This morning I flew back to Australia from China. It is a journey I have made now nearly a hundred times since I first travelled to the country back in 1984, when we moved to Peking as a family on our second diplomatic posting. While the country may have become familiar for me, each time I go I find something completely new. In fact, the pace of change outstrips our analytical frameworks for comprehending it. It is like the English Industrial Revolution and the global information revolution combusting simultaneously and compressed into not 300 years, but 30.

China has become the embodiment of the great east Asian transformation. As a result, it is becoming the embodiment of the great global transformation, as the centre of political, economic and strategic gravity moves from the Atlantic to the Pacific, from Europe to Asia, from the US to China. Yet this deep structural shift in the underlying drivers of international relations, a structural shift that is happening before our eyes, is one for which the collective west is woefully unprepared.

I first became fascinated with China as a child. I grew up on a farm in rural Queensland where my mother always ensured that the family bookshelf was as well stocked as it could be, to open our eyes to a wider world beyond the demands of animal husbandry. I remember one day she brought home what could only be described as the Boy’s Own Annual guide to archaeological “derring-do”, including the great architectural wonders of the ancient world.

Tucked at the back, after the mandatory excursion across the classical forms of ancient Egypt, Greece and Rome, was China. It took only a couple of pages to “do” China in those days. But what caught the eye even of a child was a tradition and an aesthetic so different from anything familiar to us in the west that it captured the imagination from the start. And once that happens, you can never quite escape it, as you find yourself subconsciously drawn in ever deeper, trying to understand this phenomenon called “the Middle Kingdom”, just as thousands of others have been drawn before you, going back to the days of Matteo Ricci, Marco Polo and beyond.

Here in the Antipodes, what was quaintly described in London and Washington as the “Far East” has, since the fall of Singapore, been regarded as the “Near North”. Comprehending Asia, and the driving forces within it, has never been for us an exotic intellectual luxury. It has long been a matter of national necessity. None­theless, one of the great inheritances of the tradition of scholarship we have imbibed from British and, to some extent, American Sinology over the past century was embodied in the London School of Oriental and African Studies (Soas). After the war, when the Australian National University (ANU) began teaching the disciplines of Asia comprehensively (its languages, its histories, its philosophy, its literature and aesthetics), the ANU adopted the teaching traditions of Soas by conscious design. The core principle was simple: if you are to understand the modern languages, politics and economics of, say, China, the deep historiographies of such ancient, continuing civilisations had to be understood as well. These were not optional “add-ons”. Rather they were an essential element in understanding the modern phenomena called China, Japan, Korea and India, as well as the various high cultures of south and south-east Asia. I was fortunate to have been taught Chinese in this tradition, the beneficiary of generations of scholarship and pedagogy before me. Because, each time I encounter modern China today, I also encounter a China profoundly shaped by its unique historical experience, and a country still searching deeply in its own classical traditions to understand how it might navigate its future in an unfamiliar world.

One of the best books on this subject in recent times is Henry Kissinger’s tour de force On China, published in 2011. I believe this might be regarded in time as Kissinger’s greatest work, not as an interesting diplomatic reflection, but as an active guide to the various Chinese “futures” that might unfold. Kissinger’s analysis of Chinese “exceptionalism” (yes, that’s right, Chinese, not American, “exceptionalism”) is superb. He calls it “the singularity of China”. Take the following:

The Chinese approach to world order was thus vastly different from the system that took hold in the west. The modern western conception of international relations emerged in the 16th and 17th centuries, when the medieval structure of Europe dissolved into a group of states of approximately equal strength, and the Catholic Church split into various denominations. Balance-of-power diplomacy was less a choice than an inevitability. No state was strong enough to impose its will; no religion retained sufficient authority to sustain universality. The concept of sovereignty and the legal equality of states became the basis of international law and diplomacy.

China, by contrast, was never engaged in sustained contact with another country on the basis of equality for the simple reason that it never encountered societies of comparable culture or magnitude.
That the Chinese Empire should tower over its geographical sphere was taken virtually as a law of nature, an expression of the Mandate of Heaven. For Chinese Emperors the mandate did not necessarily imply an adversarial relationship with neighbouring peoples; preferably it did not. Like the United States, China thought of itself as playing a special role. But it never espoused the American notion of universalism to spread its values around the world. It confined itself to controlling the barbarians immediately at its doorstep . . . China did not export its ideas but let others come to seek them.

