Business Interests and US-China Relations on Climate Change*

Cooperation between the USA and China serves as the lynch pin for the creation of an effective international climate regime. Recent USChina relations on climate change exhibit the contrasting pattern of active collaboration at the bilateral level and hostile relations at multilateral climate negotiations. This article argues that domestic politics, in particular business interests, largely explain the variation in USChina relations at the bilateral and multilateral levels. Due to the fragmented and decentralized structure of the climate policy community in the USA and China, business interests wield a disproportionately large influence over climate politics in both countries. Unlike multilateral climate negotiations that focus on universal benefits, bilateral collaborations on climate change projects deliver targeted benefits to business sectors through various government funding, support and favorable policies. As a result, business interests in the USA and China are quite supportive of bilateral climate change projects, while they oppose any endeavor to implement binding regulations in multilateral climate negotiations. Such observation implies that meaningful USChina cooperation on climate change will have to occur through bilateral projects that induce active private sector partnerships and privatepublic partnerships.