SCENARIO 3 COMPETITIVE COEXISTENCE n 2040, the United States and China have HOW WE GOT THERE prioritized economic growth and restored After a slow recovery from the COVID-19 crisis Ia robust trading relationship, but this and an extended US-China trade war, by the economic interdependence exists alongside late 2020s, pent-up demand and widespread popular frustration with underperforming competition over political in昀氀uence, economies led to a revival in the Organization governance models, technological for Economic Cooperation and Development dominance, and strategic advantage. The (OECD) countries of market-driven economic policies to stimulate growth. Meeting in Cana- risk of major war is low, and international da in 2031, the G7 endorsed plans for econom- cooperation and technological innovation ic stimulus payments, liberalized trade and make global problems manageable over investment, streamlined taxes, and decreased the near term for advanced economies, but regulations. Memories of an overbearing European Union (EU) having faded, Europeans longer term climate challenges remain. agreed to a new round of trade liberalization, somewhat paradoxically under strengthened EU institutions. Weakened by years of de- pressed oil prices, post-Putin Russia supported the new G7 economic consensus, and emerg- ing economies, including Brazil and India, joined with important economic reforms. China rejected the OECD model and adhered to its closed state-directed system but priori- tized economic growth and trade. Beijing and Washington took steps to stabilize economic relations, despite their mutual suspicion and contrasting political-economic models. The relationship has been fraught with disagree- ments on core security issues and values, but seeking relief from the tight trade and investment restrictions of the 2020s led each side to conclude that they need each oth- 114 GLOBAL TRENDS 2040 James Kenny / Unsplash | Macau Photo Agency / Unsplash