STAN GRANT: Mr Rudd, the key word there is “will”, will China step in and play this role and what would it take for China to really use all its influence? They think that North Korea’s a long term strategic ally. Then also, it’s a fundamentally small business state and where, if we as the Labor Party and alternative government of Australia don’t have a strong message for those aspiring to build their own businesses, then it won’t resonate. We have seen the factional tensions play out in Labor today as people jockey for frontbench positions, the talented New South Wales MP Mr Husic has made way for Kristina Keneally, the former New South Wales premier. LEIGH SALES: Does Anthony Albanese need to watch out for Bill Shorten? I mean, it’s a good cocktail of talents there. We know we are dealing with someone in Donald Trump who has already shown he will act in countries like Syria where he has launched an attack there. What is my belief given that I am resident of the United States and I deal with the American think tanks and to some extent the administration? I think bottom line is that the Chinese believe the Americans are bluffing and their reason for that is that America’s South Korean ally, in China’s assessment, would be urging the United States not to undertake any such action for fear of a North Korean retaliatory strike against the south. And that, I think, cautions against those who just want to do an internal factional stitch-up. The big one which stares us in the face, of course, is the US-China trade war. KEVIN RUDD, FORMER PRIME MINISTER: I think the Chinese have two points of leverage and they are big ones. KEVIN RUDD: Well, Leigh, I think there are some national answers to that which are applicable to Queensland and maybe a few that are Queensland-specific. I cannot tell you how probable it is, in terms of use, but it is on the table and the problem is the Chinese don’t believe that because they believe that the US would never risk such an approach because of the possible consequent damage to the south. Kevin Rudd tells 7.30 he believes US military action against North Korea is ‘on the table’, and says the problem is that China doesn’t believe it. STAN GRANT, PRESENTER: The United States has military plans on the table for a strike against rogue nuclear nation North Korea, according to former Australian prime minister, Kevin Rudd. That would be the dream.". KEVIN RUDD: It was mentioned to me quite a number of times. I know him very well and those who would have run against him very well in addition. I have always been pro-Israel but being pro-Israel doesn’t line you up as being pro-Netanyahu, particularly when Netanyahu has effectively walked away from the substance of a two-state solution. If you look carefully at the reports, not just by the IMF but reading between the lines about what the Reserve Bank Governor of Australia had to say in the course of the last week, the risks are there and there are lots of downside risks going forward.

KEVIN RUDD: I think it is a real and growing risk. So I think we need to be choosing our words very carefully into the future. "We went weekly during the election campaign with so much going on politically, and will revert to fortnightly in the foreseeable future," he says. So these two factors – one generated itself by this Conservative government in Australia, but the second, frankly, through no fault of Mr Morrison or anybody else, is the new dynamic of the US-China relationship. One, obviously, is in the supply of energy to the north, oil keeps the wheels, the North Korean economy turning but more importantly, it keeps the wheels of the North Korean military turning and North Korea is about 70, 80 per cent plus dependent on Chinese crude petroleum and refined petroleum. But given he is our Prime Minister, this period ahead, this next, frankly, 12 months, will be one of profound significance for whether we in Australia get the balance right in our relationship with China and the United States. Credit:Dean Lewins. STAN GRANT: And of course, if an action was to be taken, what would North Korea then do, that is the big question, would it retaliate with the use of nuclear weapons, in your assessment?