Indo-Pacific to Shape America’s Future, Kevin Rudd Says

By Feng Yuqi and Lu Zhenhua

The development of the Indo-Pacific will fundamentally shape the future strategic and economic environment of the U.S., making the region Washington’s top foreign policy priority, said Kevin Rudd, Australia’s ambassador to the United States.

Speaking Friday at the Asia New Vision Forum 2025, an event organized by Caixin Media, the former Australian prime minister analyzed global geopolitical trends in a virtual conversation with Niu Xiaopeng, founder and CEO of Nexus Worldwide.

Despite ongoing conflicts in Ukraine and the Middle East, the U.S. strategic focus has significantly shifted eastward, Rudd said, making the Indo-Pacific its primary concern from economic, technological and strategic perspectives. He said that although the U.S. has many significant domestic agendas, its future will ultimately be molded by developments in the region.

Discussing China’s development model, Rudd explained that Beijing views “security” and “development” as inseparable concepts. The core of its economic strategy is the “dual circulation economy,” which relies on domestic demand for growth while strengthening its export orientation.

However, Rudd noted that China faces challenges in raising domestic consumption’s share of its GDP. Furthermore, its export-driven model has deepened other countries’ reliance on it while reducing its own dependence on the outside world.

This has created friction, he added, pointing to criticism from figures like U.S. Treasury Secretary Janet Yellen, who has described the model as a source of global economic imbalance.

When Niu brought up Rudd’s book, “The Avoidable War,” a military conflict between the U.S. and China over Taiwan is “entirely avoidable,” Rudd said.

He outlined three key factors. First, maintaining clear political and diplomatic communication channels between the U.S. and China. Second, the U.S. and its allies must establish effective military deterrence to create the perception that the risks of an armed conflict would be unacceptably high.

Third, both sides must practice “managed strategic competition,” which requires clearly defined “red lines” on core national security issues and a commitment to resolving differences without force, Rudd said.

He added that the U.S. and China must have the political will to collaborate on global challenges like climate change, financial crises or future pandemics.

“We need to have enough collaboration between these two great countries, China and the United States, to deal with these serious structural, global challenges, which only have one solution, which is global collaboration,” Rudd said.

At the regional level, Rudd analyzed the complex relations among China, Japan and South Korea. He said that although their proximity and large economies create an incentive to expand trade, deep-seated security contradictions — including the North Korean issue and territorial disputes — complicate cooperation.

Turning to India, which he called “the elephant in the room,” Rudd described its relationships with both China and the U.S. as multifaceted. While tariff frictions exist between Washington and New Delhi, he noted negotiations have resumed.

Rudd further pointed out persistent contradictions between China and India, including their border dispute, the China-Pakistan strategic alliance and regional maritime competition.

Looking ahead at multilateral institutions, Rudd suggested the Group of Seven might expand by incorporating major Indo-Pacific democracies like India and South Korea, potentially growing into a G-10 or G-12. The prospects for the Group of 20 are less certain, he said, with its effectiveness dependent on U.S.-China stability.

For BRICS and the Shanghai Cooperation Organization, Rudd said their key test will be whether they possess the financial tools and coordination capacity to stabilize markets during another global financial crisis.

Regarding ongoing U.S.-China trade negotiations, Rudd observed that both sides are motivated to stabilize their economic relationship while also recognizing the deep economic competition between them. He said the U.S. goal is to achieve an economic “soft landing,” but the outcome remains uncertain.

Contact reporter Lu Zhenhua (zhenhualu@caixin.com)

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