POLICY BRIEF 13-16

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

by Arvind Subramanian, Peterson Institute for International Economics

June 2013

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.

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