William S. Cohen

Recent events confirm that we're living in a new world of disorder. North Korea tested a missile that could reach the U.S., and is threatening to resume its nuclear-weapons program; the Taliban is using drug money to destabilize Afghanistan and turn that country back into a terrorist safe haven; the financial crisis has sparked a global recession; and unchecked greenhouse gas emissions are transforming the global climate.

These disparate challenges share one thing in common: They cannot be addressed successfully without cooperation between the U.S. and China.

The most immediate opportunity for cooperation is in confronting the international financial crisis. China currently holds $2 trillion worth of largely U.S. dollar-denominated foreign exchange reserves, and it is by far the world's largest holder of U.S. government debt. As the Obama administration increases that debt to finance its economic stimulus plan, China will almost certainly be called upon to purchase the lion's share of new U.S. debt instruments. China also has an interest in working with the U.S. to ensure those efforts succeed, because it depends on economic growth in the U.S. (still its largest single trading partner) to ensure stability at home.

There is a compelling need to create a new dialogue on finance and economics. This conversation began with President Barack Obama and Chinese President Hu Jintao's discussions at the G-20 summit this month in London. Meetings between U.S. and Chinese leaders have been dubbed the 'G-2' by some to reflect the crucial role of economic negotiations between our two countries. This first meeting between the two men, and the agreement reached by world leaders at the close of the summit, mark a positive beginning to the effort to harmonize our financial management and banking regulatory practices, and explore ways to expand bilateral trade opportunities in areas such as energy and environmental technologies.

The U.S. and China are the world's two largest emitters of greenhouse gases. This means that our nations have the opportunity, and the primary responsibility, for shaping the global response to climate change. To date, both sides have used each other as an excuse for inaction. This must end. The Obama administration has made it clear that it will work hard on energy and environmental issues within our bilateral relations. China and the U.S. together have the power to set the de facto global standard for energy efficiency and emissions control. To do so, we should jointly promote the development and transfer of clean energy technology between our countries, initiate bilateral projects on energy and climate issues, and develop common principles to drive the multilateral negotiations on a new international climate-change agreement.

China and the U.S. have a shared interest in denuclearizing North Korea. That state's erratic behavior and brinkmanship, of which the missile launch was yet another manifestation, may one day persuade Japan to develop a nuclear deterrent. This is something China should want to avoid. As North Korea's principal supplier of oil and other essential commodities, China has significant leverage with the North Korean regime. The U.S. and China must stand together and increase pressure on the North to stop its missile testing, return to the six-party talks with Japan, Russia and South Korea, and abandon its nuclear-weapons program.

The U.S. and China have a shared interest in combating the international drug trade that fuels terror in Afghanistan. Today, Afghanistan competes with Burma as the main provider of narcotics to China. Much of the drug trade is facilitated by trafficking and organized crime networks in Western China. To combat these networks on both sides of the border, the U.S. and China should propose a new NATO-China antinarcotics program. Such a program could increase antidrug cooperation along China's border with Afghanistan. And it could serve as the basis for increased cooperation on other Central Asian security issues, including Pakistan.

To be sure, there remain a number of areas of serious divergence between Washington and Beijing. But with so many challenges facing our nations, the stakes are too high to allow old hostilities to impede constructive cooperation. Virtually no global challenge can be met without China-U.S. cooperation. By finding new ways to promote our common interests, the Obama administration can transform our relations with China and promote the global good.

Mr. Cohen, U.S. defense secretary from 1997-2001, is chairman of The Cohen Group, a global business consulting firm.