New G-2?
Fred Bergsten recently wrote in the Foreign Affairs to argue that the US should forge a "partnership of equals" with China. While I have reservations on some of the points raised in the article, such as whether China should bear the blame for breaking the latest Doha talks, or whether the US (or for that matter, other major powers) is really willing to treat China as an "equal partner", I found most of the other arguments very intriguing. The full article is available here. Below are some of the parts I enjoyed most.
"Even the strongest defenders of the current world trading system would concede that at least some of China's criticisms are valid. At best, the Doha Round will achieve only marginal liberalization of world trade after almost a decade of effort. The IMF has failed to enforce its own rules and is being forced to downsize. The World Bank has lost any clear direction. The G-7 (the group of highly industrialized states) has adopted a mutual nonaggression pact among its members, making its criticisms of outsiders such as China seem hypocritical. And by failing to adapt their governance structures to the dramatic changes in the relative economic power among nations, the international economic institutions have lost much of their legitimacy. The fact that some Chinese attitudes are understandable and some Chinese concerns legitimate does not lessen the significance of the challenge but rather suggests some of the logical components of an intelligent response.
To deal with the situation, Washington should make a subtle but basic change to its economic policy strategy toward Beijing. Instead of focusing on narrow bilateral problems, it should seek to develop a true partnership with Beijing so as to provide joint leadership of the global economic system. Only such a "G-2" approach will do justice, and be seen to do justice, to China's new role as a global economic superpower and hence as a legitimate architect and steward of the international economic order.
The present U.S. approach seeks to entice China to join the existing global economic order. Washington's fondness for the status quo is understandable given its basic success and the prominent role it accords Washington. But China is uncomfortable with the very notion of simply integrating into a system it had no role in developing. Both Chinese officials and Chinese scholars are actively discussing alternative structures for which China can be present at the creation. At one particularly contentious point in its negotiations to enter the WTO, the Chinese ambassador reportedly thundered, "We know we have to play the game your way now, but in ten years we will set the rules!" The existing system, moreover, has become increasingly sclerotic, and it might well be that the only way to overcome the enormous resistance to change (manifested in positions such as Europe's refusal to wind down its excessive quotas and give up some of its IMF executive-board seats) is to undertake a fundamental overhaul."
"Even the strongest defenders of the current world trading system would concede that at least some of China's criticisms are valid. At best, the Doha Round will achieve only marginal liberalization of world trade after almost a decade of effort. The IMF has failed to enforce its own rules and is being forced to downsize. The World Bank has lost any clear direction. The G-7 (the group of highly industrialized states) has adopted a mutual nonaggression pact among its members, making its criticisms of outsiders such as China seem hypocritical. And by failing to adapt their governance structures to the dramatic changes in the relative economic power among nations, the international economic institutions have lost much of their legitimacy. The fact that some Chinese attitudes are understandable and some Chinese concerns legitimate does not lessen the significance of the challenge but rather suggests some of the logical components of an intelligent response.
To deal with the situation, Washington should make a subtle but basic change to its economic policy strategy toward Beijing. Instead of focusing on narrow bilateral problems, it should seek to develop a true partnership with Beijing so as to provide joint leadership of the global economic system. Only such a "G-2" approach will do justice, and be seen to do justice, to China's new role as a global economic superpower and hence as a legitimate architect and steward of the international economic order.
The present U.S. approach seeks to entice China to join the existing global economic order. Washington's fondness for the status quo is understandable given its basic success and the prominent role it accords Washington. But China is uncomfortable with the very notion of simply integrating into a system it had no role in developing. Both Chinese officials and Chinese scholars are actively discussing alternative structures for which China can be present at the creation. At one particularly contentious point in its negotiations to enter the WTO, the Chinese ambassador reportedly thundered, "We know we have to play the game your way now, but in ten years we will set the rules!" The existing system, moreover, has become increasingly sclerotic, and it might well be that the only way to overcome the enormous resistance to change (manifested in positions such as Europe's refusal to wind down its excessive quotas and give up some of its IMF executive-board seats) is to undertake a fundamental overhaul."
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