more assertive in the prosecution of its national interests abroad, these two sets of conflicting democratic and authoritarian values are now coming into greater conflict around the world. Loading To understand where Australia fits in the wider scheme of things, it’s important to begin by understanding the political and policy priorities of Xi Jinping’s China. I see them as a set of 10 concentric circles. It helps to understand what the world looks like when viewed from the weekly meeting of the standing committee of the Politburo, before we then decide what our best strategy should be in response. Number one, keep the party in power and never yield to any argument that it should transition to more democratic forms of governance; Two, sustain and secure the unity of the motherland, hence the unyielding approach in Tibet and Xinjiang, anxiety over Hong Kong, and the great unfinished business of Taiwan;

Three, grow the economy to become a fully advanced economy and the world’s largest economy within the next thirty years, as the basis of China’s long-term national power, and continue to improve people’s living standards along the way in order to sustain party legitimacy; Kevin Rudd with former US secretary of state Henry Kissinger, a fellow member of a delegation from the 2019 New Economy Forum, before they meet Chinese President Xi Jinping in Beijing last week. Credit:Jason Lee-Pool/Getty Images Four, ensure China’s relations with its 14 neighbouring states are as benign as possible, and ultimately as compliant as possible, to China’s stated core national interests, including the fundamental strategic transformation of the relationship with Russia to that of a de-facto security and foreign policy alliance; Five, because of large-scale environmental pollution during the first 30 years of unconstrained economic growth, resulting in large-scale popular unrest, entrench sustainable development (including climate change action) as an additional economic and planning discipline for the future; Six, modernise the Chinese military, using fully integrated operations, information warfare as well as classical power projection capabilities, to return Taiwan by force if necessary, assert China’s other unresolved territorial claims, and begin articulating China’s aspirations to be a global great power;

Seven, on China’s maritime periphery to the east, push US forces back behind the second island chain, fracture US alliances in Asia, thereby enhancing China’s future Taiwan contingencies; Loading Eight, on China’s continental periphery to its west, deploy the Belt and Road Initiative to turn wider Eurasia into a new zone of economic opportunity and foreign and security policy influence for Beijing, extending to Western Europe, South and South East Asia and the Middle East; Nine, build on half a century of aid diplomacy in Africa and Latin America to secure new markets, as well as political support for China’s multilateral interests whenever needed; Ten, begin the gradual refashioning of the global rules-based order in a manner more compatible with China’s interests and values, through personnel, institutional and cultural change within existing multilateral institutions, while creating a new set of arrangements beyond the UN and the Bretton Woods system.

As for future directions for Australian China policy, I would like to recommend the following principles: Develop, agree and regularly update a classified, cabinet-level national China strategy. China has one for the US and all its allies. The US is beginning to develop one towards China. It would be negligent for Australia not to have our own. Loading Such a strategy should be cabinet-driven. It should be crystal-clear about our national objectives in relation to China, just as it should be clear in its understanding of what China’s objectives are in relation to Australia. It should be brutally pragmatic about how we go about realising those objectives over time by the full deployment of all arms of Australian statecraft. It should also be shared as appropriate with our principal allies. And it should be subject to systematic annual review. Australia’s national China strategy should be anchored in three core understandings: first, China respects strength and consistency and is contemptuous of weakness and prevarication; second, China too has net strengths and weaknesses of which Australian strategists should be aware in framing our own strategy; third, Australia should be equally aware of our own strengths, weaknesses and vulnerabilities.

Australian strategy should also understand the difference between operational and declaratory strategy. One of the failures of the current government is to shoot its mouth off about everything and believe that this somehow adds up to a strategy. It doesn’t. In fact, it’s just political self-indulgence, driven by its perception of domestic political opportunity rather than advancing our interests with China. Australia in this respect should learn from Japan and India. Both countries have fundamental security problems with China, including significant contested territory. But both manage to be able to prosecute a balanced strategy towards China which protects their security interests, advancing their economic interests and doing so with regular summitry. That has eluded the current Australian government. Australia needs a more mature approach to managing the complexity of the relationship than having politicians out-competing one another on who can sound the most hairy-chested on China. Such an approach might make for great domestic politics. It might make for great media coverage. But it gets you nowhere in advancing your core security and economic interests. Maintain domestic vigilance against any substantive rather than imagined internal threats to the democracy, our political institutions and our critical infrastructure. China does this for its own country. We should do the same for our own. I fully support the Foreign Influence Transparency Act which was passed with bipartisan support. Indeed I wonder what would have been the result for the Port of Darwin had the Abbott/Turnbull/Morrison government brought this in a little earlier. The port might still be in Australian hands.

