The shift of power from west to east is evident. After the 'bipolar' Cold War, and then the 'unipolar' (ie, US-dominated) 1990s, the international order is becoming multipolar. In terms of economics, in 2020, according to the Economist Intelligence Unit, the US, the EU and China will each have a little less than 20% of world GDP (on a purchasing power parity basis). But the nature of the emerging multipolar system is far from clear. Will it be competitive, based on the assertion of national power, or co-operative, framed by international rules?

Robert Kagan (in his recent book "The end of dreams, and the return of history") foresees the former. He believes that the political values of the various powers are likely to determine their principal alliances. Thus Russia and China could form an axis of autocracies, united by their dislike of political liberalism. They would face an axis of democracies, consisting of the US, Europe, Japan and perhaps India.

Many Europeans recoil from that kind of balance-of-power politics. They believe that the major challenges of the 21st century, such as climate change, energy security, migration and terrorism, require co-operation among all the leading powers, rather than just the democratic ones, and strong multilateral institutions.

Of the major powers, only the EU can be relied upon almost always to champion the United Nations, other international bodies and treaties. The concept of multilateralism is engrained into the DNA of European politicians, since the Union is itself a multilateral construction. In contrast, China, India, Russia and the US are capable of acting unilaterally, bilaterally or multilaterally, depending on their perception of which tool best promotes their interests.

The chances a multilateral order emerging appear quite good. As the US becomes relatively weaker, and more concerned about the behaviour of other powers, it is more likely to favour strong institutions to constrain them. Many Europeans and Americans, driven by economic self-interest, will prefer to engage rather than confront Russia and China. Nor is a close alliance between those two countries likely: their political elites mistrust each other; Moscow knows that in any partnership with Beijing, China's economic strength will make it the dominant partner; and some Russians worry that China may one day encroach on their Asian territory. China's leaders care more about what Washington thinks than what is happening in Moscow. Indeed, the most important geostrategic relationship of the 21st century is likely to be that of China and the US, because of their mutual economic dependence and potential strategic rivalry.

But the China-EU relationship will also help to shape the international system. The core of this relationship is currently economics. The EU is China's biggest trading partner and their two-way trade topped €300 billion last year. Yet economic tensions threaten to create ill-feeling that could damage the increasingly important political co-operation between the two. The Europeans complain that Beijing does not play fair, failing to enforce intellectual property, under-valuing its currency and restricting foreign investment. Yet the Chinese are worried by the increasingly protectionist rhetoric in Europe, and the threat to use trade weapons against Chinese exports.

What kind of role will China play in the new world order? Europeans note a vigorous debate within the Chinese government between liberal internationalists, who are sympathetic to multilateralism, and assertive nationalists, who are not. The latter remain influential. Hence China's continuing attachment to the principle of non-interference, especially if western countries are proposing to interfere in some part of the world. Hence its support for regimes shunned by the West, such as Burma, Iran, Sudan, Venezuela, Uzbekistan and Zimbabwe; in return China has won contracts to exploit oil and mineral resources in these countries. Hence China's defence budget, which consistently grows much faster than its economy, worrying governments in Delhi, Taipei and Tokyo.

Yet the long-term trend of China's foreign policy seems to be for it to become, as World Bank President Robert Zoellick has urged, a 'responsible global stakeholder'. China joined the World Trade Organisation in 2002. It has led the international diplomacy to persuade North Korea to abandon its atomic weapons programme, and voted (albeit reluctantly) for three rounds of UN sanctions against Iran, to dissuade it from enriching uranium. China has sent 1,000 peacekeepers to the United Nations force on the Israel-Lebanon border. Last year China put pressure on Sudan's government let UN peacekeepers into Darfur, and after the bloodshed in Burma it helped to persuade the generals to let in UN envoy Ibrahim Gambari.

I believe that Europeans can influence the arguments within China. The EU should propose to China that they build a strategic partnership, focused on issues that cause tensions between them but which, if tackled in a serious dialogue, could help to strengthen global governance. The priorities should be climate change, nuclear non-proliferation, Africa and maintaining an open global trading system. If Europe can use such a partnership to draw China towards multilateralism, the whole international system will tilt away from balance of power politics.

Europeans are better placed than Americans to make the case to China's leadership that it can best achieve many national objectives by working through international institutions. This is because the EU has been a consistent proponent of multilateralism, and because Europe, unlike the US, is not a strategic rival to China.

It is true that China's foreign policy remains predominantly hard-nosed and realist, focused on the pursuit of national interest. But that should not prevent Europeans from seeking to draw China towards the principal of multilateralism. The Europeans can make a convincing case strong international institutions serve China's national interests.

In all these areas, constructive dialogue between the EU and China could help to strengthen global governance. But the dialogue should also explicitly include the institutions of global governance. Many of these institutions do not represent the emerging powers adequately, which means they are losing authority. The IMF and the World Bank need to be reformed so that big economies such as China greater have a greater weight within them. The UN Security Council needs to become more representative, in order to revive its dwindling legitimacy, which means that China has to stop blocking the membership of Japan. The G8 cannot tackle serious global economic problems so long as countries like China and India are not full members. The G8 is bound to evolve into a larger and more representative body within in a few years, but some Chinese leaders have been ambivalent over whether they want to be part of such a body, since it could imply extra responsibilities (for example in curbing carbon emissions or giving aid to Africa).

The EU should also start a dialogue with China on the creation of new institutions, such as those that will be needed to manage the global system for curbing carbon emissions, or to bring together the principal producers and consumers of energy. The world's leading multilateral institutions cannot be reformed, or new ones created, without China's active involvement. The truth is that China is becoming one of the world's top powers, and it needs to play a leadership role in global governance, so that it can shape the international system to suit its interests. It should not leave the Americans, Europeans, Russians and others to design the new world order.

The Europeans and the Chinese share a common interest in a multilateral world order. EU leaders understand this, as do some in China. As this century progresses, I believe that more and more Chinese leaders will come to see that multilateralism, rather than assertive power politics, best serves China's interests.

Centre for European Reform © CER 2008