The resonances of Kissinger’s work can also be found in the considerable analytical research under way in the Chinese academy on the country’s future role in the world. Recently in Beijing, I visited Yan Xuetong, professor of political science at the Institute of  International Studies at Tsinghua University, which is one of China’s oldest. His most recent book, elegantly titled Ancient Chinese Thought, Modern Chinese Power, seeks to identify the classical origins of both the realist and the normative dimensions of China’s engagement with the world. In particular, Chinese academics are hard at work trying to identify the possible philosophical foundations for Chinese political leadership in an increasingly complex inter­national order.

Although this may sound terribly interesting, is it all that important? The answer is yes, and for several fundamental reasons. It is now a commonplace that China will emerge as the world’s largest economy (either by purchasing power parity or GDP measures) at some point over the next two decades. I believe it is likely to come sooner rather than later because of the compounding effects of an economy that has grown at an average annual rate of more than 8 per cent for the past 30 years.

With regard to the sustainability of high levels of growth for the future, the Chinese are fully aware of the need to change their development model to one based on higher levels of household consumption, lower levels of savings, a greater role for the services sector, and the incorporation of principles of sustainable development in overall economic policy (this last not through fashionable choice, but rather because of the dictates of national economic survival). But the overall point is this: very soon we will find ourselves at a point in history when, for the first time since George III, a non-western, non-democratic state will be the largest economy in the world.

If this is the case, how will China exercise its power in the future international order? Will it accept the culture, norms and structure of the postwar order? Or will China seek to change it? I believe this is the single core question for the first half of the 21st century, not just for Asia, but for the world. Importantly, some might say disturbingly, the matter remains unresolved among the Chinese political elite themselves. The internal debate continues to unfold. Hence the Chinese academy, in close co-operation with the policy agencies and research departments of the state, is searching the past for legitimate, non-threatening forms to explain their future regional and global role and to define, more fundamentally, what that role should be. At present, there is no centrally agreed grand design. In other words, on this great question of our age, the jury is still out.

It matters what the rest of us do and say about China’s rise. It is not a question for China alone. In international relations it takes two to tango. In China’s case, given its impact across north-east, south and south-east Asia, the Middle East, Africa and Latin America – not to mention the “Old World” of Europe and the United States – how the rest of the world responds to China’s rise also affects Chinese international behaviour. The content of this engagement, positive or negative, constructive or confrontational, principled or driven by pure pragmatism, is therefore important. It would be even more important if the west’s engagement with a rising China were considered, consistent and driven by a clear set of organising principles, rather than reflecting a series of one-off reactions to random events.

Moreover, the rest of the world’s ability to shape the contours of China’s future global role constructively represents a limited window of opportunity, while China’s international debate is still fluid, while Chinese influence continues to be contested, and well before final strategic settings become entrenched. I believe it is realistic to assume that we have, at best, the remainder of the present decade for this purpose – in other words, the better part of the ten-year presidency of Xi Jinping, who will assume office this autumn.

If it does take two to tango, we also need to ask: who are we really dealing with on the Chinese side? China, though a one-party state, does not represent a monolithic political culture. Chinese politics is made up of many competing forces. First there are the liberal internationalists who have pioneered, implemented and seen the great harvest that has come from China’s decision in 1979 to bring about market reforms in its domestic economy and to liberalise its economic engagement with the world.

The benefits are there for all to see in the great Chinese political debate. Living standards have risen rapidly, and not just in the great cities of Beijing, Shanghai and Guangzhou, but also for hundreds of millions of people living in provincial centres and the countryside. Nonetheless, the country’s liberal internationalists do not have it all their own way. Their formidable achievements notwithstanding, there is a growing internal debate about the sharpening of income inequality, as well as widening regional and subregional disparities. Furthermore, the environmental dimensions of China’s industrial explosion are not only a problem for the world, they are a problem for China, too.

The big debate in Beijing recently was between the Chinese foreign ministry and theUS embassy over the latter’s right to produce and publish the daily pollution levels for the city of Beijing. The foreign ministry argued that it was an affront to national sovereignty. I dare say the good burghers of Beijing are quite happy to know which days they should keep their toddlers indoors. So, even as the thrust of China’s great drive towards economic liberalisation persists, reactions and reservations are now deliberated on and discussed more publicly than ever before.

It follows from this that another big competing force in the Chinese political debate today is one more critical of the social impact of economic liberalisation, and one that is more conservative in its policy conclusions. This group argues that the reform process has already gone far enough. It contends that any pretence of “socialism”, in what formally remains a “communist” system, has long disappeared. Elements of this conservative group argue that to take the economic reform process much further would endanger the interests of the still significant state-owned sector of the economy. They say that, when push comes to shove, it remains important for the Chinese state to be able to pull the levers of the national economy, not just through the classical forms of fiscal and monetary policy as we have in the west, but by actively directing state-owned corporations and financial institutions to expand or contract their economic and financial activity in direct response to government direction.