Loading However, a word of caution about foreign influence. It’s very easy for this to translate into a form of racial profiling. I will be the first to the barricades if this national security legislation becomes a political vehicle for Hansonism and a return to the days of the yellow peril. These new arrangements on foreign influence transparency should be given effect as a legal and administrative process, not as a populist witch-hunt. Regionally, Australia must once again become the international champion of our friends in the South Pacific. The current government’s posture on climate change has undermined our standing with island states and provided a further opening for China. Without credible climate leadership from Australia, it will be a dead letter. And on the aid side of the “step-up”, bear in mind that the quantum this year has still not returned to the levels we had when I left office in 2013.

In South East Asia, Australia should join ASEAN. I first raised this with Indonesia in 2013. Turnbull mentioned it in 2016, and the Indonesian President appeared supportive. There will be some resistance. But we should work through these challenges over time. Australian membership would enhance the strength of this critical regional institution at a time when it is coming under considerable internal and external pressure. It would also help Australia manage its long term relationship with Jakarta once Indonesia becomes a larger economy than Australia and the power relativities between the two countries change. Former prime minister Kevin Rudd with Peter Hartcher at the launch of his Quarterly Essay on at Parliament House on Tuesday. Credit:Alex Ellinghausen Australia must diversify its international economic engagement. We have become too China-dependent. We need to diversify further to Japan, India, Indonesia, Europe and Africa – the next continent with a rising middle class with more than a billion consumers. We must equally diversify our economy itself. Australia must continue to consolidate its alliance with the United States. This should be matched with consistent Australian defence effort for the long term – of the type outlined a decade ago on the 2009 White Paper. The alliance remains an enormous force multiplier for Australia at every level. It remains a critical factor impacting China’s long-term strategic perceptions of Australia. It creates greater respect in Beijing for Australia, not less, given that China continues to recognise the formidable capabilities of the US armed forces and the closeness of the alliance relationship Canberra has with Washington. The alliance will also continue to generate its own frictions with Beijing. But this comes with the territory. As for the Quad, Abbott’s recent re-writing of history on this ignores the fact that when we were elected in late 2007, neither India nor Japan wanted to proceed with it. The Bush Administration at the time was also at best half-hearted. It would have been passing strange to join something when you would be the only active member.

Ten years later, the Quad is meeting at foreign-ministers level. But India for its own curious reasons continues to exclude Australia from the Malabar naval exercises held with Japan and the US despite six years of Australian requests to do so. I predict India may change its posture in January when Morrison visits Delhi. But Australia should be deeply realistic about the long-term reliability of India as a robust defence partner given Delhi’s competing priorities elsewhere. Australia should make no apology for its support for universal human rights as defined in the Universal Declaration of 1948 and the other UN covenants. China is also a signatory. These are the international standards we should all be held to. Australia as well. Australia must also look to mid-century when we may increasingly have to stand to our own two feet, with or without the support of a major external ally. Trumpist isolationism may only be short-term. But how these sentiments in the American body politic translate into broader American politics with future Republican and Democrat administrations remains unclear. Loading Australia must plan for a big Australia. A big and sustainable Australia of the type I advocated while I was in office. That means comprehensive action on climate change and broader environmental sustainability. Again, as I have argued in my essay on "the Complacent Country", only a country with a population of 50 million later this century would begin to have the capacity to fund the military, security and intelligence assets necessary to defend our territorial integrity and political sovereignty long-term. This is not politically correct. But it’s yet another uncomfortable truth.

The Sydney Morning Herald's political and international editor, Peter Hartcher, concludes his Quarterly Essay by saying “history is forcing us out of our complacency”. I hope he is right. Because he must be right. For too long we have been the complacent country on the retooling of our economy, with both a government and a private sector remarkably disengaged from the structural economic challenges and opportunities unfolding across our region and the world. I increasingly fear we will be left behind. For too long we have also been the complacent country on climate change despite the existential dangers now staring us in the face and a government just hoping to keep it all out of the news while the country literally burns. And for too long we hav been complacent in anticipating and responding to the profound geo-political changes now washing over us with China’s rise, America’s ambivalence about its future regional and global role, and an Australia which may one day find itself on its own. This is an edited version of the speech that former prime minister Kevin Rudd gave at the launch of the Quarterly Essay by Peter Hartcher, The Sydney Morning Herald's political and international editor.