Preserving the Open Global Economic System: A Strategic Blueprint for China and the United States

When the new Chinese leader, Xi Jinping, meets with President Barack Obama this month, they will have a lot to talk about. In the economic sphere, the paramount challenge for the two leaders is to overcome what might be called the Kindleberger Conundrum: the preservation of the open, rules-based multilateral economic system against the background of the historic shift in which the rising power (China) might be unwilling to sustain it at a time when the declining power (the United States) is increasingly unable to single-handedly shoulder the burdens of leadership. The two nations must overcome their mutual wariness and strike a Power-for-Purpose Bargain: The United States would give up power in existing multilateral institutions in return for China taking on greater global leadership to preserve the system’s real purpose.