U.S. Troops Heading to Australia
KING: You're watching live pictures of the president of the United States, Barack Obama. He's in Australia addressing the Australian parliament. On the president's mind, a key relationship with Australia, but also a huge security challenge -- a huge security challenge in the South Pacific and throughout the China seas, which brings us to tonight's "Number": $91 billion. That is what the United States government projects China will spend on its military in 2011. Ninety- one billion. Go back to 2000, about $50 billion. Look at that. Look at that steady growth in Chinese defense spending. There's a reason -- there's a reason the United States is a bit concerned about this. If you just look at this here, this area here, the red area, this is what China says are its territorial waters. Well, the United States and others disagree. They say most of this -- you see the blue lines, that is international waters. One thing the president of the United States is doing today while in Australia is announcing a new security commitment. About 2,500 United States Marines eventually will be stationed here in Darwin. That is a security commitment to the region. We all know about the economic relationship with China. It holds a lot of U.S. debt. That's complicated, the president says, but he also says not to worry.</s>BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I think the notion that we fear China is -- is mistaken. What we have said is the future of this region depends on robust trade and commerce, and the only way we're going to grow that trade is if we have a high standards trade agreement where everybody is playing by the same rules.</s>KING: The president says not to be feared. Let me put that question to our next guest, the former CIA director, Michael Hayden, retired general from the U.S. Air Force. I always like to phrase the question this way. China, friend, foe, or don't know?</s>GEN. MICHAEL HAYDEN, FORMER CIA DIRECTOR: China is not an enemy of the United States. John, there are logical, non-heroic policy choices available to us and to the Chinese that keep this relationship within bounds. Look, it is forever going to be competitive. There are times when it's going to be confrontational. It never has to get to the level of conflict. All that said, when I give speeches about security concerns, China is always among my list of three, four or five areas that we have to keep an eye on. It doesn't have to be an enemy of the United States.</s>KING: You say it doesn't have to be. Even a very modest commitment, 2,500 U.S. Marines eventually -- it will take a long time to build that up -- in a country, Australia, that has been a U.S. ally for decades. If you look, the "People's Daily" crossfire," the editorial says today, "Australia surely cannot play China for a fool. It is impossible for China to remain detached, no Australia does to undermine its security. If Australia uses its military bases to help the U.S. harm Chinese interests, then Australia itself will be caught in the crossfire." That's tough language.</s>HAYDEN: It is pretty tough. It's not particularly useful either. And it really doesn't reflect the true understanding of China's interests. Look, we have telegraphed for more than a year that we're shifting our weight, that we're moving our forces more in the direction of East Asia, moving our forces away from ground forces and more in the direction of forces that control access. Marines, naval forces, air forces. Why are we doing that? We're trying to continue a balance in East Asia. And doing that in concert with our allies like Australia but not limited to Australia. Look, John, the way I put it very starkly is this is not preparation for war with China; it's not threatening China. It's creating a balance that makes it much more difficult for anyone in China in five, ten or 15 years to do something both they and we would regret.</s>KING: Well, let me ask you to come over to the wall. Because you say creating a balance. If you're trying to create a balance, that means you're addressing what you consider to be an imbalance. So I want to close this one down. Just look at this compared to other countries in the region. This is China's defense spending. Russia, Japan, Korea. Look at that. That's pretty astounding, the build-up in China. That's one thing. And if you look again at the weapons modernization, if you look from 2000 -- 2008 to 2010, surface forces, submarine forces, air force, air defense forces. The Chinese are getting about this in a very busy way. And I want to come back just to put up the South China Sea. A lot of it is about this. A lot of their new surface-to-air missiles can reach ships here. Yet, you say not to worry.</s>HAYDEN: No, I didn't say not to worry. I said it was an item of concern. I said China is not necessarily an enemy of the United States. Now, there are aspects of Chinese behavior that are quite disturbing. This one in particular. That's 1.2 million square miles of what you and I would consider to be open ocean, and they want to treat it the way we treat Lake Erie. They call it a Chinese core interest, which is the same language they use to describe Taiwan and Tibet. We can't let that stand. And what you've got is the neighborhood here welcoming an increased American presence to balance what they see as this potential danger coming from China. A potential danger.</s>KING: Now, the neighborhood welcomes the presence, not China. We can walk back over to the table. How much does the economic dependence of the United States -- they hold a great deal of our debt; they're a critical trading partner at a time we want the United States economy to start growing again. How much does that complicate the security relationship? Can the president be as tough as he would like, for example, at a time when China, with just a few pulls of the lever, could mess with our economy?</s>HAYDEN: I actually think the president has more headroom, more freedom to maneuver on these security questions than much of the public commentary would suggest because of the economic relationship. Remember we have some dependence upon China, but China also has great dependence on the United States. This is a symbiotic relationship. So I don't think we will unnaturally control or keep in check things we should, you know, legitimately be doing for our national security purposes.</s>KING: You're formerly in the spy business. One of the ways during the Cold War eventually that we didn't have something go off the rails with the then Soviet Union is there were channels of communication as the relationship matured. Are there those levels of communication at the security level, at the defense and at the intelligence level now that, if somebody does misjudge somebody, we can quickly turn the volume down?</s>HAYDEN: Not nearly as robust as they need to be. There are some. But the Chinese use the military-to military relationships we have developed with them as a tool to punish us. They cut them off when we do something that they view to be offensive. That, frankly, is an example of Chinese behavior that I think is not in their interest and not in our interest either.</s>KING: General Hayden, appreciate your insights. This is the challenge of the next generation. Appreciate you, sir. Thank you, sir. And next, the truth about a scandal that's costing taxpayers -- that means you -- a half billion dollars.