China

By Ian Bremmer

President Obama embarks today on a tour of East Asia, a region central to U.S. geopolitical interests and its economic recovery. The primary goal is "strategic reassurance," a term Deputy Secretary of State Jim Steinberg has used to describe U.S. relations with China.

On Friday, he'll reassure Japan's brand new Prime Minister Yukio Hatoyama that, despite well-publicized recent frictions in U.S.-Japanese relations and a broader U.S. engagement with China, his administration considers ties with Japan a cornerstone of U.S. foreign policy. And he'll seek some reassurance that the new DPJ government isn't about to revisit key assumptions in the relationship. Hatoyama will likely take the opportunity to "clarify" his view on the importance of the security partnership. Throw in a highly publicized Obama speech on Saturday, and we can expect an easing of suspicion and a lot of warm smiles, especially since the two sides now appear to have a deal on a joint-commission to resolve the Okinawa troops and base relocation issues.

On Sunday, Obama will be in Singapore, where he'll reassure Prime Minister Lee Hsien Loong that the US isn't planning on reducing its Asian presence anytime soon. He'll then join the festivities at the Asia-Pacific Economic Cooperation summit. During the meetings, there will be early discussion of an "Asian Economic Community" and rumors that Obama is involved in discussion with ASEAN leaders on a U.S.-ASEAN free trade agreement -- though he'll more likely simply be offering reassurance that his government hasn't set its trade agenda on indefinite hold. The meeting will end with public pledges from all sides to reject protectionism, the sort of empty reassurances we've seen in recent months at G20 meetings in Washington and London. Much of the media focus will be on the silk shirts and blouses inspired by Singapore's Peranakan culture that the leaders will be wearing.

More interesting are the side meetings that we'll hear much less about. Obama is scheduled to sit down with Myanmar's prime minister to reassure him that the United States is willing to engage the country's military junta if there's any prospect that engagement might yield results. Back home, Obama will reassure critics in Washington that he won't move to lift sanctions until Myanmar's generals offer something of substance. He's also scheduled to meet with Indonesian President Yudhoyono to assure him that the U.S. views the emerging regional player as a valuable local partner, and with Russia's President Medvedev to assure him that his administration is serious about improving strained relations with Moscow.

On Monday, Obama heads for Shanghai and Beijing for a three-day visit that includes some sightseeing and a Q&A with Chinese students around meetings with President Hu Jintao and Premier Wen Jiabao. The talking points for these sessions are nearly as ambitious as what you'd expect from one of those G20 meetings. There will be discussion of the recently contentious U.S.-Chinese trade relationship, energy, human rights, stability in Pakistan and Afghanistan, and the nuclear programs in North Korea and Iran. Obama can reassure China's leaders that he seeks mutually profitable engagement with the one subject he's NOT likely to bring up: The value of China's currency. The Chinese wouldn't welcome the discussion, and Obama has no interest in inviting the Chinese to comment on the state of the U.S. economy and Washington's role in it.

If there's any tangible progress from Obama's time in China, it will be on climate change/green energy issues. There may well be an agreement to expand joint development and investment in renewable energy technology. It won't be a true "breakthrough," but given the low likelihood that anything especially important comes out of climate change meetings in Copenhagen next month, the Obama team will use any sign of modest progress to reassure skeptics of his commitment on the issue and to tout the trip as a success.

On the way home, Obama will stop off in Seoul to tell South Korean President Lee Myung-bak that KORUS, the U.S.-South Korean free trade agreement, isn't dead. He'll also reassure Lee that, though the US won't reduce troop levels on the peninsula, Washington can help make their stay a little easier for South Korea's government to manage.

Ian Bremmer is president of Eurasia Group.

