The Naval War College was founded in 1884 by RADM Stephen Luce as the Navy’s ‘home of thought’.
The College was interdisciplinary from the beginning, seeking to understand how wars begin, how wars are fought, how wars end and most importantly, how wars can be prevented.
There is, therefore, no better place to examine the role of deterrence in the future of US-China strategic competition – and in doing so avoiding war while preserving strategic stability across the Indo- Pacific.
That task has never been more pressing as strategic competition between the United States and China continues to unfold across multiple military and civilian vectors, and across multiple geographies.
President Trump has come to office advocating an approach of peace through strength. This is a goal which he shares with America’s Indo-Pacific allies.
Like others, in Australia, we are committed to conflict prevention, through effective deterrence.
And in this spirit, today I’d like to explore how we continue to prevent conflict by deterrence – specifically to deter forms of action aimed at unilaterally changing the status quo over Taiwan.
Purpose of this Lecture
This is not the first time I have addressed the Naval War College.
I did so a decade ago in my capacity as a recently retired Prime Minister, as a life-long China scholar and then as Senior Fellow at the Belfer Center of the Harvard Kennedy School.
And while I have now been Australian Ambassador to the United States for the last two years, my remarks today are delivered once again in my private capacity as a China scholar, rather than reflecting the official views of the Australian Government.
Over the past twelve months, I’ve sought to drill down into the detailed dimensions of US-China deterrence.
In April 2024 at the US Naval Academy in Annapolis, I sought to define what we mean by integrated deterrence – incorporating its military, foreign policy, political, economic and ideological components; as well as the role of US allies and not the US alone.
In June 2024, at INDOPACOM in Honolulu, I looked at the question of deterrence (or its absence) in the “grey-zone”, particularly around Taiwan, including the problem of China seeing its increasingly assertive grey zone campaign involving all “measures short of war” as not only advantageous to its strategic interests, but at the same time not generating any significant strategic risk to itself.
Then in September 2024, at the National Defense University in Washington DC, I looked at China’s definition of deterrence within the wider Chinese frame of “struggle”. This included the Chinese concept of “weishe” which while normally translated as deterrence, in fact involves a much broader concept including a combination of deterrence, compellence and dissuasion through calculated escalation.
In this lecture I seek to build on these foundations and examine further what the Chinese strategic literature describes as “controlled escalation”, and what this may mean in turn for the US and its allies in the event of a crisis – including the unique challenges of crisis communication and crisis management.
This is particularly important if we find ourselves not only not talking the same physical language.
But it’s even more important if we’re not talking the same conceptual language around core strategic assumptions about acceptable levels of threat and risk under so-called “controlled escalation” and how this is likely to be viewed by the United States.
In a crisis, we cannot afford for anything to be lost in translation.
History, regrettably, teaches us that much often is.
Deterrence under the Trump Administration
From my perspective, in his first term, President Trump transformed American policy towards China.
Shortly after taking office, in his 2017 National Security Strategy he defined China as a competitor, challenger and rival – formally abandoning the language of strategic engagement that had governed bipartisan US policy towards Beijing for the previous quarter of a century.
President Trump’s 2018 National Defense Strategy said that “long-term strategic competition with China and Russia are the principal priorities for the Department of Defense”.
President Trump and his team returned to office last month with a renewed focus on China.
Just last week, new Defense Secretary Hegseth told the Ukraine Contact Group in Brussels that: “the United States is prioritising deterring war with China in the Pacific, recognizing the reality of scarcity, and making the resourcing trade-offs to ensure that deterrence does not fail; that deterrence cannot fail, for all of our sakes.”
Earlier, during his confirmation testimony, Secretary Hegseth said that “re-establishing deterrence” was one of three key elements in his job.
He added that “we can no longer count on reputational deterrence; we need real deterrence.”
For Secretary Rubio’s part, during his confirmation hearing, he said of China that “a lack of deterrence is an invitation to war, an invitation to hostility… deterrence is critical not just to defending Taiwan, but also to preventing a cataclysmic military intervention in the Indo-Pacific”.