This group is particularly wary of the calls for democratic reforms arising from the burgeoning economic freedoms that already have been created, because it recognises these as significant medium- to long-term threats to the continued political monopoly of the Communist Party itself.

One last group that will be central to the question of China’s future place in the world is the military. Even as someone who began studying China 35 years ago, I still find the country’s armed forces one of the most opaque institutions in the world. That is also the conclusion of most China scholars and analysts around the world.

Like most militaries, the People’s Liberation Army (PLA) is a conservative institution in terms of values, traditions and its intrinsic nationalism. However, under the Chinese system, the military in many respects operates as a structure separate from the Chinese government. Usually the PLA’s policy perspectives on the region and the world are brought together with those of the government only at the most senior echelons of the party itself – through the Central Military Commission and the Standing Committee of the Politburo. The problem with opacity is that it often induces “worst-case scenario” planning on the part of China’s neighbours, and those who share the country’s broader strategic environment. Naturally, the PLA would argue that US and allied contingency planning in relation to China leaves it with little option other than to engage in worst-case scenario planning itself.

And so the self-perpetuating cycle of strategic mistrust and military countermeasures continues. The problem with risk management of this order of magnitude, however, is that it runs an even greater risk of becoming a self-fulfilling prophecy. Planning for the worst tomorrow often shapes the political behaviour of today.

How this internal Chinese debate is resolved (between liberal internationalists, political conservatives and the military) is critical for all of us. Because the core question remains – once China becomes the world’s largest economy and as its diplomatic footprint and its strategic power expand accordingly, will China seek to change the rules, customs and culture of the postwar international order? And if so, how?

Whether we like it or not, the answers to these questions will affect all our futures: the future of economic integration in Europe, given the rolling European debt crisis and China’s emerging status as the global creditor nation; the emerging security order in Asia, where China’s military influence is already significant; as well as future prospects for global humanitarian intervention (in Libya or Syria, for instance) under the auspices of the UN Security Council, given Beijing’s ability to wield the power of veto.

I noted earlier that the debate about China’s future in the world is not just the sound of one hand clapping. The attitude and the actions of the rest of us can also have a profound effect, for good or ill. Regrettably, however, it is a debate for which most of the collective west is ill-prepared, particularly given individual countries’ domestic preoccupations with their respective economic futures and, as a result, the increasing political insularity of both Europe and the United States. Policy elites on both sides of the Atlantic (with the exception of some sections of the Obama administration) are largely disengaged from this, most critical conversation of the century – the rise of China. However, that is not the case in Asia, where, because of proximity, the policy debate on China is more sophisticated, nuanced and acute. There is, nonetheless, a real danger that a new global and regional order begins to emerge by default, in the absence of significant diplomatic engagement from the west, and one that may turn out to be deeply inimical to western values and interests.

So, what then is to be done? Is it possible for the west (and, for that matter, the rest) to embrace a central organising principle as we engage China over the future of the inter­national order? I believe it is. But it will require collective intellectual effort, diplomatic co-ordination, sustained political will and, most critically, continued, open and candid engagement with the Chinese political elite. So, what might the core elements of such an engagement look like?

First, the international community must accept that it is entirely legitimate for China to have a louder voice at the global negotiating table. Not only is China a great civilisation, it has become, once again, a great power. The international system should not be seen to be exclusively the expression of western interests. The history of European colonisation has done much to diminish the moral authority of the colonisers in the eyes of those in the previously colonised world. Europeans in particular are often blind to this reality. It is critical that the future international system be based on universal values, as expressed in the various normative codes of the United Nations system, rather than the narrow interests of a particular group of states. And within this framework, Chinese, Indian, Latin American and African voices should be able to play a more important role, including making contributions from their own civilisatorial traditions.

Second, we should argue clearly with the Chinese political elite that the current liberal internationalist order, which has preserved the global peace and enhanced prosperity for two-thirds of a century, must be sustained. This will entail enhanced co-operation with China on the world’s security, macroecono­mic, macrofinancial, trade, investment, social, environmental and humanitarian challenges, based on the agreed norms of the present global rules-based order.

