Blueprint for collaboration

The US should modify its opposition to the Asian Investment Infrastructure Bank and ratify the UN Convention on the Law of the Sea. And the US and China can work together on climate change and to reform the WHO. These are concrete ways to build strategic trust between the world's two major powers, says former Australian prime minister Kevin Rudd.

UNITED STATES-CHINA global collaboration and cooperation occurs against a background of mounting problems in global governance and increasing Chinese interest in the reform of the global order.

States are concerned at the growing inability, incapacity and, in some cases, dysfunctionality of a number of multilateral institutions, including the UN generally, the World Health Organisation (WHO), the United Nations Framework Convention on Climate Change (UNFCCC), the World Trade Organisation (WTO), the World Bank and the G-20 in meeting the expectations of the international community.

The mismatch between the growing list of challenges facing the international community on the one hand, and the decreasing ability of both international institutions and national governments to effectively resolve them on the other, is a major problem for all states, large and small.

This provides an opportunity for joint initiatives for multilateral reform from the US and China, rather than simply assuming that their positions will always be at loggerheads:

Climate change

THE US and China should intensify their collaboration within and beyond the UNFCCC on climate change this year in the lead-up to the Paris Conference of the Parties to agree on a globally binding treaty on climate change.

This should involve trilateral collaboration with India, given India's historical reservations about the impact of greenhouse gas mitigation on development.

If the US, China and India can forge a joint approach to Paris, there will be a global agreement. If not, there won't be. Such collaboration should also continue and intensify beyond Paris during the critical period of implementation of national climate change commitments.

The US and China should drive a global public/private investment initiative through the G-20 on sustainable development, energy security (including renewables) and energy efficiency. This is necessary to deal with climate change. It is also necessary for developing countries to adopt alternative energy solutions for effective action on climate change that does not impede their growth path. This type of initiative, driven by global public policy, and financed in large part by underutilised global private capital, can also help provide a new growth engine for the global economy, which has been lacking since the financial crisis.

Renewed G-20

MORE broadly, the US and China should develop a joint initiative for the re-energisation of the G-20 as the agreed "premium institution for global economic governance". Both China and the US were co-founders of the G-20 at summit level in 2008. Together they formalised the long-term institutionalisation of the G-20 at the summit in 2009. Five years later, it is beginning to lack global focus at a time of continuing global economic uncertainty. With China's upcoming G-20 presidency next year, a major new opportunity presents itself for significant reform.

Modify stance on AIIB

THE US should modify its opposition to the Asian Investment Infrastructure Bank (AIIB) proposed by China. If the US is concerned about China stepping outside the Bretton Woods institutions through the establishment of this bank, then a problem arises from the other public development banks that already exist outside the framework of multilateral development banks, such as the Islamic Development Bank.

There is a major global infrastructure deficit, both in developing and developed economies, including in the US itself.

There should, therefore, be a joint initiative from both China and the US to develop an effective global infrastructure initiative that harnesses public and private capital. The former could become a vehicle for effective risk management, by unlocking underutilised private capital currently seeking secure, lower risk investments.

Chinese president in World Bank

OVER time, the US should consider, together with other World Bank stakeholders, having a Chinese representative take over the presidency of the World Bank if and when Chinese capital contributions become the bank's largest. Given the relative size of the two economies, this makes sense. Furthermore, if the US wants China to work within the Bretton Woods system, rather than outside it, this would be a practical initiative. Given the continuing dominance of the US dollar as the dominant reserve currency, the US should consider taking on the presidency of the International Monetary Fund. Given the changing shape of the global economy, the West's automatic continued leadership of the two major Bretton Woods institutions may have reached its "use-by date".

Dialogue on yuan

THERE should be a sophisticated, high-level discussion between the US and China concerning the growing internationalisation of the renminbi (yuan) and its future role in global capital markets, including sovereign reserves arising from any future decisions by the Chinese authorities on the liberalisation of the Chinese current account.

Full convertibility will involve risks for China, including private capital flight. But if this policy decision were taken, its implications for global capital markets would be profound.

This is not simply a bilateral matter, given the global significance of the US dollar as the undisputed international reserve currency. Prudence, and the avoidance of any significant instability on financial markets, requires that this be the subject of mature, confidential discussion over time between the governments and their respective monetary authorities.

