I'm executive director of ANU China Institute.

Former diplomat.

Spent a good deal at my life working in or on China.

And today we're extremely fortunate to have with us,

Tan Sri Andrew Sheng

who is a very well-known commentator and more than a commentator

on matters Asian and on China in particular,

both as an academic but also as somebody

who's involved in the actual processes of reform

and talking about reform in China.

So Andrew, first of all,

thank you very much for agreeing to talk to us.

It's been wonderful to have you here at the ANU

for the second Crawford Australia Leadership Forum.

You've spoken both in a general session

but also in the session we had this morning on China's domestic challenges.

And obviously throughout China that I I'd like to speak.

Now some of the speakers talked about Chinese leadership and other problems.

But you spoke in a particularly interesting way

on just what you see is happening in China now,

the transformational nature

of the developments that we're witnessing.

And I wonder for the benefit of our viewers

you might be able to talk a little about this for me.

-Andrew Sheng: Well first of all,

I think one needs to have the long lens of history to understand China.

It was the first point.

Chinese bureaucracy is the oldest surviving human institution around.

It survives all the emperors, all the changes of regime,

foreign invasion, internal decay, et cetera.

And so when you're dealing with China

you must remember that you're dealing with a very old

and adaptable institution is point number one.

The second point is that China complies with the law of large numbers.

It's one-fifth of mankind

and so by the law of large numbers one-fifth the world's problems exists in China.

And that's the point I was trying to make.

And it's not just that it's one-fifth of China's internal problems,

but China's success or failure would affect the rest the world

and the world's success or failure would affect China.

It's just over too big and we're all living on one planet earth.

The third point that I would like to make is that

because the whole world is going through very major transformative shifts,

demography, climate change, technology,

geopolitics, the revival of the Cold War et cetera,

and governance,

you know China is evolving at, with this,

at a speed and scale that has never,

is unprecedented in history, right?

For China to move from a hundred over place in GDP numbers

to number two economy in the world in 35, 36 years is unheard of,

I mean you even when, you know, long-term history.

So this is the biggest transformation that we've seen.

And what has happened is that its success can only be explained

because the Chinese government's model,

whether you like it or not

has been an institutional development, innovation,

over the old bureaucracy,

ability to control the bureaucracy

and to be able to have policy objectives and policy outcomes, right.

You know, it started with the formal modernization in 1979

and it's implemented quite a lot of it

except that the game has changed

and the context has changed.

And I think that's the process that we need to appreciate

that at the present moment the Chinese economy.

You know, in 30 years became the world's greatest factory.

It's the hub of the global supply chain, right.

It's not very high-value production,

but it is still a major production.

Anything you can think of these days is,

carries that, made in China.

But China is now moving from that old investment-based export-led model

towards a knowledge-based

innovation-driven and consumption-driven model.

The best illustration of this is that

four out the top global fifteen Internet platforms are Chinese.

And, you know, there's some names that become well-known

like Alibaba, Tencent, Baidu, jd.com,

transcend more electronic e-tailing business than the United States

because their user base is somewhere between 400 to 600 million population,

larger than the US population.

So these transformations are changing China,

changing the mode of governance.

The very fact that the CCP is, allows, these entrepreneurs now

to have creative destruction.

You must understand this,

these businesses have created disruptions on state-owned enterprises.

You know, so the whole game is remarkable.

And it's a remarkable march to markets

in spite of the fact that people accuse,

the leadership of autocracy, et cetera.

But it is a massive commitment towards market economy,

massive commitment to entrepreneurship and innovation,

and openness to the world.

Now, you know, whether you agree with that is another matter.

But that's essentially what the policy objectives are

and we're now looking at the outcome.

-Richard Rigby: I think analytically, you put your finger,

one of the things that makes it difficult to approach.

On the one hand you say quite rightly that the Chinese bureaucracy

is the oldest bureaucracy in the world

so these vast elements have continuity in China,

but at the same time, what is actually happening,

what is being undertaken by this very Chinese bureaucracy,

is absolutely revolutionary,

is something we've never seen in the world before.

So that does make it a little bit challenge.