Mike Waltz, the President’s National Security Adviser, has been no less clear. After he was nominated to the position, NSA Waltz said that the US must “finally focus strategic attention where it should be – countering the greater threat from China”.
He said that the new Administration “should increase defence spending and revitalise the defence industrial base to make sure its armed forces are clearly capable of denying a Chinese attack on Taiwan… by doing so, the US can end ongoing conflicts and restore deterrence, stability and peace”.
The Role of Allies
President Trump has been clear, too, about the role of allies and partners in sharing the burden of deterrence.
Australia is clear about our strategic interests and our commitment to deterrence.
We are, for the United States, a long-standing and reliable ally.
We have fought alongside America in every major war since fighting together on the western front in 1918;
We have shared a critical Five Eyes intelligence partnership with the US since 1948;
We have had a mutual defence pact since 1951;
Australia has always paid its own way and played its part;
And we invest directly in America’s defence industrial capacity.
Just ten days ago, for example, Australia’s Deputy Prime Minister and Defence Minister passed to Defense Secretary Hegseth here in Washington a US$500 million Australian contribution to America’s submarine industrial base. This payment was the first of a US$3 billion contribution under AUKUS. It signals also a vote of confidence in the future of America’s defence industry.
China’s Strategic And Economic Trajectory – the Need for Analytical Rigour
So what of China’s medium term strategic and economic trajectory?
Since exiting its Covid lockdown just two years ago, China has not managed to deliver the sustained, strong economic growth that we saw over previous decades.
Long gone are the days of double-digit growth.
There are many reasons for slower Chinese growth, including the low consumer confidence, and the Chinese peoples’ resulting preference for saving rather than consumption, both reinforced by the unfolding burden of demography.
The main factor, in my view, is the lack of rolling market reforms, challenges to the role of the private sector, and the preferencing instead of state industrial policy and the dominant role of SOEs.
This in turn has diminished the confidence of investors, innovators and entrepreneurs both at home and abroad.
But chatter in the commentariat about China’s economic decline is both analytically unsound and dangerous in its policy presumptions.
China’s economic growth may be slowing, but its economy is not shrinking.
Those who believe otherwise need to reappraise.
China will remain at least the world’s second largest economy for the foreseeable future. And it may still become the largest.
Those who believe China is in economic decline tend also to believe that because China’s private sector is currently in difficulty, the cutting-edge technology innovation is all taking place in Silicon Valley.
That view too is as premature as it is dangerous.
China’s national industrial strategy to make China a global leader in AI, quantum computing, semiconductors and other paradigm- shifting technologies, is now ten years into its implementation.
The bottom line is that for every million dollars wasted by the Chinese party-state on research and innovation, one thousand of those dollars are likely to be producing a result.
So despite China’s domestic crackdown on its so-called major tech platform companies over the last five years, it is simply analytically wrong to conclude that China is somehow falling behind in the great technology race.
Indeed, China continues to march forward and up the value chain.
There is also a view in some quarters that because China’s military leadership has been riven by corruption, the PLA is now somehow incapable of acting against Taiwan.
It is true that the PLA is currently being convulsed by an anti- corruption campaign, with multiple purges in its top ranks.
To paraphrase Oscar Wilde, to lose one defence minister is unfortunate, but to lose two could be regarded as careless.
However, at the same time, China’s military expenditure continues to rise.
The Stockholm International Peace Research Institute noted less than a year ago that China had for all of the previous 29 years enjoyed year-on-year rises in military expenditure.
That trend continues.
And in my view no amount of economic headwinds will arrest it.
The resources that China is injecting into its military capabilities is also generating results.
The December 2024 China Power Report produced by the US Department of Defense noted that China continued to close capability gaps with the United States.
Nothing suggests that this process will abate, whatever the state of party rectification campaigns might be within the PLA leadership.
