China and US need to reach for positive-sum outcomes

Shared global leadership between two biggest economies is not assured, but differences cannot be allowed to translate into a negative-sum game

PUBLISHED : Thursday, 11 December, 2014, 9:07am
UPDATED : Thursday, 11 December, 2014, 9:07am

Discussions of global economic and political affairs are usually premised on the assumption that the bilateral relationship between China and the United States is the most important one in the world. The annual conference of the Hong Kong-based China-United States Exchange Foundation (CUSEF) hosted a high-powered panel last week to discuss what that means for those countries and the rest of the world.

The debate was billed as an economic discussion, but the exchanges inevitably zeroed in on political as well as economic aspects of the relationship. The assessment was upbeat, but laced with recognition of the ups and downs intrinsic to such a complex relationship.

Last month's Apec Summit in Beijing fostered an optimistic mood, but significant challenges face many elements of the interaction between the two largest economies. The areas for action agreed on by China and the US on the margins of the Apec meeting are wide-ranging. Their specificity is encouraging. But the test is always execution.

On the trade front, agreement was reached on further action towards putting flesh on a long-standing plan for building an Asian-Pacific free-trade area. The stalled WTO talks on free trade in information technology products and the bilateral negotiations on an investment treaty were both given a push. China and the US have also agreed to make business and tourist visas valid for 10 years.

The commitments on climate change are a remarkable and essential joint initiative to advance flagging multilateral action on this front. Turning these undertakings into concrete action will be a severe test of resolve.

The understandings on how better to manage air and sea military encounters and share information on military activities seek to address the threat that brinkmanship turns into confrontation. Agreement to talk more readily about North Korea, nuclear proliferation, Islamic State and Afghanistan acknowledges a shared interest in managing flashpoints of conflict.

The underlying script for all these efforts, of course, is how to manage a secular shift in the centre of economic and political gravity as China rises. The establishment this year of the BRICS development bank and Asian Infrastructure Investment Bank (AIIB) is in no small measure a response to Western and Japanese domination of existing institutions such as the World Bank and the Asian Development Bank.

These initiatives were not welcomed by the US, which even lobbied allies to refrain from participation in the AIIB. Similarly, in some circles China's terrestrial and maritime silk roads are characterised as a power grab rather than the building of infrastructure with developmental benefits.

China is also prone to emitting mixed signals as it seeks to articulate an evolving identity, somewhere between an emerging economy and a dominant one, and a powerful regional force and a superpower.

The histories, cultures, and political systems of the US and China are starkly different. That makes the quest for a shared vision of the future all the more elusive and challenging.

China and the US are engaged in numerous conversations at multiple levels on a broad range of issues. Much of this activity goes on without publicity. Recent public pronouncements point to a ratcheting down of conflict zones and a ratcheting up of cooperation.

Can shared global leadership between the world's largest and second-largest economies be assured? Not yet. Even if the Sino-American bilateral relationship is fundamental to all our futures, both sides are unhesitant in pointing out there is no Group of Two (G2) at the helm of world affairs.

The notion of a G2 implies shared vision and leadership. Pollyanna is not in charge and interests are far from aligned, especially as big power rivalry is played out under rapidly changing circumstances.

But the luxury of risk-free choice is absent from the equation. The world cannot afford for China and the US to tussle over point-scoring strategies driven by zero-sum politics, or worse, to allow their differences to translate into a negative-sum game. They need to reach for positive-sum outcomes, even if they cannot be sure how the gains will be distributed between them.

Patrick Low is vice-president of research at the Fung Global Institute