Campbell: China Gains in Asia Great Game 'Undeniable'

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00:00I want to jump straight to the news of the day, and this is the prospect of a trade deal between

00:04the U.S. and India. We heard some remarks from President Trump saying, they don't love me at

00:09the moment, but they'll love me again. Given the difficulties, the tension in this relationship,

00:14do you see any lasting damage that's been done? Well, it's a very important question.

00:19After the election last year, I would say the government that I worked with that was most

00:25confident that they could manage President Trump given the first term successes was India. And of

00:32course, what we've seen in recent months is really a whole scale collapse in relations at the highest

00:40levels, lots of tension, and very little communication between President Trump and

00:45Prime Minister Modi. I think some misunderstandings about who gets nominated for a Nobel Prize and

00:52some of the issues associated with the U.S. role and what went on between the fighting between

00:58India and Pakistan earlier in the year. But let's put that aside now. It's clear that both countries

01:04want to try to rebuild relations. Each leader is sensitive about how to do that. But in the

01:12background, trade negotiators have really hammered out what I think is a very substantial trade

01:20agreement between India and the United States that will take tariffs down from almost 40% to, I think,

01:28a livable range. And you'll see substantial areas where India's markets will open to further

01:36cooperation with American tech firms, manufacturing, and the like. So I'm optimistic about this.

01:42I would simply say that the most important element of our Indo-Pacific strategy is a strong and growing

01:50relationship with India. I was very troubled that relations had fallen to such a low level.

01:57Your important question really is, will there be lasting damage? And the honest answer is probably

02:03some. But we'll just have to see how deep that is.

02:07Well, I know it's an appealing idea to set aside the India-Pakistan conflict. But at the same time,

02:12President Trump is also trying to nurture a relationship with Pakistan, inviting an army

02:16chief to visit the White House as well. So how to balance that relationship?

02:20Well, look, I would say almost all our strategic interests lie with India. And I think our engagement

02:29with Pakistan is substantially different and much less significant since the Cold War and the period

02:37thereafter.

02:38But nurturing that relationship does risk alienating India, right?

02:41It does. And it is also the case, and I think we just have to be honest about this, Paul.

02:45Really, it is Pakistan that has more, shall we say, effectively engaged the Trump family

02:53with a variety of engagements on cryptocurrency and resorts and the like. But still, the most

03:00important relationship for us is India. We should not just tilt towards India. We should fundamentally

03:06embrace India.

03:08And of course, in the background is China. All this geopolitical positioning has China firmly

03:15in mind. Do you see a new Cold War-style narrative beginning to emerge in South Asia?

03:19I don't know if it's a Cold War-style narrative, but I would simply say that for U.S. strategy,

03:28a close relationship with India is absolutely essential. I think increasingly, you see China's

03:35support for Pakistan, which is really of central significance, military and nuclear support.

03:42And that is a subject of real concern for Indian interlocutors. I think the real issue is this

03:48enduring relationship with Russia that causes problems with the United States. India tends to

03:55be loyal to countries that have stood with it for decades. But at the same time, I think behind the

04:02scenes, India knows and understands that this horrible conflict in Ukraine has alienated Russia from most

04:10countries across the world. And frankly, India has to be more responsible about that relationship.

04:17I want to talk a little bit about the U.S.-China relationship as well, because I do wonder what

04:22you make of China's pushback against the U.S., whether China had a stronger hand than perhaps

04:27President Trump anticipated. And has the balance of power between the two countries shifted a little?

04:32Well, look, I will simply say this. At the beginning of the first term, Paul, no country was thrown

04:39enough balance more than China. They anticipated a different electoral outcome. That's not the case

04:45for this second term. They come in with a plan. They're very strategic about how they are engaging

04:52the United States and President Trump. You'll note President Xi, senior interlocutors in China,

04:59treat President Trump with great personal respect. But at the same time, every step that the United States

05:05is taken with respect to tariffs or sanctions or any step against Chinese firms or practices, China responds

05:13immediately. And their responses tend to be highly carefully designed for specific damage or signaling

05:24for the United States. And for instance, rare magnets were shot across our bow, making clear the vulnerabilities

05:34in key areas of technology. China is prepared to match us step for step. And it is also the case that China

05:42is stepping up in a variety of vectors, building closer relations with a number of countries. Just a few years ago,

05:50they were busy alienating countries like Australia, Japan, South Korea, and India. Now they are,

05:57again, on a kind of modest charm offensive. And they realize that much of what President Trump has done

06:05has been disruptive to traditional relations. They see an opportunity, they're trying to seize it. Now,

06:12hopefully the, I think, relatively positive trip of President Trump to the Indo-Pacific,

06:18good stops in Japan and Malaysia and South Korea. And at least initial engagements with China were

06:26somewhat reassuring to Indo-Pacific partners. And the hope will be we'll be able to build on that

06:31into the future. But I think it is undeniable that in terms of the great game, China has made some

06:38important steps and has some advantages. I just want to end on some of your thoughts about how

06:44supply chains have been reorganized as well. And particularly for the Bloomberg audience,

06:48what do you see this meaning in terms of capital allocation, location of manufacturing hubs,

06:53et cetera? Well, look, I will say this, Paul, you know, there's obviously a lot of talk about,

06:58you know, in each of the stops that the president made first with the visit of Prime Minister Albanese

07:05to the United States, but also Malaysia, Japan, and South Korea. The president signed critical minerals

07:12deals. He's launched on a major program in the United States that will look at new investments in

07:20areas of refinement, also looking at recycling for some of these capabilities.

07:25The truth of the matter is that if you look at, you know, the vast majority of rare earths and

07:32critical minerals of the 90 or so that are important to industrial and technological pursuits,

07:40China has an overriding advantage and dominance, both in terms of supply and refinement. And it will

07:48take years, if not decades, for the United States and partners to match that. And so this is a

07:55vulnerability that has been built up over years, and it will take years to resolve. I'm grateful that

08:01the United States working with Australia has committed to attack this problem, but it will

08:06take time, resources, and substantial commitment, not just this administration, but next administrations.

08:14Just very quickly, we've only got a few seconds left, but since you're here in Australia,

08:17I wondered if you get a score for Anthony Albanese and the way he's balancing the relationship with

08:22China, the largest trading partner, the US, such an important ally. Just a quick score and a comment.

08:26Look, the truth is, it's hard for Australians to hear positive news. They immediately tend to dismiss

08:34it or think, oh, someone's exaggerating. I think Prime Minister Albanese handled himself extraordinarily

08:41well in his visit to Washington. He walked that fine line. He has challenges at home in terms of a

08:48population that's skeptical of President Trump, but also a country that wants a close relationship

08:54over the trenchant with Washington. He secured AUKUS, a variety of areas of common purpose,

09:03critical minerals, technology, AI. I thought it was a very good meeting,

09:07and it keeps US-Australian relations on a positive trajectory.

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