The former ambassador to the US and founding president of the Asia Society Policy Institute has used an address to the Australian National University to warn of the Asian superpower using artificial intelligence to create a state controlled allocation of resources.
"No more invisible hand of the market, the explicit term now used in the Chinese Marxist literature ... is the visible hand of the state," he said, suggesting this use of AI could do away with the free market economy model altogether.
Productivity driven by artificial intelligence, Dr Rudd said, is not just a way to catch up with the United States, "but now to leapfrog the West".
China has faced a subdued period of economic growth propped up solely by a $US1.2 trillion ($A1.7 trillion) trade surplus during the past 12 months.
This excess in production and exporting at lower prices has disrupted global supply chains and industry around the world prompting tariff action by the United States in recent years.
Dr Rudd noted tariffs easily threaten China's only source of economic growth, with artificial intelligence viewed as a overwhelming positive solution to these concerns.
"Whereas in this country and around the democratic world, there is an emerging parallel debate about the risks presented across the spectrum by artificial intelligence," he said.
"Risks to individuals, psychosocial risks, employment risks, the security risks which arise from agents escaping from the sandbox."
The difficulty facing the Chinese Communist Party, Dr Rudd said, is working with the private sector which has the technology and innovation without jeopardising the party's ideology.
Dr Rudd also praised the government of Prime Minister Anthony Albanese for "putting the megaphone away" when tackling diplomacy with China.
"The megaphone got a lot of use in the period that Scott Morrison was prime minister. I'm not sure that that actually produced any sensible outcome for anybody."
Dr Rudd also took the opportunity to weigh in on the governance issues plaguing the university he called home as a teenager.
"This is a first-class, world-class university," he said.
"So it's time, I think, just for everyone just to put the bullshit away and just get on with the business."
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