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By Nicholas Consonery

During the next six months or so, as leaders in Beijing and Taipei see their window of opportunity shrinking, they will make a concerted push toward remedying one of the world's major geopolitical dilemmas. Both sides will work feverishly to expand economic ties-in the hopes of strengthening Tawainese President Ma Ying-jeou's domestic standing and staving off a rebound for the opposition Democratic Progressive Party (DPP). Ma's political strength hemorrhaged in August when Typhoon Morakot created a humanitarian and public relations disaster, leaving 700 dead or missing. Now, the president's approval ratings remain below 30% and the DPP looks set to regain some strength.

When he was elected last year, President Ma had already become a relative darling in Beijing by promising to focus on the economics of the cross-strait relationship, without addressing the politics. Beijing was happy to accommodate this approach because it coalesced with the leadership's broader plan to secure sovereignty over the island through gradual economic integration. With hardliners in Beijing threatening to undermine Chinese President Hu Jintao's Taiwan policy after a tumultuous eight-year presidency of DPP member Chen Shui-bian, progress was needed quickly.

Concessions began in the months after Ma's election, as charter flights and other tourism channels between the two sides were expanded. Later, in April 2009, the first-ever direct corporate investment from China into Taiwan was announced, with mainland telecom giant China Mobile planning to purchase a 12% stake Taiwan's Far EasTone. The next day, Taiwan's domestic market jumped nearly 7%. In following days, then Minister of Economic Affairs Yiin Chii-ming announced that Chinese investments would soon be allowed into 99 Taiwanese business sectors.

But political troubles for President Ma are making Beijing concerned that all this progress could be for naught. The president's popularity ratings had already fallen precipitously during the global financial crisis. Now, with the mishandling of the Morakot disaster, Beijing fears that Ma's reelection prospects in 2012 may be imperiled. Certainly things seem to be trending downward for Ma and his Kuomintang (KMT) political party, and based on recent experience, Beijing dreads a resurgence of the more confrontational DPP.

As a result, China will be handing out economic concessions to Taiwan in the next six months, hoping that they will bolster Ma's prospects. For his part, Ma will happily accept, fearing a stronger opposition and believing that he can regain some political strength by improving commercial ties with the mainland and boosting Taiwan's growth prospects. The big deliverable could be an economic cooperation framework agreement, which would set the stage for a significant expansion in economic ties, investment, and trade flows. Negotiators for both sides are purportedly working for an agreement by early next year, and rumors are swirling that President Hu himself is calling for a deal. More cross-strait corporate activity looks likely, perhaps including chances for Chinese firms to invest in Taiwan's leading tech industries, though this will face popular resistance on the island. A planned memorandum on financial cooperation, which will allow mutual investments in the banking sector, also looks set to be signed by early December.

On the political stage in Taiwan, Ma recognizes that the DPP's growing strength will make concessions to the mainland more contentious heading into 2010, motivating him to accomplish as much as possible before then. Although recent polling indicates general disgust with both parties, the opposition is positioning itself to rebound from recent lows by increasing its representation in local government and in the island's legislature. Two weeks ago, a DPP candidate won a by-election for a seat in the legislature to represent the second district of western Yulin County. While KMT-affiliated candidates split the vote, affording the DPP candidate an easy win, the victory left the opposition just one vote short of holding one-fourth of the total seats in the legislature. The DPP could also gain more representation during local mayor and magistrate elections on 5 December, which would be a blow to Ma and his KMT party.

The DPP stands a decent chance of securing one-fourth representation in the legislature in the next few months, as another by-election must be held in Nantou County before 10 December for the seat abandoned by Wu Den-yih, who was installed as premier in September. This would give the DPP more leverage in combating the KMT's majority coalition in the legislature. The DPP would also be able to propose recalls of the president, a political move that would be easily blocked by the dominant KMT. But such infighting would steal the domestic news cycle, distracting Ma from his strategic and economic goals, and causing more than a little heartburn in Beijing.

Nicholas Consonery is an Asia Analyst at Eurasia Group.

