In Australia to give an address for the Alliance 21 Emerging Asia theme, former US Assistant Secretary of State Kurt Campbell tells ABC Lateline's Emma Alberici that he is most troubled by the lack of depth in US expertise on China.


EMMA ALBERICI, PRESENTER: Until last month, Kurt Campbell was responsible for building relationships in the Asia Pacific region on behalf of the Obama Administration. As Assistant Secretary of State, Dr Campbell worked closely with Hilary Clinton in developing the Pivot to Asia. He has now taken on a new project, training Americans to deal with the complex issues that come with an Asian-centric foreign policy. On his first trip abroad since leaving the state department Kurt Campbell is in Australia as part of the Alliance 21 project run by the United States Studies Centre at the University of Sydney. I caught up with him earlier today to discuss China which he describes as the most consequential relationship for the US in the 21st Century. Kurt Campbell, we're very pleased to welcome you back to Lateline, this time as a civilian. KURT CAMPBELL, FMR US ASSISTANT SECRETARY OF STATE: That's right, yes, I'm free. It's great to be here, thanks. EMMA ALBERICI: You went to Japan on your way to Australia, tell us what do you think it will take to break the deadlock over the disputed territories in the South China Sea? KURT CAMPBELL: That's a great question. Clearly some time, both countries feel that they're very wound up. It will take some patience, probably some creative diplomacy that will take place beneath the boiling hot surface. I think there is a recognition that this set of interactions are very problematic between Japan and China have affected both countries' economies. Two days ago was the second anniversary of the tragedy that struck Japan and this nuclear crisis, and we've been able to calculate how much that cost the Japanese economy. But if you look at what's happened both in the combined Japan China economy since the Senkaku, Diaoyutai crisis erupted in September, it's actually more. So that's how much impact in terms of lost economic performance we've seen since the crisis began. EMMA ALBERICI: Because of the movement of freight through those shipping corridors? KURT CAMPBELL: No, it's mostly through investment being withdrawn, sort of unofficial boycotts of Japanese products, some retaliations in China, and the longer this goes on, the more, for instance, Chinese consumers are reluctant to buy things that are Japanese for fear that one of their nationalist neighbours will break it, and Japanese investors are saying, "Look, I don't want to invest in China under these circumstances. I will look at Vietnam." EMMA ALBERICI: In your speech in Sydney last night you emphasised the complexity of the US China relationship. Is that because there is a general distrust on both sides? KURT CAMPBELL: This is a relationship that has many facets. Part of our relationship is based on trust and confidence and very deep economic and cultural engagement, and part of it has clear components of distrust and uncertainty, and that is, that's our destiny, that's what the relationship will be like going forward. What I tried to convey to Australian audiences, I think sometimes even elite Australians do not appreciate just how much time we spend on this relationship. We know that it will be, and it is the most consequential relationship for us in the 21st Century and we cannot afford to get it wrong. EMMA ALBERICI: US intelligence now claims that cyber espionage has sur-planted terrorism as the number one security threat for the United States. Who are the chief targets of these attacks? KURT CAMPBELL: I think the general conception is everyone. I mean, what we have seen is a massive increase in cyber activities across the board, and, look, some of them are alleged to have roots in China, but the truth is China is not alone here. Other countries and individuals I mean, it can emanate in Russia or places in the Middle East, or an American dorm, right, but what is clear is that there has to be an effort on high involving key countries that we establish more rules of the road with respect to how we do our business and what would be considered unacceptable in terms of intrusion into sensitive government sites... EMMA ALBERICI: Nothing is acceptable, is it? KURT CAMPBELL: And economic penetrations into companies. These are practices that are creating very real anxieties, and I will say it is in the indiscriminate, vast nature of these attacks that I think you might actually find the roots of a strategy to confront it, and I will say one of the key features of Chinese foreign policy is to never allow a group of countries or groups to form a united front against you. Right? But what China has done in some of these areas is agitated a very large group of people, and they're going to start racing it much more