In the decades after the 2008 Olympiad in Beijing, the world is going to face a startling development — America and China together will produce more than half of the total worldwide gross domestic product. Never before have two nations so dominated the world economy while being so interdependent. Never before have the possibilities for good been so great. But if you had listened to the people in either country talk about the other in recent months, you’d never know it.

The reports from the fourth meeting of the U.S. China Strategic Economic Dialogue, which took place in June at Annapolis, were promising, because Secretary Paulson and his new Chinese counterpart, Vice Premier Wang Qishan, at last reached some strategic conclusions.

The ministers announced that the two powers would pursue bilateral agreements on investment policies, environment, and energy. The tone and substance of the announcement suggests that the relationship might finally turn a corner — in time for a new American president to nurture it into a mature partnership.

It won’t be easy for America and China to get it right during the next several years. Reactionaries in both countries will resist reform and change in the political order and seek to preserve an international political competition reminiscent of the Cold War — one based upon spheres of influence, mutual antagonism, and embedded distrust. But signs of reformation already are springing up in both countries.

An apparently irreducible amount of protectionism and xenophobia has littered this year’s presidential race in America, particularly on the Democratic side, but the campaign also has been marked by the rejection of “old” politics by huge numbers of independents and young voters.

In China there is visible evidence of movement toward a central government that will be better able to deliver on promises of environmental improvement and social progress. There have been stirrings of democracy in Shenzhen and within the Communist Party School, the emergence of a philanthropic sector, and growing evidence of civic engagement.

If majorities in both countries would opt to break down the barriers of misunderstanding and distrust and move this reformation forward, what should be on their political and commercial agendas?

First, when it comes to natural resources that are in short supply, China and the United States stand in similar circumstances as the two biggest energy and food consumers and polluters on the planet. There is logic for the two to cooperate to develop and conserve energy and water resources, improve air quality and reduce carbon emissions, and speed the development of efficient agricultural production wherever arable land exists. If instead we race to obtain “secure” supplies of resources, buying up entire countries in the process, neither nation is likely to increase either its security or store of resources.

Next, we need to permit our private companies to operate freely across borders. Despite differences between our two political systems, the private sectors in America and in China are growing more alike, separating themselves from the rest of the world in respect of the most important characteristics of the strongest capitalist economies — competitiveness, efficiency, and innovation. Even so, both countries face difficult challenges.

Americans are wrestling with job losses in the fifth decade of a painful economic transition away from a manufacturing economy, but they face an even greater test. The current credit crisis marks merely the beginning of a longer struggle to wean ourselves from generations of a consumptive lifestyle financed by cheap credit — much of it extended by China.

China soon will be challenged to make an even more hurried shift from an economy dependent upon cheap labor and weak enforcement of environmental protection rules, to one that is increasingly services-based. Domestic demand will rapidly increase for expensive investments in job training, education, health care, and environmental remediation.

In the face of these challenges both countries need to resist new restrictions on cross-border investment that would impede the efficient flow of capital and threaten economic growth. It would help a great deal were we to strip the investment game of national winners and losers. Both countries should encourage the growth of no-flag or multi-flag companies in the worldwide private sector.

Without regard to where these companies might be incorporated, they would eschew national identities in favor of true multinationalism. It would be in the interest of both China and America, as they increasingly dominate the world economy and spark jealousy and protectionism in countries with smaller and more fragile economies, to avoid inviting protectionism and market-distorting subsidy battles.

Finally, we all need to work hard at promoting considerably better communications. The world’s most intractable problems — climate change, terrorism, food and energy shortages, poverty, and the growing gap between rich and poor — will be solved only if leaders in both countries figure out in a hurry how to increase understanding and even mutual empathy between China and the United States.

Secretary Paulson and Vice Premier Wang appear to understand that this is the central political and commercial challenge of our time. Let’s hope that Senators Obama and McCain are paying attention.

Mr. Cutler is the resident partner in charge of the Beijing office of Akin Gump Strauss Hauer & Feld.