AT NO time since the end of the Cold War have U.S.-China relations been worse. Yes, in the past there have been periodic confrontations over Taiwan, and tensions over the American bombing of the Chinese embassy in Belgrade and the Chinese fighter-jet collision with an American reconnaissance plane over the South China Sea. But the current downturn reflects a potential long-term trend with the likelihood of protracted strategic conflict. Equally troubling, this raising of tensions is not only unnecessary but also potentially costly to the United States.

Beginning in early 2009, China committed a series of diplomatic blunders that ultimately elicited a near-universal condemnation of Chinese diplomacy. The list is long:

 - The March 2009 Chinese naval harassment of the U.S. Navy reconnaissance ship Impeccable operating in China’s exclusive economic zone in the South China Sea;

 - Beijing’s heavy-handed resistance to negotiation at the December 2009 United Nations Climate Change Conference in Copenhagen, causing diplomatic friction between China and Europe and between China and the United States;

 - Its hard-line response to the January 2010 U.S. decision to sell arms to Taiwan, which included a threat to impose sanctions on U.S. companies that have defense cooperation with Taipei;

 - Mismanagement of North Korea’s sinking of the South Korean naval ship Cheonan in March 2010, followed by widespread South Korean anger toward China;

 - Strident Chinese diplomatic protests against U.S.-South Korean naval exercises in international waters in the Yellow Sea;

 - Excessive hostility to the Japanese detention, in September 2010, of the captain of a Chinese fishing boat for operating in Japanese-claimed waters and for steering his ship into a Japanese coast-guard vessel;

 - The Chinese government’s clumsy campaign to compel Google to cease service of its search engine on the mainland;

 - Its December 2010 harsh and persistent opposition to Liu Xiaobo’s selection as the Nobel Peace Prize recipient;

 - Increasingly forceful assertion of its disputed economic and territorial claims in the South China Sea, eliciting apprehension throughout Southeast Asia.

In contrast to three decades of a successful peaceful-rise strategy that enabled Beijing to develop cooperative interactions with nearly every country in the world, within two years China had managed to sour relations with virtually every Asian country and every advanced industrial nation.

The source of all this strident Chinese diplomacy is not its emergence as a regional great power with corresponding confidence in its new capabilities. Rather, China’s new diplomacy reflects the regime’s spiraling domestic confidence and its increasing dependence on nationalism for domestic stability. Washington has misread the state of affairs, exaggerating Chinese capabilities and fundamentally misinterpreting the source of all the aggressive Chinese diplomacy.

THE TRUTH is China is neither particularly militarily strong nor particularly domestically stable. Beijing’s combative diplomacy was not spurred by American economic weakness in the wake of the recession, and it was far from an indicator of growing Chinese confidence. On the contrary, in recent years Beijing has not deployed and operationalized significant new advanced naval capabilities, and its domestic economic environment is worse today than at any time since the onset of the post-Mao economic reforms in 1978.

Beyond its coastal waters, China’s naval capability remains dependent on its advanced diesel submarines, which were first deployed in the mid-1990s. By 2000, China’s submarine force had already begun to pose a formidable challenge to U.S. naval operations in the western Pacific Ocean. But since then it has not deployed any additional naval capabilities that pose consequential new challenges to the U.S. Navy or to America’s defense of its security partners. China still cannot independently manufacture advanced military aircraft, and it has yet to deploy a single Chinese-designed advanced aircraft. The J-15 and J-20 fighter planes are still in development. It has finally launched its first aircraft carrier, but it does not have aircraft for the carrier. Its antipiracy naval operations off the coast of Somalia are basic. Its protection of its claims in the South China Sea depends on coast-guard ships. China is developing potentially effective advanced-technology maritime access-denial capabilities, including an improved missile capability, but none of it has yet been adequately tested, much less deployed. Its antiship ballistic-missile program is not operational. China’s space program is making great progress, but the People’s Liberation Army (PLA) hasn’t developed the capacity to significantly challenge U.S. space-based communication capabilities or hasn’t built its own space-based war-fighting capability. The PLA is developing drones and air-based radar systems, but again these and other such defense projects remain relatively primitive or experimental. China will continue to modernize its military capabilities, and it will eventually deploy advanced systems that may challenge U.S. security and regional stability, but Beijing’s new diplomacy cannot be explained by thirty years of defense spending and military modernization.