Andrew Wong/Getty Images)

By Ian Bremmer and Willis Sparks

To mark 60 years in charge, China's Communist Party threw a lavish party last week, a triumphalist pageant with enough military hardware on parade to fill the nightmares of would-be "dragon slayers" for years to come. It was a reminder that China has developed advanced fighter aircraft, military satellites, the Dong Feng 21 missile (also known as the "aircraft carrier killer"), and has been working toward production of a first aircraft carrier of its own -- an asset that would enable China to project naval power further from its shores than ever before. As if the visuals weren't enough, the celebration included a 2,000-member military marching band.

So will China one day pose the 21st century equivalent of a Soviet-scale military challenge to America's geopolitical dominance? That's unlikely. China wants to extend its influence throughout East Asia, protect the commercial traffic that provides the oil, gas, metals, and minerals that feed China's growing economic appetite, and project national pride. It will one day pose a broader military threat than it does now, but its economy has grown so quickly and its living standards have improved so dramatically over the past two decades that it's hard to imagine the kind of catastrophic, game-changing event that would push its leadership to upend a profitable status quo and confront American leadership outside Asia. China's leaders know their government won't be ready anytime soon to bear a superpower's burdens. Their primary goal is to bolster their political control by generating prosperity for the Chinese people. Why would it allow anything short of the most dire and immediate threat to its territorial integrity to ignite a military conflict that would sever its web of commercial ties with countries all over the world -- and, in particular, with its three largest trading partners: the European Union, the United States, and Japan?

Beijing's primary military concern is the risk of a direct or proxy conflict with the United States over Taiwan. But the Chinese leadership knows that no U.S. government will support a Taiwanese bid for independence, and why should China invade the island when it can co-opt most of Taiwan's business elite with privileged access to investment opportunities on the mainland? Globalization has been good to China's Communist Party, and wars are bad for business.

Certainly, China has ambitious military modernization plans. With 2.3 million soldiers under arms, the People's Liberation Army (PLA) is already by far the world's largest. It has reportedly invested considerable time, effort, and money in cyber-warfare technology. Its total military budget probably doubled between 2003 and 2009 to about $70 billion. But that's still only about 12 percent of what the United States now spends on its military each year -- and an even smaller percentage if supplementary U.S. spending on the wars in Iraq and Afghanistan is included.

The problem for U.S. policymakers over the next several years is not that the unipolar world order will give way to a multipolar but to a non-polar system. In other words, it's not that America has company on the global stage but that it must continue to carry so much weight on its own-and at a time when pressing problems at home will limit the American public's appetite for ambitious foreign-policy commitments.

Over the past 20 years, U.S. analysts have scanned the horizon in expectation of potential challengers to America's great power advantages. The European Union was already struggling to manage the latest round of expansion before the financial crisis gave EU leaders another reason to avoid potentially onerous new commitments abroad. Russia's leaders may be unhappy with the geopolitical status quo, particularly when it comes to the balance of power within several former Soviet republics. But they're far too preoccupied at the moment with the protection of domestic markets, banks, and companies from the worst effects of the financial crisis to embark on any long-term plan to build a threat to U.S. power outside its immediate neighborhood. India has market reform issues to manage and security worries flowing across the border from Pakistan. Within the Western hemisphere, Brazil appears to have no grander near-term aspirations than to promote stability in Latin America, jumpstart an economic recovery, find new ways to profit from its recent oil discovery, and to play a broader leadership role among developing states.

It's not a challenge for dominance, but a growing vacuum of power that should worry Washington. The more important questions for the next decade are: Who will take the lead on building a new global financial architecture that reflects 21st century realities? Who will take the lead on multilateral efforts to address climate change? Who will create a new (and more credible) nonproliferation regime? Who will provide momentum behind Middle East Peace talks? Who will provide the leadership to ensure that G20 summits don't simply turn into G8-style photo opportunities with a wider angle lens?

A decade from now, who will carry that weight?

Ian Bremmer is president and Willis Sparks is a Global Macro analyst at Eurasia Group.

