‘Dangerous decade ahead’: warnings for US and China in global showdown
- Henry Paulson says economic ties between the two countries are essential to avoid unnecessary confrontation
- Kevin Rudd urges Beijing and Washington to set ground rules to manage engagement
In a pre-recorded speech to the forum, former US treasury secretary Henry Paulson said some “strategic decoupling will be necessary to protect national security”.
“But if this goes too far, it will create what I’ve called an ‘economic iron curtain’,” Paulson said via video link.
As incompatible rules and standards were developed throughout the global economy, innovation and economic growth would be impeded, he said.
Paulson said economic linkages were vital for both countries to avoid “unnecessary confrontation”, and China and the US should work towards “targeted reciprocity” around market access.
“It’s not on a mechanical and reflexive basis, but in a way that makes sense for our two countries’ firms and workers,” he said.
“So let’s compete, let’s coordinate, and yes, let’s cooperate when it’s in our self-interest to do so.”
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The warning from Paulson, who helped create the China-US Strategic Economic Dialogue a decade ago, comes after several years of confrontation under the administration of former US president Donald Trump.
The new administration has also gone further to build an international coalition to take on China.
Former Australian prime minister Kevin Rudd said the signs pointed to a “dangerous decade ... ahead”.
In his pre-recorded video address to the Beijing forum, Rudd said China and the US needed to lay ground rules to manage their strategic competition, with lessons to be learned from the procedures the United States and the Soviet Union put into place in the aftermath of the Cuban missile crisis.
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“They must draw the bottom line and set rules,” he said.
“Their relations can never be managed unless there’s a basic agreement between the parties on the terms of that management.”
Rudd, now president of the New York-based Asia Society Policy Institute, said the one-China policy was central to those terms.
“Ending the Trump administration’s unnecessarily proactive actions over Taiwan, in my judgment, would be appropriate,” he said.
Beijing regards Taiwan as a breakaway province and the one-China principle – the understanding that there is only ‘one China’ – as a cornerstone of diplomatic relations.
Rudd said China and the US were likely to mount a global contest, with each aiming to show its system as better than the other. But there was still room for cooperation on issues such as climate change and arms control.
“The United States and China would need to jointly set up some hard limits on each other’s security policies, their security conduct and their allies” he said.
“I strongly believe constructing such a framework is possible, and the alternative cost of action could be catastrophic.”