The danger is that at some point the United States and China will be drawn into the kind of arms race that characterized the Cold War and which produced such a climate of fear. There is no doubt that the United States feels rather more comfortable on the terrain of hard power than China, first because its military superiority is overwhelming and secondly because the language of hard power is deeply inscribed on the American psyche — partly as a result of the Cold War and partly as a consequence of the violent manner of the country’s birth and expansion, as exemplified by the frontier spirit — in a way that it is not on the Chinese. [1199] But there are dangers here for the United States too. The fundamental problem of China for the US is not its military strength but its economic prowess. This is what is slowly and irresistibly eroding American global pre-eminence. [1200] If the US comes to see China as primarily a military issue then it will be engaging in an act of self-deception which will divert its attention from addressing the real problems that it faces and in effect hasten the process of its own decline. [1201]

These four issues — the United States ’ attitude towards globalization; the shift in the balance of power in East Asia; China ’s emergence as an alternative model to the US; and the issue of military power — do not lie at some distant point in the future but are already beginning to unfold; nor do they exhaust the likely areas of friction. As China ’s power and ambitions grow apace, the points of conflict and difference between the US and China will steadily accumulate. Such is the speed of China ’s transformation that this could happen more rapidly than we might expect or the world is prepared for: China-time passes rather more quickly than the kind of time that we are historically accustomed to. It is not difficult to imagine what some of these points of difference might be: growing competition and conflict over the sources of energy supplies — in Angola or Venezuela, or wherever; an intensifying dispute over the expanding strategic partnership between the United States and India; Chinese firms, awash with cash, threatening to take over American firms and provoking a hostile reaction (as happened in the case of the oil firm Unocal); the Chinese sovereign wealth fund, its coffers filled with the country’s huge trade surplus, seeking to acquire a significant stake in US firms that are regarded as of strategic importance; [1202] and a pattern of growing skirmishes over the militarization of space. [1203] Moreover, China being culturally so different from the United States, in a way that was not nearly as true of the USSR, only adds to the possibility of mutual misunderstanding and resentment. Furthermore the fact that China is ruled by a Communist Party will always act as a powerful cause of difference as well as an easy source of popular demonization in the US, with memories of the Cold War still vivid. [1204] Any serious, protracted depression could serve to heighten the prospect of friction as countries, in the face of stagnant living standards and rising unemployment, become increasingly protectionist amidst a rising tide of nationalist sentiment. [1205]

Potentially overshadowing all these issues in the longer run is the growing threat of climate change and the need for the world to take drastic action to reduce carbon emissions. Under the Bush administration the United States adopted a unilateralist position on this question, refusing to be party to the Kyoto Protocol or accept the near-universal body of scientific opinion. As a developing country, China was not required to sign the Kyoto agreement, but now that it is the largest emitter of greenhouse gases its exclusion is unsupport able from a planetary point of view. [1206] Any new climate treaty will be meaningless unless it includes the United States, China and India. But any agreement — involving inevitable conflict between the interests of the developed countries on the one hand and the developed on the other, with China the key protagonist for the former and the United States for the latter — will be very difficult. [1207]

If relations between the US and China should seriously deteriorate, any attempt that might be entertained to exclude China from the present international economic system would simply not be an option. China has become so deeply integrated into global production systems that it would be well-nigh impossible to reverse that process. Chinese manufacturing has become a fundamental element in a complex global division of labour operated by the major Western and Japanese multinationals, which presently account for a majority of Chinese exports. The fact that the value added in China (30 per cent or less) is only a small proportion of the total value added because of the extremely low cost of Chinese labour means that any attempt to impose sanctions on Chinese exports, for example, would inflict far greater economic harm on the many other countries involved in the production process, especially those in East Asia, than on China itself. [1208] Powerful evidence of China ’s integration has been furnished by the global recession: from the outset its involvement was regarded as fundamental to any solution and its continuing rapid growth has been seen as vital in limiting the severity of the recession. One might add that the US ’s options are also limited in East Asia. If it decided to start pressurizing its East Asian allies — such as the Philippines, Singapore and Indonesia — to move away from China, it is not at all clear that it would meet with a positive response; indeed, it is conceivable that such a move might even be counter-productive because, in the event of being forced to choose, these countries might opt for China as the rising power in the region. Finally, if the United States chooses to become more confrontational with China and engages it in an arms race, this could well harm the US ’s global standing rather more than China ’s, which is what happened in the case of the invasion of Iraq; and China, for its part, might simply refuse to be drawn into such a military contest. [1209] The problem for the United States, meanwhile, is that China ’s relative economic power, on which all else depends, continues to grow in comparison with that of the US.