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By Eurasia Group analysts Damien Ma and Sean West
    
After the Obama administration slapped 35 percent tariffs on Chinese tires over the weekend, China responded with hyper-charged rhetoric and its own investigation into U.S. chicken and auto parts exports. When the news broke, the world woke up to a scary possibility: What if these actions were the opening shots that would trigger a trade war?

Despite some serious media hype, we don't think a trade war is likely. But we also don't think it's outside the realm of possibility. If such a scenario occurred, it would have serious implications for global recovery, financing the U.S. debt, and even the stability of the Chinese regime. Therefore, it's clearly worth considering how this situation could occur, while also examining why it's unlikely that events will evolve in that direction.

The United States implemented tariffs on Chinese tires under section 421 of U.S. trade law, which was agreed to by the Chinese when U.S.-China trade relations were normalized and China joined the WTO. Until 2013, it allows the United States to tariff Chinese goods simply by showing that there has been a surge in imports from China with damaging effects for U.S. domestic producers. To put tariffs in place, the U.S. International Trade Commission makes an assessment of the import surge and recommends to the president whether and how large a tariff should be put in place. The president then determines what tariff to apply.

Until now, the U.S. president never put such tariffs in place; the Bush administration declined four ITC recommendations to do so during its tenure. The interesting twist about President Obama's decision to apply tariffs was that the case was filed by a U.S. labor union without the support of tire manufacturers. Thus, section 421 became a direct path from labor grievances about imports to domestic protection. It's hard to imagine labor groups not trying to push forward similar cases in the future.

Rampant enforcement of section 421 is the type of thing that could seriously anger the Chinese to respond outside of the global trade regime. This is because section 421 can be implemented even if China does nothing wrong -- other than becoming very efficient at exporting a particular good to the United States. Moreover, when 421 is invoked, there is little China can do to appeal or counter the action because the determination is not based on China doing anything forbidden, so China cannot undo any action. Challenging whether the United States is implementing the provision properly -- as China has recently announced it will do -- can take as longer than the life of the tariffs.

It's reasonable, then, that politicians in Beijing are worried that the decision on tires will lead to China being singled out as the target of future trade actions. What's more, the simmering nationalism of the Chinese public forces the leadership to be more aggressive in its responses. A poll on a state-run news site found that 90 percent of Chinese citizens believe that China can go toe-to-toe with the United States in a trade war. Thus, every time Section 421 is used, it will engender fiery retaliation from the Chinese. If the door the administration has cracked open is thrown fully ajar, trade tension could theoretically spill over into WTO-incompliant responses or responses that have nothing to do with trade. Thus, there is a chance -- though not a likelihood -- that section 421 could lead to a trade war if the United States repeatedly uses it and China responds through escalation.

The administration's recent demonstration that it is willing to apply section 421 and China's aggressive reaction moved the US-China relationship one step closer to that scenario. But it was a small step in a robust trading relationship with two sides that understand what's at stake. Top Chinese leaders have little interest in engaging in a trade war with the United States because they know it would hurt their heavily export-dependent economy. Washington is trying hard to make China a willing partner on a host of global issues, and China has been receptive to the idea if only for the recognition of its increased international stature.

During the first Strategic and Economic Dialogue in July, the two countries pledged to move toward a more mature relationship. In Washington, Obama -- despite how he appeared on the campaign trail -- remains committed to open markets and the national economic benefits the United States gets from trade. While a potential trade war is scary stuff, there is little reason to believe it is forthcoming.

By Eurasia Group analyst Courtney Rickert

Amid headlines that the global economic crisis has stabilized, an important question arises: Which countries' economies will recover most quickly, and which recoveries will be the most sustainable? The key to finding an answer lies in understanding how countries were exposed to the global downturn and assessing their policy responses. Countries that choose to adjust to the changed global economic environment will come out on top in the long term.

While all internationally integrated economies have suffered growth declines, some economies entered the recession in a better position than others. Part of this divergence is a result of the quality of government policies, such as balanced fiscal positions and low inflation. Other key factors in determining a country's exposure to the crisis are trade imbalances and overinvestment in select sectors, such as real estate, in the period leading up to the global financial crisis.

