We have a financial crisis that has forced any traditional superpower to understand that the emerging economies must be given a more important role when global economic policy is being developed. So far this has resulted in G8+5, a bigger role for G20 and a number of crisis meetings.
But the financial crisis is nothing more than the tip of an iceberg and much more is needed. Below the surface we have a number of trends that require a dramatic change in how the current global governing system works, including the Bretton Woods institutions that were created after World War II.
The firm action that the current financial crisis requires is a perfect opportunity to begin looking toward a new global architecture. At the very center of this architecture are two different G2's that will play a very important role.
The first G2 is the one that has been discussed in media since the beginning of the financial crisis, that of China and the United States. This is the G2 that follows the logic of the current system. Few would disagree that the G8 that exists today is increasingly outdated and that something new is needed. The G8 was a response to the oil crisis in 1973 and when it was formed in France in 1975 it was the major Western countries that came together. That time is gone and we have a different situation today.
The two major economies on the planet should have a special relationship and the "strategic and economic dialogue" mechanism that was launched during the G20 meeting in London provides a great opportunity.
It is important that China is clear and does not allow the old, polarized agenda to dominate, so that G2 becomes a smaller, more effective version of G8. China's global role so far has been a breath of fresh air as it does not seek global leadership, but instead wants to work in collaboration with all countries and on all levels.
With the US as a major consumer and China as a major producer, we can hope for a "global collaboration" initiative. This could focus on the major challenges we face and how China and the US could together, with other countries, find solutions for them.
These solutions could range from major initiatives with incentives that support sustainable innovation and standards that ensure future buildings are net producers of energy. Instead of being the largest problem for climate change and resource use, the buildings of the world could become the epicenter for climate-smart and resource-efficient solutions. For this to happen, China and the US must cooperate.
This G2 could also encourage micro collaborations. I myself carry around a bag with solar panels that can charge my laptop; it is made in the US and costs a lot. I would like to see these kinds of solutions being made in places like Baoding, the city south of Beijing that wants to be a center for renewable energy production that Silicon Valley is to the computer industry. At the same time, companies in China could be invited to the US to explore how joint construction projects for solar buildings can be launched.
This kind of practical collaboration could be linked to more strategic collaboration in trade, investments and finance, as well as in security policy and other important areas.
In order to identify the second G2, we must take a step back to the macro level. It is easy to see that the center of the global economy is moving east. The need to find long-term solutions for a financial system where the money can move at the speed of light will require new regulations and new institutions.