In October 2020 at the 5th Plenum of the 19th Central Committee, President Xi set the date of 2027 as the date for the Chinese military to “achieve the centennial military building goal”. This new milestone has effectively supplanted Xi’s previous directives, including that China “basically complete national defence and miliary modernisation by 2035” and “possess a world-class military by 2049”. When Xi sets these dates, he means it.
His doctrine for a fully modernised PLA that is capable of “fighting and winning wars” is entrenched.
And the PLA is operationally responding to the directives of its commander-in-chief.
So whatever Xi’s real-world political intentions concerning military contingencies against Taiwan may be for the near-to- medium term future, the bottom line is that China is openly signalling that it wishes to ensure PLA capabilities present the Chinese leadership with a military option after 2027.
And this once again brings us back to the core question of effective, integrated deterrence.
US-China Relations under President Trump
Against this backdrop, President Trump is moving to re-set the chess board between the US and China, as he promised during the presidential election campaign.
We have seen the first moves and counter moves by the US and China on tariffs over fentanyl.
We have yet to see where the wider negotiations between the US and China may land on the President’s commitment to 60% tariffs against China unless a deal can be forged.
The ingredients of any such deal would be complex in the extreme, possibly including such sensitive questions as:
- existing and future tariff levels;
- comprehensive purchasing agreements;
- voluntary export restraints;
- domestic subsidies;
- technology export restrictions;
- foreign direct investment restrictions; and
- the future exchange rate regime for the renminbi.
These are all complex in their own right.
Solving the “Rubik’s Cube” by aligning all seven of these variables into a mutually acceptable agreement will be exceptionally difficult.
The foregoing analysis suggests that China and the US may in fact find themselves right now (and perhaps for the next several months) in the calm before the storm.
Xi Jinping certainly has long spoken of his doctrine of “continuing struggle”.
The Chinese government’s directive to its foreign policy apparatus is to “chan dou” 缠⽃, or “entangling while fighting” the US.
Whatever the outcome of the two countries’ trade and economic negotiations, it is prudent for us all to think through the forms that the CCP’s continuing doctrine of “struggle” against the US might take over the rest of this year and for the remainder of President Trump’s second term.
Beijing’s reaction overnight to the US State Department’s language on US Taiwan policy website is another direct reminder that the Taiwan question remains fundamental to the future of US- China relations.
And that brings us back to the core questions of deterrence, and in particular how these are seen through the Chinese lens.
The US-China deterrence prism
It’s important to remember that deterrence is both psychological and physical in its nature.
It’s about capability, credibility and communication - and how these are perceived from both Beijing and Washington.
In the West, deterrence is a two-sided coin: assurance and dissuasion.
Assurance concerns an irreducible core interest on the part of the other party. In China’s case, this is no change to Taiwan’s status, notably no erosion of Beijing’s interpretation of the “One China policy” on the part of other countries.
Dissuasion concerns constructing a clear and unambiguous consequence that the risks of undertaking any unilateral action to change the status quo are not worth any advantages that may arise from such an action. In China’s case, this is that Beijing concludes that the costs of invasion – ie. the risk of defeat – are greater than any benefits it may achieve by attempting such an invasion.
For its part, China is constantly looking for greater assurance, while offering little of its own.
China is looking for assurance from the US and others on their approach to, and policy on, Taiwan; their positions on Taiwan’s current and future status; as well as the level of international engagement with the Taiwanese authorities.
At the same time, however, China’s military build-up in our region is the largest build-up in the post-war era, with little transparency – let alone assurance – from Beijing about how it intends to use its newer, more numerous, more nuclear, and more capable military platforms.
So for China, deterrence is not a two-sided coin.
China’s Definition of Deterrence – Weishe 威慑
It is important therefore that we understand the broader ideological worldview and specific theoretical underpinnings of Chinese concepts of deterrence.
Thanks to growing academic research on Chinese foreign and security policy, we now know more about how China conceptually approaches deterrence and crisis management.