Countries that had persistent trade deficits -- such as the US-financed them by borrowing heavily from abroad. Frequently, international borrowing fed domestic consumption far more than investment. This excess consumption contributed to bubbles during the boom years -- notably in financial assets and real estate-that have since popped. These economies have been slower to stabilize, but the housing and retail markets are naturally adjusting as home prices fall, banks become more prudent, and consumers buy less. In these cases, there is little need for long-term adjustments to macroeconomic policies.

On the other hand, government policy choices will play an important role in countries that sustained trade surpluses, such as China, Germany, and Japan, because these surpluses were a result of government policies that promoted exports. Their economies have been hard hit by declining global demand-particularly in the US. Although government stimulus spending has propped up their economies in the short term, China, Germany, and Japan will face a fundamentally different global market in the long term -- one that is unlikely to revert to the pre-crisis status quo levels of global demand. Governments in these countries will have to choose whether to reorient their economies away from export dependence or try to muddle through and hope for a return of foreign demand.

Effective policy responses in all countries have required crisis stabilization, the cleanup of sectors that experienced overinvestment, and adjustment to the rapidly shifting global flow of funds and goods. Even the best-run governments will face difficulty managing these activities smoothly, but many are demonstrating the ability and willingness to do so. Below are snapshots of policy responses in the four largest economies: the United States., Japan, China, and Germany.

United States
The United States had a large trade deficit during the expansionary period, allowing it to adjust relatively easily to declining global demand. However, as a result of international capital inflows, it also had significant overinvestment in financial assets and real estate. The Obama administration responded relatively aggressively to the crisis by taking action to clean up the financial sector and implementing a $787 billion fiscal stimulus plan, but spending has been slow to materialize. The US economy is forecast to contract by 2.6% in 2009 and show only minimal growth in 2010, as individuals and firms paying down their debts remain a drag on economic growth. But compared to the major trade surplus countries, the United States' relatively fluid economy will likely to adjust to the new global environment more smoothly and rapidly.

Japan
Japan's exposure to the current crisis has been exacerbated by its efforts to sustain trade surpluses, but its economy had already been adjusting before the crisis began, with production increasingly moving overseas. Moreover, when the global decline in demand hit, Japanese firms decreased production and rapidly leveled off at much lower output. In addition, the 30 August elections are expected to displace the long-ruling Liberal Democratic Party (LDP), bringing to power a government that is more interested in protecting the interests of consumers rather than producers. This situation is reducing Japan's dependence on exports, providing a more stable base for growth.

China
The global slowdown has hurt demand for Chinese goods and threatened the vitality of China's export-oriented economic growth. While exports are unlikely to return to their previous levels in the near to medium term, Beijing's massive stimulus spending, relaxed monetary policy, and export promotion will partially counter the collapse in demand. If China is to secure long-term growth, however, efforts to rebalance the economy toward greater domestic consumption -- by putting more income in workers' pockets-must be considered.

Germany
The export orientation of the German economy and tight integration with the wider European economy limits the government's ability to stimulate domestic demand. Moreover, liabilities in the banking sector are worrying. While the government has fiscal room to maneuver, focus on the upcoming election and fears about the cost of potential interventions in both the real and financial sector have constrained Berlin. Most importantly, the government is averse to policies that would lead to a structural change in the country's export orientation. While this could begin to erode after the 27 September elections, any shift in German policy will be limited by concerns about government debt levels.

YOSHIKAZU TSUNO/AFP/Getty Images

By Eurasia Group analyst Damien Ma

The sheer numbers are overwhelming: There are about 300 million internet users, at least half a billion cell phones, and 70 to 80 million blogs in China. Yet the proliferation of information technology during the last decade has not ushered in a Twitter revolution or propelled China toward democratic change, and it probably won’t in the foreseeable future.