US Should Ratify Unclos

THE US should ratify the UN Convention on the Law of the Sea (Unclos).

China did so in 1996, although in 2006, it voiced reservations concerning the applicability of the convention's dispute-resolution mechanisms to its own maritime claims. If the US ratifies and undertakes to apply Unclos mechanisms to its own outstanding maritime claims, China should consider submitting its claims to Unclos. Both Unclos and the International Court of Justice have proven to be effective dispute resolution mechanisms for other states in the region with outstanding maritime and territorial claims.

By doing so, China would demonstrate to the world that it is voluntarily submitting controversial claims to international law. It would also fundamentally deal with many continuing geopolitical tensions in East Asia, particularly if all parties commit in advance to accepting the final jurisdiction of the tribunal.

Reform WHO together

THE US and China, within the framework of UN reform, should launch a joint initiative, in partnership with other member states, on the reform of a single UN institution as a test case for how the efficiency and effectiveness of the UN system as a whole could be lifted.

There are a number of candidate institutions for reform. But given recent crises in the management of globally communicable diseases and the security implications for all states in preventing and handling such crises effectively, the WHO presents an obvious case for conjoint effort.

China has extensive experience in the field, with its medical corps having worked across the developing world for over half a century. The excellence of US medical research and treatment facilities in dealing with globally communicable diseases is well recognised. The opportunity for immediate collaboration in more effectively dealing with this major global public good is clear.

Common strategic purpose

BOTH the realist and constructive dimensions of this proposed framework for US-China relations are designed to be dynamic, not static.

As political space begins to open up in the relationship over time as a result of progress in any of the collaborative diplomatic and economic initiatives listed above, accrued political capital should be deployed to deal with new challenges arising from developments in the international community.

It should also be deployed to deal with some of the older, more "realist" problems endemic to the bilateral relationship that had hitherto been seen as too difficult to address. The key ingredient, however, is the gradual development of a stock of strategic trust based on what the US and China are able to achieve cooperatively.

This brings us to the question of whether an overall "common strategic purpose" is to be served by the US-China relationship and, if so, given the vast differences between the two countries and their different expectations of the international system, what that "common purpose" or mission might be. De minima (at the very least) one common purpose is clear: To avoid conflict and war, and against the benchmark of the cautionary tales of Thucydides' Trap, this would be no small achievement.

However, another common ambition might be the preservation of a functioning global order itself that is capable of effective global decision-making and dispute resolution. China has a deep philosophical reservation, born of millennia of historical experience, of "chaos under heaven", (tianxia daluan).

Whereas historically, this has applied to China's domestic arrangements to preserve the unity and good government of the empire, China's now unprecedented global engagement creates a new imperative for order in the international domain as well.

Chinese interests are now at stake in every region in the world. In some cases, these are not marginal but, in fact, are core interests of the Chinese state, such as a functioning global energy supply and distribution system.

Try as China might, it will be in no position to rely on unilateral diplomatic or military effort to guarantee Chinese energy interests. This, therefore, points to China's broader need for an effectively functioning global order for the future, given China's expanding global interests and its inability to secure those interests by purely national means.

Securing a stable, effective global order for the future, and avoiding "global chaos under heaven" of the type offered by the proliferation of non-state actors such as ISIS, may well constitute the beginnings of a common strategic purpose for China and the United States for the future.

This may be able, over time, to transcend the considerable ideational divide that at present separates them on the question of precisely what sort of order that should be.

Furthermore, if the preservation and evolution of a functioning order could become an animating vision for the future of US-China relations, not only could it provide a global dividend to the rest of the international community, it could also provide an even deeper momentum for managing the more basic tasks confronting the bilateral relationship: that is, avoiding conflict; managing ideational differences on democracy, human rights and the rule of law; as well as the range of bilateral, regional and global problem-solving referred to above. This question on future Chinese and American collaboration in defending and enhancing the global order is discussed further in the conclusion of this summary report.

The summary report was first published on the Harvard Kennedy School's Belfer Centre's website.

http://belfercenter.ksg.harvard.edu/publication/25237/summary_report.html

A version of this article appeared in the print edition of The Straits Times on June 19, 2015, with the headline 'Blueprint for collaboration'. Print Edition | Subscribe