Now you someday, I know that your own background

and training is entirely western oriented,

but at the same time you could you can draw on Asian traditions as well as,

plus your own contemporary involvement in China,

your mastery of the Chinese language,

from that point of view what do you think some of the more obvious mistakes

that Western observers of China tend to make?

-Andrew Sheng: Westerners tend to look at China

from a very theoretical point of view.

They love a theory.

They love a hypothesis.

They love to put, China into a box of,

that, this fits, this doesn't fit.

You know, or this is black this is white.

The Chinese system is actually a very complex organic system.

You know, governments work on network,

networks of networks.

There's a civil bureaucracy.

There's a military bureaucracy.

There is a civil society that's transforming very fast as I mentioned.

Religion, Buddhism, even Christianity is gathering as much membership,

in China as in anywhere else.

So all these things are simultaneously changing China.

And the very fact that you know on WeChat

one could have wonderful discussions,

mostly in Chinese unfortunately,

on policy issues belies the traditional way that there is,

lack of freedom of speech or discussion in China.

The intellectual tradition is very much alive China.

And a lot of the policy debates that you have in the West

on climate change, on pollution,

on social in, inequity,

all these are being debated very rigorously

and very somewhat heatedly

and sometimes, the authorities clamp down on this

so that it doesn't get out of hand, put it this way,

but that's -- but it is moving forward.

-Richard Rigby: And clearly in last year so,

it is true.

I think we have to acknowledge that in some areas

there has been a degree of clamping down.

In other areas as you say, the debate continues at pace.

And I'm always struck by the fact that sometimes within the system

that you see the most vigorous debate

rather than from people outside the system,

for instance, in our own ANU contacts with the Chinese system.

We look at within the central party schools

are there debates about democratization,

the future role of the party,

centre province relations.

These are all very, very vibrant.

Or in China international relations,

the China Institutes for Contemporary International Relations, CICIR,

which that belongs to the Minister of State Security,

but within which nevertheless you have a very, very vibrant debates

and quite meaty, arguments about the appropriate role

China should be playing globally.

I know we don't have a great deal of time,

but I ask you put yourself in the seat of Xi Jinping.

If you were Xi Jinping, what would be worrying you most?

What are the issues that you would be grappling with most of all do you think?

-Andrew Sheng: Well I think,

I think the --

first of all, I can't be and never will be.

But I think that's one of the toughest jobs in the world.

But I think what he's grappling with is that

he genuinely believes that there is a China dream.

He genuinely believes that Chinese society can be transformed towards that.

And that China dream is not that far different from an American Dream

or an Australian dream or Malaysian dream.

It is about middle-class income,

everybody having their jobs,

living in a world of peace and security,

don't have to deal with terrorism, petty crime, corruption

and all these sort of issues.

I think on that area,

other than, the absolute freedoms of individuals, et cetera

which the Chinese feel is relative,

I think within his lifetime and probably my lifetime

some progress will be made.

Now how much of that progress,

that's a very difficult question.

-Richard Rigby: Well, that's a very interesting point and obviously

precisely what is involved in the Chinese dream

is of increasing importance to all of us,

whether we exactly have the same dream or not.

The old Chinese expression, "tong chuang yi meng"

"same bed, different dreams"

is all very well.

But at the same time China is increasingly talking about peripheral diplomacy.

And I think Australia is definitely on the periphery,

talking about a community of common destiny

even without the formulation community of common destiny,

seems to me that China is now so much part of our future,

our futures our regional futures,

that whether we want it or not,

we are going to have at least to some degree,

a common destiny.

-Andrew Sheng: Well we are having common destinies.

Look at the children of the top leadership.

A lot of them are in ANU or in Harvard, in Stanford et cetera.

So the young generation thinks very much like the millennials

of other nationalities

except that they have Chinese characteristics.

And so if one recognizes that increasingly the framework of thinking,

what people care about, social justice,

climate change, jobs, technology,

having a cool life,

these will be the shared values

that we can build the common community, put it this way.

-Richard Rigby: Well Andrew, there's so much to talk about

but I realize you're very busy

and I really appreciate the time that you given us

for sharing with us your thoughts.

I hope in the future you might have an opportunity

to revisit some of these issues.

-Andrew Sheng: I think it's a great honour

and a learning experience for me to be at the ANU.

Thank you very much for the opportunity.