Those who point to the size of China’s army of “Netizens,” or cybercitizens, as evidence of a potential online anti-state movement will probably be disappointed. That’s because the numbers of internet users are misleading. Many are teen gamers, for instance. Of the millions of blogs, the vast majority are personal diaries or entertainment related. Of the tiny minority that post substantial content and commentary, virtually none is overtly political. Also, the government has deployed an impressive corps of internet censors that have imposed enough of a cost for the average internet user to circumvent the “Great Firewall” that they often don’t bother. Inculcating general political apathy, while simultaneously allowing more room for debate on a host of other issues, has been an effective method for the Communist Party to maintain control.

The internet, however, has changed the nature of public discourse and Chinese citizens’ relationship with the government. It promotes pluralism in public opinion, which has certainly affected state policies in China. During the recent “Green Dam” internet filtering fiasco, for instance, the state’s overreach in forcing an unpopular policy was met with fierce retaliation from unofficial Chinese media, the online community, and other private actors. As a result, officials last week formally abandoned their effort to impose the installation of filtering software on individual’s computers.   

Politically, the internet has been both a boon and a nuisance to Beijing. Bloggers and other unofficial online media have been empowered to act like citizen journalists, helping the central government expose local corruption. In response, the Chinese Communist Party (CCP) has stepped up its anticorruption efforts. On the flip side, information that reflects poorly on the central government travels freely on the web, and the viral nature of the internet makes it exceedingly challenging for censors to move at the same velocity. Recently, the central data bureau has been repeatedly embarrassed by leaks on the internet that showed discrepancies in its GDP data versus local data (the agency closely guards its information each quarter before the official release). In defense, the agency called on Netizens to stop spreading false information about figures. Yet many people refused to accept the agency’s spin, forcing it to admit the inadequacies in its data collection.       

Despite some public gains, the CCP is not ceding significant ground to the internet. It has installed what is arguably the most sophisticated censorship system in the world. Yet it continues to fear losing its monopoly on message control and has increasingly tried to curb internet use in other ways. The state hired more censors, arrested online activists, and blocked Twitter during the Xinjiang riots in recent months. Online coverage of a potential corruption case involving President Hu Jintao’s son is nowhere to be found. The Charter 08 movement (a treatise for political reform by intellectuals) and the internet’s role in Iran’s recent political tension have been troubling for a regime bent on minimizing unexpected dissent ahead of October’s 60th anniversary of the founding of modern China. The CCP wants to ensure unity and demonstrate that its legitimacy endures. If it must stifle dissent on the internet, it will, but there are limits to how far it can go.  

Short of completely dismantling the infrastructure that allows the internet to exist, Beijing does not have enough capacity to filter and block every piece of information. The state will likely continue to rely on a nimble and adaptive strategy that manages and manipulates the flow of information on the web, allowing public opinion in some cases while restricting information when it feels it must. But as recent developments have shown, the state often has trouble taming the expanded online space for public opinion. The technological revolution isn’t likely to beget a political revolution in China, but an evolution in political governance is occurring as a once omnipotent state grapples with the advancement of a more contentious society.

By Eurasia Group analyst Sean West

Earlier this month, the G8+5, the world's leading industrial states plus some other important developing states, committed to finishing the Doha Round of trade talks by the end of 2010. U.S. and Chinese officials paid lip service to finishing Doha this week during the inaugural bilateral "Strategic and Economic Dialogue." World Trade Organization chief Pascal Lamy will likely cite both announcements as cause for celebration. Healthy skepticism is in order.

Overblown fears of oncoming protectionism were all the rage just weeks ago. But as Ian Bremmer wrote in this space back in March, the financial crisis need not trigger as many new trade barriers as some feared. Still, the global liberalization envisioned by a completed Doha Round by the end of next year is likely a bridge too far.

Pledges aside, there's not much reason to be optimistic that a deal can be concluded in the near future. Personality conflicts may have receded, as both Susan Schwab and Kamal Nath -- who banged heads last year -- no longer represent the United States and India respectively. But domestic conditions in the wake of the financial crisis won't help much with trade liberalization. While there's ample reason to be skeptical that neither China nor the EU are any more ready conclude an agreement than in the past, all other countries can play wait-and-see unless and until the United States shows serious leadership.

