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Friday 18 Aug 2017 | 03:20 | SYDNEY
Friday 18 Aug 2017 | 03:20 | SYDNEY

Gee, is that a G2 I see before me?

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15 July 2011 10:22

One joy of the ANU China Update series is that they bring out the book of the conference the day before the annual talkfest takes place. Ross Garnaut claims it's the only conference in the world to achieve this feat. Thus, rather than risking the chills and fogs of Canberra this week, you can dive straight into the 338 pages of 'Rising China: Global Challenges and Opportunities'.

If you really want to while away some hours, dive deeper into the many book-length treasures to be downloaded at every turn at the ANU E Press, not least from the China Update series, the Melanesia project, and Strategic and Defence Studies.

One of the discussions that bobbed through this year's Update was the nature and status of a G2, so that China and the US can seek accommodations or even agreements on how to run the world. Geoffrey Garrett's chapter lays out the case for a G2 that dare not speak its name:

The fundamental big-picture trajectory of the post–financial crisis era is the same as it was before—towards a world dominated by interactions between the United States, which is still the most powerful country, and China, which is the biggest and fastest-growing rising power. A de facto G2 is emerging, almost by default, even though neither China nor the United States will give their relationship this grandiose title.

Coming at the same point from the Beijing direction, Huang Yiping and his colleagues offer a range of reasons why China cannot institutionalise a G2: a 'small country mentality', nationalist sentiment that fears US conspiracies and wants to say 'No' to Washington, and a Chinese willingness to claim more rights while not taking on 'more of the responsibility for maintaining a stable global economic environment'.

Beijing is more comfortable with the G20 than any open expression of the G2: 

China sees the G20 as the best compromise between representativeness and efficiency for dealing with international economic issues and is interested in making it a permanent institution. The Sino-US partnership will probably be a cornerstone of China's international economic relations. But China is not ready to formalise the institutional arrangement of a Group of Two (G2) for global economic affairs. China promotes collaboration between the BRICS countries but regards it more as a platform for formulating policy positions among key emerging market economies, not as a parallel organisation alongside the G20.

There are all sorts of reasons why the G2 needs to start gearing up. As one example, consider Andrew Kennedy on China's petroleum predicament. Kennedy is interesting on the mishaps that could befall the G2 if China's naval buildup to protect oil shipments ends up flipping into a challenge to the US for sea control.

The chance for misunderstandings as well as bad policy crops up in lots of places. A US analyst suggests that the US is a consumption addict and China is the dealer. For Woo Wing Thye, this analogy becomes a reference to one of the low points in Chinese history: 'It is hard not to see this reference to the Opium War of the nineteenth century, with the identities of the aggressor and the victim reversed, as a transmogrification of history that is quite over the top.'

A different sort of war, though, is the focus of the Woo chapter:

A spectre is haunting the World—the spectre of a currency war...This spectre is sustained by the prolonged swinging trade imbalances of the United States and China. Will the G20 degenerate into a G2 with China defending its exchange rate against the protests of the rest? Can't the G20 show some statesmanship instead by putting global economic recovery on a new, environmentally sustainable path? If China can work out such an outcome with the other members of the G20, this will be China's and the G20's greatest contribution to global economic recovery—nay, global economic renaissance.

Gee, that G2 has got a lot of work to do, whether it has a formal existence or not.

Photo by Flickr user La Zirenetta.

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