Any recourse by any member state to uni­lateralist, nationalist or mercantilist behaviour should be deemed unacceptable. This principle must be applied rigorously to all of us, including China. It also means that China should be encouraged to enhance the existing order through its own policy actions, even when its national interests are not at stake, but whenever the integrity of the order is worth defending in its own right. Such an approach is very much in keeping with the advocacy by Robert Zoellick, the former president of the World Bank, of the principle of China as a responsible global stakeholder.

Third, if, for whatever reason in the future, China steps beyond these agreed norms, the rest of the international community should be prepared not only to say no resolutely, but also to act accordingly. Understandably, the international community will hedge to some extent against this possibility.

Fourth, the crucible for China’s rising role in the world is of course the Asia-Pacific region. This is where the new regional institutions underpinned by shared international values will be needed to craft principles and practices of common security and common property for the future. In the past, Asia has had no such institutions with either the mandate or the membership to discharge this function. But with the expansion of the East Asia Summit last November to include the US (and Russia), we now have all the major powers of this region around a single table at summit level with an open mandate on political, economic and security issues. And this for the first time in Asia’s history. Confidence-building and security-building measures, greater military transparency, common responses to natural disaster management (the greatest scourge for the peoples of the region) as well as common regional commitments to open economies and sustainable development are now possible.

For the first time, we have it within our grasp to fashion a credible, new Pax Pacifica – a multilateral, regional, rules-based order, anchored in the principles of the broader international system. And given China’s expanding international role, the new Pax Pacifica may ultimately be translatable into a wider peace, should Washington’s relative global power continue to decline. Importantly, at present, no one in Asia is seeking to replace Pax Americana with a Pax Sinica. Workable multilateral, rules-based orders are in a different category altogether, in which all legitimate stakeholders share responsibility for upholding the order.

It may seem unfashionable to some, but on balance I remain optimistic that we can see this great global and regional transformation unfold without degenerating into irreconcilable political/military conflict or war. Yet, regrettably, for those of us in Asia, European history offers a series of unhappy precedents.

From the wars of religion in the 16th century through to the fall of Berlin in 1945 and, if one agrees with some arguments, the collapse of the Soviet Union in 1991, Europe was a continent awash with blood as the rise of any new great power or new ideology (religious or secular) invariably resulted in protracted warfare, often on an industrial scale. Nonetheless, despite these tragedies, the relative success of the postwar European political project (the current financial crisis in the European Union notwithstanding) offers grounds for hope of how ancient conflicts can be subsumed to the more fundamental need for future co-operation.

Mine is not a starry-eyed optimism. I have lived in China, travelled in China and studied China in one capacity or another for most of my life. Like all civilisations, it reflects an accumulation of historical experiences, perceptions and achievements. But China’s history does provide us with a reasonable basis for optimism. The China that I have studied over the decades is one that has not been in the business of invading other countries for more than 2,000 years. Nor has China sought to establish colonies around the world, even though its navigational skills and naval capabilities during the Ming Dynasty were considerably more advanced than those of countries in the west.

China’s modern political consciousness has been badly seared by what the Chinese routinely and legitimately describe as a century of foreign humiliation, from the opium wars to the end of the Japanese occupation. China in effect remained internationally isolated for the first half of its communist history, and only in the past three decades has it begun to engage systematically the world once again. China today seeks respect in the eyes of the world for the contributions of its ancient civilisation and modern economy. These are all historical truths that we in the west can work with.

It remains an open question, however, whether China will democratise and whether it will in time respect relevant international covenants and their application to domestic human rights practice. All who are familiar with the country’s development are equally familiar with the arguments for and against the likelihood of this coming to pass.

In the meantime, the challenge we all face (China included) is managing the rise of a non-democratic China as a great power within the framework of the international order. I believe there is sufficient common sense, common interest and, therefore, common purpose for these difficult decades ahead to be negotiated peacefully. It will require great statesmanship – statesmanship that must be based on rational engagement and not predicated on any form of appeasement. Success can never be guaranteed. It will require the highest levels of political engagement and thoughtful diplomacy that the world has seen since the end of the cold war. And then, should China through its own national means choose to become a democracy, all the better. However, to predicate our diplomacy in the immediate period ahead on such an assumption would be foolish indeed.

If we in the west can continue to work with liberalising elements within the Chinese system – to cause the country’s leadership to conclude that their people’s long-term interests lie within the current liberal, rules-based order, one that has served the international community reasonably well since the carnage of the Second World War – then we can succeed and, indeed, craft a truly Pacific century for us all.

Kevin Rudd was prime minister of Australia from 2007-2010 and foreign minister from 2010-2012