In this context, I am particularly indebted to Lyle Morris of the Asia Society’s Centre for China Analysis, and a number of other scholars of the PLA and China’s military doctrine, for their insights.
China has developed a deep reservoir of theoretical concepts to achieve deterrence against its peer competitors.
The Chinese deterrence literature refers to what they call ‘effective control’ (youxiao kongzhi, 有效控制) in what they see as a flexible, graduated tool designed to guide political and military action during times of heightened tension.
This tension exists as a result of what Beijing sees as the structural inevitability of inter-state competition as China rises and the West declines – or, more specifically, that the US and its allies fail to accommodate China’s rise.
In other words, the Chinese doctrine of “effective control” represents the conceptual machinery for operationalising the Chinese theory of deterrence.
We should underline once again that the Chinese theory of deterrence or “weishe” involves a spectrum of state activity that embraces both what the West understands as classical deterrence in preventing a crisis from metastasising into conflict, as well as ontaining strong elements of compellence, including the possibility of limited kinetic activity to force an adversary to stop what they are doing.
This is where the doctrine of “effective control” enters into the equation – ie. in Beijing’s view “managing” the escalation process seamlessly through both the deterrence and then the compellence phases.
This concept of “effective control” rests on the theoretical assumption that if a crisis breaks out as China asserts its global leadership role, any such crisis can still be scientifically “controlled”.
Furthermore, this “effective control” doctrine argues that escalation can still be managed by applying these scientific principles and various (albeit unspecified) advanced military technologies.
In the Chinese lens, “effective control” can therefore be broadly understood as the need to reduce the risks and damage of warfare, limit escalation, or then terminate war on terms favourable to China.
“Effective control” requires Chinese military commanders to seize the initiative in war; be able to control war aims, means, scale, rhythm, time, and scope; and strive to achieve, at a relatively low cost, a favourable war outcome.
Chinese strategists ultimately believe that China can exert sufficient control in the escalation process if all factors and dynamics are accounted for within their scientific models of deterrence.
This theory of escalation control and escalation dominance implies a high degree of confidence in China’s ability to manage escalation during times of crisis.
It seems to take little account of what in the West we routinely describe as the “fog of war”.
It relies significantly on game theory in the first instance, and increasingly more rarefied forms of computational and algorithmic science that the PLA leadership believe are capable of scientifically predicting foreign country behaviours when confronted with a series of Chinese military and policy actions.
In my view, this is the product of an inordinate faith in Chinese dialectical analysis, and the theory of action and reaction that dialecticians believe can be elevated to a science.
This concept of ‘effective control’ has long been present in authoritative PLA doctrinal writings, including the 2013 edition of the Science of Military Strategy.
Most importantly, at a political level, it was used by Xi Jinping in his 19th Party Congress report in 2017.
For these reasons alone, we should take it seriously.
The Four Core Elements of the Doctrine of Effective Control
“Effective control” as a doctrine has four components:
- effectively shape the situation (youxiao suzaotaishi, 有效塑造态势);
- control the crisis (guankong weiji, 管控危机);
- curb the war (ezhi zhanzheng, 遏制战争); and
- win the war (daying zhanzheng, 打赢战争).
The first two of the concept’s four components — ie. ‘effectively shaping the situation’ and ‘controlling the crisis’ – emphasise the need to manage escalation before the onset of hostilities.
The priority in this phase is war avoidance, fighting only when prepared, ensuring military goals do not subsume political goals, and terminating a war to ensure postwar stability.
By contrast, the latter two components – curbing the war and winning the war – are about conflict management once conflict prevention has failed.
Stage One: “Effectively Shaping the Situation”
The first component – to “effectively shape the situation” –seeks to actively manipulate the peacetime environment to prevent crises from escalating while maximising China’s leverage over external conditions.
Most of the actions at China’s disposal during this phase have already been trialled.
China’s use of inducements, dissuasion and punishments are well- documented.
