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The Sino-American Decade

By A. Michael Spence

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Beyond the bilateral benefits, the rest of the global economy is dependent on Chinese and US leadership – both in terms of growth and in matters concerning global economic governance and coordination.

The California summit between US President Barack Obama and Chinese President Xi Jinping on June 7-8 comes at a time of heightened tension between the world’s two preeminent powers. But divisive issues – from computer hacking to America’s “pivot to Asia” – must not claim all of the attention. If Obama and Xi lift their heads above the parapets and begin charting a jointly agreed course through the coming decade, they may find that they have much in common.

The next ten years will be characterized by major structural adjustments and shifts in individual economies, and by a huge reconfiguration of the global economy as a whole. Above all, much depends on the policies adopted by the two largest economies, China and the United States, and their cooperation and leadership in creating global public goods and maintaining a stable and open economic environment.

Cooperation will be needed in many areas. One is the management of natural resources and the environment. The growth of China and the developing world will lead to a doubling of global output in 10-15 years, and probably a tripling in the 15 years after that. The growth model on which both advanced and developing countries relied in the past will not work at two or three times the scale. Climate, ecology, food, water, energy, and livability will not withstand the pressure.

Global problems are hard to solve. A productive starting point would be China-US collaboration on energy efficiency and security, greener growth, and climate change.

Read full article as published in Project Syndicate

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A. Michael Spence is the William R. Berkley Professor in Economics & Business.