Obama has yet to lay out a clear strategy for the Doha Round. U.S. Trade Representative Ron Kirk has said several times that the United States considers Doha completion as critical, but there's no evidence yet that he'll have the political support he needs to set policy and to bargain. Comments from Obama himself on Doha have been ambiguous at best, warning of an "imbalance" in potential trade-offs on the table in current negotiations. It's also not yet clear how much political capital Obama will put at risk at a moment when he needs the support of organized labor for a host of other domestic priorities. And in a nod to agricultural interests, he allowed his budget proposal to cut farm subsidies -- a critical sticking point in the Doha negotiations -- to die on arrival.

Real movement on trade policy remains on hold until the president explains publicly how trade policy fits into his administration's broader agenda -- a speech he might give in advance of the September G20 meeting in Pittsburgh. But he'll have to use that speech to persuade an anxious American public -- and many trade skeptical US lawmakers -- that trade deals can spur growth without killing jobs. Obama has an advantage. His history suggests that he believes in the benefits of trade, and in a Nixon-goes-to-China way, he can spend political capital earned on the campaign trail to bring trade-wary Democrats along with his initiatives. But he has so far provided no indication that he's ready to accept the political risks that come with the push needed to get Doha done within 18 months.

RABIH MOGHRABI/AFP/Getty Images

By Ian Bremmer

Moisés Naím wisely warns us in his latest FP column that transnational problems are pressing just at a moment when multinational consensus on solutions has become nearly impossible to achieve. If 20 countries produce 85 percent of global GDP, 20 countries generate three-quarters of global greenhouse gasses, just 21 are directly concerned with nuclear non-proliferation, and 19 account for almost two-thirds of AIDS deaths, limiting negotiations over collective action to the smaller number of states needed for workable solutions makes good sense. But in today's geopolitical environment, 20 is still a very big number.

The ongoing economic meltdown has accelerated the inevitable transition from a G7 to a G20 world. Gone are the days when the United States, UK, France, Germany, Italy, Japan, and Canada could credibly claim global political and economic leadership. Today, no institution that excludes China, India, Russia, Brazil, and a few other emerging heavyweights can fully address the biggest international challenges.

But it's not simply that it's tougher to forge compromises with 20 negotiators at the table than with seven. It's that some of the new players have fundamental disagreements with the established powers on some very big questions -- like what role government should play in an economy. Agreements on managing transnational health crises, nuclear proliferation, regional security, or greenhouse gasses and global warming will involve complex policy solutions with direct impact on domestic economies.

Second, the new governments at the table are preoccupied with problems much closer to home-issues that can be addressed on a (relatively) more modest and manageable scale. China's political leadership, an increasingly indispensable player on several transnational problems, is far more concerned with domestic than with international challenges. Much of its foreign policy is intended to fuel the continuation of explosive domestic economic growth-and the millions of jobs it creates. Its rhetoric may be global, but its focus is more often regional. The governments of India, Russia, and Brazil are likewise intent on managing the impact of the global recession on their domestic economies and advancing their political interests within their immediate neighborhoods. That's why much of the forward movement on transnational issues will come from regional groupings like the European Union, the Gulf Cooperation Council (GCC), and the Association of Southeast Asian Nations (ASEAN).

Some respected observers of international politics have called for a G2, a meeting of US and Chinese minds for the ultimate in minilateralist institutions. There are many reasons why this won't happen anytime soon-if ever. The Chinese leadership may enjoy such talk, but its most seasoned policymakers know well that China cannot yet afford to shoulder such burdens. Nor are Washington and Beijing likely to agree on how to solve many of these problems. And to reduce international consensus to two countries is to ignore the growing importance of many others.

In other words, Moisés is correct that 20 is a much more manageable magic number than 200. But these 20 are unlikely to accomplish big things for the foreseeable future.