The post-global financial crisis world will be increasingly dominated by China and the United States. What the de facto G-2 do, together, independently or in conflict, will increasingly define the global bounds of possible. Both countries want to embed their bilateral diplomacy in the multilateralism of the G-20. The problem for the emergent G-2 in G-20 global architecture is that economic relations between China and the US will be increasingly difficult to manage. The large economic imbalances between the two countries, in which China buys American debt and Americans buy Chinese goods, will endure. Before the crisis, the co-dependence these imbalances created was a source of stability in Sino-American relations. After the crisis, they will be a source of frustration and conflict, as the second half of 2009 showed. To manage effectively economic relations between China and the US, the G-20 agenda will have to move from crisis response to strategic planning for the global economy. The G-20 will also have to become more institutionalized, but in a way that resembles more the non-executive board of directors of a multinational firm than a management committee of C-level executives.
Dueling protectionism and economic nationalism is the biggest potential medium term threat to China-US relations
Nesting the de facto G-2 in the de jure G-20 is the best hope for managing China-US tensions
The G-20 should be institutionalized as the board of directors overseeing the Bretton Woods system, not a replacement for it
The world will be characterized by a de facto China-US G-2 after the financial crisis
Despite new commitments from both countries, large scale China-US economic imbalances will persist