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In wide-ranging talks with US Secretary of State Hillary Clinton, Rudd also described Chinese leaders as "paranoid" about Taiwan and Tibet and said that his push for a new Asia-Pacific body was designed to contain Chinese influence.
The memo detailing a March 2009 lunch conversation between Rudd, who was then prime minister, and Clinton in Washington states that the Australian leader described himself a "brutal realist on China".
It said Rudd, a Mandarin-speaking former diplomat who was once posted to Beijing, argued for "multilateral engagement with bilateral vigor" in China, The Sydney Morning Herald reported.
He called for "integrating China effectively into the international community and allowing it to demonstrate greater responsibility, all while also preparing to deploy force if everything goes wrong," the cable states.
The Australian government has refused the comment on the cable which reveals Clinton affirmed Washington's desire for a successful China, with "a rising standard of living and improving democracy at a pace Chinese leaders could tolerate".
The cable said the US wanted China to take greater responsibility in the global economic sphere, build a better social safety net for its citizens, and a better regulatory framework for the goods it manufactures.
But Clinton also addressed the challenges arising from Beijing's growing economic clout, asking, "How do you deal toughly with your banker?" it said.
Rudd also reviewed Chinese leaders for Clinton, comparing President Hu Jintao to his predecessor by saying he "is no Jiang Zemin" and opining that Hu's likely successor Xi Jinping could rise above his colleagues in part thanks to his family's military connections.
On Taiwan, Rudd said that the feelings of Chinese leaders were "sub- rational and deeply emotional" while hard-line policies on Tibet were designed to send messages to other ethnic minorities.
Rudd also revealed that his thinking behind his ambitious Asia-Pacific Community was mostly to ensure Chinese dominance in the region did not result in "an Asia without the United States".
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