For the PLA, this includes comprehensive planning for a wide range of contingencies during peacetime.
This includes using both military and non-military tools to establish advantageous strategic conditions conducive to China’s definition of internal and external stability.
For Chinese foreign policy, its role in this phase is to create a perception, and if possible a conclusion, in global and domestic public opinion on where the blame lies for the “situation” in question, before becoming a real-world crisis.
The ultimate goal in this phase is to minimise risk and prevent a crisis from taking shape – but at the same time also preparing both international public opinion as well as the Chinese domestic population and military, for a crisis should one break out.
Stage Two: “Controlling the Crisis”
If a crisis does unfold, the “effective control” concept then progresses into its second phase: ie. “controlling the crisis”.
During the “controlling the crisis” stage, the aim is to minimise risk and achieve limited strategic objectives by leveraging all elements of Chinese national power.
This includes both classical deterrence and multiple forms of non- kinetic military action.
In this stage, “effective control” is meant to prevent war, exploit opportunities, while at the same time preparing the PLA for potential escalation.
Tools at China’s disposal include information operations, strategic deterrence signaling, diplomatic messaging, public statements, and mobilisation efforts to prepare for crisis scenarios.
The Chinese concept of “momentum” or “shi 势” is vital to this phase. Chinese strategists believe that maintaining positive momentum can lead to victory without having to resort to military force.
In this stage, China may view cutting crisis communications with the US as allowing Beijing to dominate the information space. It comes of course with the very clear risk that Beijing’s own deterrence signals then being missed or radically misunderstood.
Heightened military exercises and training activities, prepositioning mobile assets, and enhancing intelligence, surveillance, and reconnaissance activities also commence during this period.
The intent here is to prevent a crisis from metastasising into open conflict or war, while showcasing China’s resolve to maintain an active deterrence posture with the object of emerging from any such conflict having secured Chinese national security interests.
Stage Three: “Curbing the War”
The third component of effective control – ‘curbing the war’ or, as the 2013 Science of Military Strategy states, ‘controlling war situations’(kongzhi zhanju, 控制战局) – occurs when a crisis has evolved past a state of peacetime tension and kinetic activity has begun.
Here, PLA strategists begin to employ more direct military measures, including lethal force, in an effort to bring an end to hostilities and limit the scope of the unfolding conflict.
This is where a logical tension arises between the means of controlling escalation through the Chinese lens, and a range of less-controllable factors that could lead to unintentional escalation on the battle space.
Indeed, this is where an intended act of deterrence as conceived by China could in fact be misinterpreted as an opening salvo of an outright war by the United States.
Some PLA analysts argue in favour of precision air and space strikes at a conflict’s outset to deter an enemy from continuing the fight, believing that crippling an adversary’s cyber capabilities and conducting electromagnetic interference against space and network systems would provide “escalation dominance” short of outright war.
In reality, the US is likely to interpret such actions in a radically different way.
No-one is about to accept being blinded.
For example, according to the Cybersecurity & Infrastructure Agency (CISA), Chinese state-sponsored actor VOLT TYPHOON was pre-positioned to disrupt critical, civilian US energy, transport, water and wastewater systems in the event of geopolitical tensions or military conflict.
These actions are unlikely to have been interpreted in Washington DC as normal acts of Chinese deterrence.
Stage Four: “Winning the War”
Finally, as the PLA moves to the “win the war” component, China’s war planners shift their focus to achieving victory on the battlefield.
They also, however, will seek, in this stage at least, to limit any escalation to the nuclear domain, ensuring a continuing alignment with the Chinese leadership’s overall political objectives.
This includes setting the terms of war termination, mobilising the population, and ensuring the legitimacy and survival of the Chinese Communist Party during the postwar phase.
The Role of “Effective Control” Within Deterrence
As noted earlier in this lecture, this “effective control” concept, despite its embrace of kinetic activity, is nonetheless nested under, and in the service of, broader Chinese deterrence doctrine, or “weishe”.