purposefully with them. It won't just be our government t will be others, and so that's something that I think we need to coordinate more effectively and make clear that this is one of the rules and norms that we're going to expect in the 21st Century. EMMA ALBERICI: Is this cyber activity being targeted at individuals, the government, businesses? KURT CAMPBELL: Look, it's pretty indiscriminate and almost every American firm that operates in Asia now is having problems clearly many government sites have challenges, and I can tell you even a personal anecdote. My wife works at the Treasury Department, I worked at the State Department and we were once advised that, look, you've got to be very careful because even in your own home there might be challenges, and I remember thinking as we were being briefed on this that if they were listening in my home, all they would get are my young daughters screaming about how the dress is too tight or hair is too tangly, so good luck with that. EMMA ALBERICI: At a time when here in Australia where we're quite preoccupied about arguments about press freedom, China seems again to be showing its disregard for something that your country and mine see as a central pillar of democracy. How much of a concern is it that we're starting to see cyber attacks against British, American, Australian broadcasters in China? KURT CAMPBELL: Yes, in fact one of the things we've seen over the course of the last several months is that some of our key news sites that have been involved in reporting on the earnings or the wealth of senior party officials, or elements of scandals have come under pressure, and the websites have been blocked and there have been access issues, and this is a matter of concern and we are now raising it with central authorities. Increasingly, I think what we need to do better at is coordinating more generally. Again, when our friends in Beijing hear not just from the United States but other countries about some of our concerns, they're much more likely to take them seriously. The fact remains that press issues are enormously sensitive in China, and just as the issues of the island disputes have been more complicated by the inner regular number in leadership, so have other sensitive issues, and so it's probably too early to judge just how the new President Xi Jinping will be regarding these matters, but we hope that we will see a greater flexibility and openness on matters that will allow Chinese citizens to ask questions about their governance, about their safety, about every aspect of the environment that they live in. EMMA ALBERICI: We know that some of the targets have been the Voice of America, BBC and the Australian ABC through Radio National. KURT CAMPBELL: 'New York Times', 'Washington Post', 'Financial Times', a lot of newspapers, 'Wall Street Journal', have had problems as well. EMMA ALBERICI: So what is it that the Chinese are trying to stymie with these interruptions to transmission? KURT CAMPBELL: Look, if varies in each case, but much of what triggered the most recent round were reports about the reputed wealth of senior party officials, and that happened at a time that, from the Chinese perspective, was extraordinarily sensitive, heading into the party meetings, and that's one of the areas when I would interact... EMMA ALBERICI: This was discussion about Xi Jinping and some of his chief minister... KURT CAMPBELL: Wen Jiabo. AEMMA ALBERICI: ... and the sorts of money that had been accumulated? KURT CAMPBELL: Yes, and these stories reflect just massive holdings, and it does create some anxieties inside the country and I have found that quietly that there are a number of issues that you can talk about and engage upon with Chinese friends. These are issues that are really sensitive, though, and they will probably continue to be. EMMA ALBERICI: Does this tell us something about the attitude of the new Chinese leadership? KURT CAMPBELL: Again, you know, the only thing I would tell Australian friends is that it's very early days, and so I spent a lot of time with then Vice President Xi Jinping so he came to United States as a guest of Vice President Biden, we travelled around the country, went to Iowa where he studied as a student, Washington and Los Angeles. We also went as his guest to China, travelled all around China and had a lot of time with him, so I've spent many, many hours with him, but I would say he is about the most guarded individual that I interacted with and that was just in the months before he was about to be anointed the General Secretary and President of China. At a consequence, very careful, right. EMMA ALBERICI: From your perspective having studied this China US relationship for four years quite intensely... KURT CAMPBELL: Actually even longer, at least being on the front lines, the sort of tip of the spear, yes, the last four years. EMMA ALBERICI: