Tentative Proposals of the Managing U.S.-China Tensions over the Global Economic Order
Ye Yu, Jiang Lixiao, Xue Lei, Yu Hongyuan
INTRODUCTION: The U.S.-China Global Economic Order (GEO) Dialogue, now in its ninth year, focuses on strengthening dialogue and fostering cooperation around the three pillars of the Bretton Woods system: international trade, finance, and development. The purpose of the dialogue is to provide a platform for in-depth discussions among a small number of subject-matter experts. Through repeated exchanges and consultations with policymakers, the dialogue provides an opportunity to raise sensitive topics, test assumptions, analyze challenging problems, and explore potential solutions.
Although the discussions are the main “deliverable” of the GEO Dialogue, the project has previously published reports in 2017, 2019, and 2021. The primary value of these reports were their collective call to adopt imaginative policies to resolve difficult problems. The current volume adopts the same posture but with one difference. Whereas the dialogue sessions were the foundation for previous volumes, with a portion of the participants picking up the pen to write wholly formed commentaries, this volume comprises brief notes drafted in advance of the session, held in May 2024 in Washington, D.C., and then lightly revised afterward. The exception is the summary by University of British Columbia professor Yves Tiberghien in Chapter 2.
During the 2024 dialogue session, participants were discouraged from analyzing problems and instead were encouraged to focus their attention solely on proposed solutions. In the past few years, official U.S.-China discussions have been mired in analyses blaming the other side as the source of the problems, such as unfair trade practices, technology rivalry, growing debt and other financial challenges, or climate change. Tired of the finger-pointing, participants were asked to propose solutions, and they obliged.
Because these proposals were written prior to the dialogue sessions and are quite brief, they should be taken as tentative yet provocative prods to the policy community. Some will be seen as standard fare, but others are intentionally bold, offered to spur further reflection and debate. If track-2 dialogues are meant to accomplish anything, it is to push boundaries beyond where government negotiations may go. All of the proposals were written well ahead of the United States’ November 2024 elections.
The proposals in this volume are divided into four topical groups: economic competition, economic security, finance, and decarbonization and development. They intentionally are not grouped by the authors’ nationalities since the ideas deserve more attention than the identity of their drafters.
Most of the solutions proposed in this volume are limited and meant to address specific issues, in part to resolve specific challenges and in part to serve as confidence-building steps toward rebuilding strategic trust and tackling larger problems. A small number of the proposals, by contrast, are framed as “grand bargains,” painting in broad strokes significant steps the United States and China could take to reset the course of their relationship. Such proposals may seem fanciful, yet they are valuable in that they prompt the policy communities in multiple countries to think the unthinkable and open up potential new horizons.
That said, there are clear limits to the proposals offered here, reflecting the deep challenges in the U.S.-China relationship across a spectrum of issues. The proposals may be sorted into three types: those that address one country’s own needs, those that address the needs of the other country, and those that address the needs of third parties. Many are of the first kind, intended to reassure the author’s home country. Many take into account the worries of developing and developed countries in Asia, Europe, and elsewhere. A smaller proportion address the core needs of the opposing side.
Americans are most concerned about what they see as Chinese efforts to undermine the rules-based liberal international economic order, including market-based economies, free trade and open investment, green growth, and multistakeholder governance involving both states and civil society. The Chinese seem most concerned about challenges to China’s sovereignty and the right of countries to choose their preferred economic model and political system. They see broad unfairness in many areas of global economic governance, which they believe favors advanced Western countries to the detriment of developing countries.
The proposals of U.S. and other Western participants are most often tilted toward protecting their favored order, whereas Chinese proposals look to resolve substantive issues while preserving the flexibility of China’s own governance system. Proposals from both sides emphasize the need for the other country to make adjustments. This is not surprising, but it rightly suggests caution against being overly optimistic about reaching compromise. At the same time, other authors attempt to stand in the shoes of the opposing side to suggest a need for compromise between the United States and China.
Another strategy in several essays is to remove problems from their bilateral or global context and frame them as domestic challenges, thereby reducing the salience of the bilateral rivalry. For example, the problem of China’s overcapacity and the dramatic rise in exports of various products induces a defensive reaction from the Chinese government. But when framed as a domestic macroeconomic imbalance between supply and demand, the issue becomes less about unfair trade and more about the problems of domestic economic mismanagement—a challenge in China, the United States, and elsewhere.
The GEO Dialogue organizers welcome readers’ feedback, whether the ideas are technical or philosophical; whether they are about unilateral, bilateral, or multilateral actions; or whether they are motivated by the interests of the author’s home country, the party across the table, or others. In the spirit of this volume and the broader dialogue, the authors hope readers’suggestions focus less on the analysis of problems and more on potential solutions to fix them.