Weishe incorporates both the compellence aspect (poshi, 迫使) and the dissuasion aspect (quanzhi, 劝止).
The 2011 PLA volume on military terminology, for example, defines ‘weishe zhanlue, 威慑战略’ as “a military strategy of displaying or threatening the use of armed power, in order to compel an opponent to submit”.
Again, as noted earlier in this lecture, what is noteworthy about this and other definitions of “weishe” is that it does not distinguish between dissuasion or compellence.
Indeed, for China, “weishe” can be best understood as a catch-all phrase whose purpose is to demand that the opponent submit to the deterrer’s volition, and if not heeded, compel that opponent by the use of force to cease an action undesirable by China.
This stands in contrast to Western concepts of deterrence, which seek to prevent an action before it occurs.
If that action is taken, in the eyes of Western theorists, deterrence has failed. Deterrence then transitions into the entirely different domain of ‘compellence’. And under compellence, Western strategists then threaten further harm to the aggressor if this initial set of actions continues.
Policy Implications
So what are the policy implications arising from this?
Some may find all these arguments deeply semantic.
After all, what do names matter?
I argue: quite a lot.
Particularly, if in the event of an emerging crisis, these words and their underlying concepts trigger early kinetic actions on China’s part under its own rubric of deterrence.
Whereas any form of kinetic action will not be interpreted as deterrence by the United States at all.
For these reasons, the US and its allies must engage China on Beijing’s concept of deterrence.
These concepts are alive in Chinese literature and in Xi Jinping’s speeches. And we already begin to see these concepts of “effective control” already at work, being deployed in flashpoints such as the Taiwan Strait, East China Sea and South China Sea.
In all of these theatres, China is trying to effectively shape the situation by seeding the diplomatic and information space, as part of its phase one plan of ascribing narrative responsibility. It seeks to overwhelm the information space and shape the situation by drawing a culpability matrix.
In all of these theatres, China seeks to control the crisis by ensuring the crisis doesn’t move into open conflict, as part of its phase two plan of preventing kinetic conflict until it is ready. We have seen this in part with Chinese actions towards the Philippines vessel the Sierra Madre.
In all this, however, we see China’s growing degree of comfort in operating within the grey-zone.
We in the West are generally much less comfortable living with friction, forecasting ‘struggle’, or operating within the grey-zone.
We are more accustomed to binary conceptions of war and peace.
For China, and for Xi especially, grey-zone operations lie in the fluid realm of ‘struggle’ in which Chinese policy-makers are infinitely more comfortable conceptually than their Western counterparts.
It is a core part of their dialectic for dealing with the US and the West.
That is why we see China stepping up destabilisation activities in the maritime domain, most notably in the South China Sea.
In these areas, China so far has not been effectively deterred.
There is a danger, therefore, that as a result we may be fuelling a perception within Beijing’s doctrinal lens, that China is gradually acquiring “effective control” in the grey zone.
Possible Pathways Forward
From personal and academic perspectives, I see several pathways forward.
First we must engage China on their concepts of deterrence, compellence and their doctrine of “effective control” which bridges both non-kinetic and kinetic forms of escalation. We must make plain that these concepts are dangerous.
Second, at a practical level, more work is needed to ensure China concludes that its grey-zone campaign has costs – by ensuring Beijing is not confident it has shaped the environment sufficiently, nor confident it can control the crisis, curb the war, or win the war.
Third, new responses are needed – including asymmetric responses – that challenge China’s capacity to effectively control the United States, its allies and partners in the grey-zone.
Fourth, more information operations can offer greater transparency in relation to China’s operations in the grey zone.
Our task is urgent. China is not risk averse. Xi Jinping has demonstrated that through land reclamation in the South China Sea.
But nor does China want to risk the outbreak of conflict and war.
Our task is to compound China’s risk calculus so that deterrence succeeds in bringing about continued strategic stability.
That indeed would give effect to President Trump’s doctrine of peace through strength.