What troubles you most about the relationship? KURT CAMPBELL: Oh,... you know, I would like a deeper group of people in the United States that really understood Asia, and that will take time frankly, but what we have seen is in the United States over the last 10 or 15 years a dramatic increase in the number of people that understand the Middle East and Iraq and Afghanistan and the tribes and the hills and all the challenges there. I'm not saying that that's not important, and I do think it's critical that we handle ourselves responsibly, but the truth is the lion's share of the history of the 21st Century is going to be written right here in Asia. We need more people that can navigate the challenging by ways of Asia, business, political and strategic fronts and military fronts, and we just have to do a better job, and it is going to take some time. So one of the reasons I wanted to come out is... I'm going to spend a lot of time on training and encouragement and working with businesses as well because we have to step up our game for the 21st Century. EMMA ALBERICI: I want to talk about Burma, because for 50 years or so there was virtually no contact with that country and now it's just hard to imagine the transformation that is going on right now. KURT CAMPBELL: I mean it's great and it's exciting frankly. EMMA ALBERICI: Is that the greatest satisfaction you've derived from the past four years? KURT CAMPBELL: What's taken place there is remarkable and to see Aung San Suu Kyi and the current leadership work together, towards a better future and to be able to witness myself the visits of the President and Secretary Clinton and she liked my story, I have to tell you one other funny story so. We got to fly, Force 1 - really excited, landed at the airport, just couldn't believe, had to pinch myself it was so exciting, a huge group of people. One of my best friends is now the ambassador there for the you, Derek Mitchell, and I landed and in the United States when we land with the President, there is usually a group of cars about a mile long, and so when you get off the airplane, you've got to run to get to your car quickly. I knew I would rejoin the Secretary of State. This was my shot to be on 'Air Force One', so it's exciting, we briefed the President, it felt great. So I'm getting off the airplane and I'm like in car 900 which is almost in other country and so you're running because you don't want to miss the motorcade, because that's the most important thing in presidential traffic. If you miss the motorcade you're in terrible shape. So I'm kind of making my way but I notice behind me are two Secret Service agents and they're kind of running after me and so I run a little faster because when I was on the airplane I had stolen everything that wasn't nailed down, every piece of stationary, every possible thing with the White House emblem on it, and I thought they were coming to get me. I'm literally throwing it out as I'm running, and so one of them comes to me and says, "No, no, Dr Campbell, the President wants you to ride with him in the limousine." And I'm like, "Oh, of course." EMMA ALBERICI: Can I pick up what I've dropped along the way? KURT CAMPBELL: Yes, great experience. We've got to work with countries like Australia to make sure it continues. EMMA ALBERICI: Hilary Clinton has gone from the administration as well. You know her very well? KURT CAMPBELL: Mmm. EMMA ALBERICI: Are we going to see her run for President in 2016? KURT CAMPBELL: You know the few things we've been trained not to talk about, heavily reinforced, electro-shock and all sorts of therapies et cetera - this is probably one of them. All I can tell you is I wish everyone the opportunity in their lives to work with a person who is fantastic, inspirational, incredibly devoted, a great leader, incredibly compassionate with young people and the great thing about her experience as Secretary of State is I don't think even our own country really knew her until she had this job, and so ironically it took going abroad for her in some way to come home. I don't know if that makes sense, but to define who she was as a person, and it was just the greatest honour of my life to work with her and I just hope that whatever she does that the world will have a chance, and the United States, that she will continue to serve in some way, and whatever it is, I will be right there behind her, and there is nothing I wouldn't do for her. She is the greatest, and a huge lover of Australia. So... EMMA ALBERICI: So she would make a great President? KURT CAMPBELL: She wouldn't make a great President, she would make the greatest President, in my view, but that's left for another time. EMMA ALBERICI: Thanks so much for joining us again, we hope to see you again. KURT CAMPBELL: It's just great to be here. Oh it's great, thank you very much. I really enjoyed and appreciated today.