A new G2 in Asia to help steer the way
By Dennis Pamlin (China Daily)
Updated: 2009-04-21 07:45
We have a financial crisis that has forced any traditional superpower to understand that the emerging economies must be given a more important role when global economic policy is being developed. So far this has resulted in G8+5, a bigger role for G20 and a number of crisis meetings.
But the financial crisis is nothing more than the tip of an iceberg and much more is needed. Below the surface we have a number of trends that require a dramatic change in how the current global governing system works, including the Bretton Woods institutions that were created after World War II.
The two major economies on the planet should have a special relationship and the "strategic and economic dialogue" mechanism that was launched during the G20 meeting in London provides a great opportunity.
With the US as a major consumer and China as a major producer, we can hope for a "global collaboration" initiative. This could focus on the major challenges we face and how China and the US could together, with other countries, to find solutions for them.
These solutions could range from major initiatives with incentives that support sustainable innovation and standards that ensure future buildings are net producers of energy. Instead of being the largest problem for climate change and resource use, the buildings of the world could become the epicenter for climate-smart and resource-efficient solutions. For this to happen, China and the US must cooperate.
This G2 could also encourage micro collaborations. I myself carry around a bag with solar panels that can charge my laptop; it is made in the US and costs a lot. I would like to see these kinds of solutions being made in places like Baoding, the city south of Beijing that wants to be a center for renewable energy production that Silicon Valley is to the computer industry. At the same time, companies in China could be invited to the US to explore how joint construction projects for solar buildings can be launched.
This kind of practical collaboration could be linked to more strategic collaboration in trade, investments and finance, as well as in security policy and other important areas.
In order to identify the second G2, we must take a step back to the macro level. It is easy to see that the center of the global economy is moving east. The need to find long-term solutions for a financial system where the money can move at the speed of light will require new regulations and new institutions.
But there are other issues that are harder to see, issues that will not hit the headlines before it is too late, as they happen slower. These include issues such as the demographic crunch with an aging global population, the increased population pressure as the world moves toward 10 billion people, growing inequalities within and between countries, and finally an accelerated development of new technologies.
All these can bring humanity fantastic gifts if they are met with the right framework, but they could also drive the world into conflict and problems beyond imagination. Especially since natural resources on the planet are not enough to provide everyone with a "G8 lifestyle".
This brings us to what I think is the more interesting, and less discussed, G2 - China and India. I was fortunate to be in Delhi during President Hu Jintao's visit in 2006. During this trip, a number of initiatives were started and it is clear that the 2 billion-plus population countries share many challenges and opportunities.
So while most people are looking for a US-China G2 along the lines of the old school, the most important G2 will probably be that of China and India. We should see these two in a relationship that is mutually beneficial.