Nor does the strident diplomacy reflect Chinese economic confidence. At the height of the global financial crisis, the Chinese economy continued to grow at approximately 10 percent per year. But beneath this facade of prosperity, China’s economy was weakening significantly. In October 2008, as the global recession deepened, Chinese leaders unleashed a massive but dysfunctional stimulus program. Not only did it fail to resolve most of the deep-seated problems in the system, it also managed to foster many new ones. Despite the stimulus, unemployment in China remains high in rural areas and among urban college graduates. In 2010, Premier Wen Jiabao estimated that there were 200 million unemployed Chinese. Moreover, during the past two years, inequality—by international standards—has become extremely high. As a result of the stimulus, inflation has soared, affecting the price of food, housing and transportation. By last year, China’s property bubble had significantly worsened, the condition of national banks had deteriorated more than at any time in the past ten years and local government debt had skyrocketed. Economic growth has increasingly relied on government-stimulated investment, not on consumption—which fuels even-greater inflation. More worrying still, the state-owned sector is expanding at the expense of the private sector, thus undermining innovation while politicizing economic policy making. These are all protracted problems which together suggest that social instability in China will grow and that the Chinese Communist Party’s economic-based legitimacy will significantly erode.

Beijing’s problems are only exacerbated by the fact that the tools of Chinese repression are deteriorating. In the past five years, the number of spontaneous small- and large-scale demonstrations has mushroomed. More recently, the Internet has undermined the government’s ability to control information—and to minimize nationwide hostility toward the party. It has become an effective device for people to communicate their ire over unemployment and inflation, as well as over political and economic corruption, police brutality, criminal cover-ups, environmental degradation and property seizures. In addition, peer-to-peer microblogging (via Twitter and its Chinese equivalents) can facilitate large-scale, independent and impromptu mass protests. China made its first arrest for a microblog post back in September 2010 during the rallies against Japan’s detention of the Chinese fisherman. Economic instability and the erosion of the Communist Party’s control over society are occurring simultaneously. This domestic weakness has forced the government to rely more and more on nationalism for regime legitimacy—and it explains Beijing’s diplomatic blundering.

As the Chinese people witness their relative position in the world increasing (particularly in light of the decline of Japan), the United States is seen as the obstacle to China’s international acceptance as a great power, so that Washington is gradually replacing Tokyo as the focus of nationalist resentment. With its influence waning, the party is now more vulnerable to growing strident nationalist opposition. Since January 2010, on the web and in newspapers, nationalists have demanded Chinese international assertiveness before the government can even consider a policy, putting Chinese leaders on the defensive. Indeed, in recent years nationalism has become more widespread in urban areas, infecting not just the military and disaffected youth but also workers, intellectuals, civilian leaders and businesspeople. Moreover, Internet communication technologies enable Chinese nationalists to interact with each other and can facilitate popular protests against Chinese foreign policy, thus magnifying the importance of nationalism and the danger it poses to regime stability. China’s insecure rulers, preoccupied with domestic stability, are thus compelled to pay evermore attention to nationalist triumphalism as they formulate foreign policy.

For the first time since the death of Mao Tse-tung, Chinese leaders have had to choose between using nationalism and strident diplomacy to accommodate their domestic audience and using China’s peaceful-rise strategy to accommodate the international community. Until recently, China opted for the latter. But since 2009 the party’s effort to appease China’s nationalists has resulted in a bumbling foreign policy that has aroused global animosity and undermined China’s security.

THIS NATIONALIST diplomacy bred considerable anxiety among America’s allies in East Asia. Did Washington have the will to sustain its strategic presence and balance China’s rise? A robust U.S. diplomatic response was in order. But the United States went too far, challenging China’s security on its continental periphery, creating the potential for protracted great-power security conflict and heightened regional instability.

Following the North Korean sinking of the South Korean naval ship Cheonan in March 2010 and China’s failure to publicly condemn Pyongyang for the attack, the United States developed a series of effective initiatives in maritime East Asia designed to reaffirm its resolve to contend with the rise of China. Many of these initiatives were necessary and constructive. In late June, for the first time since the end of the Cold War, three U.S. nuclear-powered submarines surfaced simultaneously in Asian ports. In July 2010, during former secretary of defense Robert Gates’s visit to Jakarta, the United States agreed to expand military cooperation with Indonesia. In November, during Secretary of State Hillary Clinton’s trip to New Zealand, the United States agreed to reestablish full military cooperation with the Pacific island nation, despite New Zealand’s ban on visits by nuclear-powered ships to its ports. The United States expanded military relations with the Philippines and strengthened its commitment to the protection of Japan. During Sino-Japanese tension over the fishing-boat-captain incident, Hillary Clinton stated that the U.S.-Japan defense treaty covered military contingencies involving the disputed Senkaku Islands administered by Japan but also claimed by China. Subsequent to the release of the captain, Washington and Tokyo carried out their largest-ever joint naval exercise. Here then was a strong America reassuring its allies—this may have encroached on China’s grand ambitions, but it was an expected and appropriate response.

But then there was the overly assertive Washington that launched, in Hillary Clinton’s formulation, its “forward-deployed diplomacy.” It was a volte-face of years of American policy, and it was seen as a growing—and very different sort of—challenge by Beijing.

During the George W. Bush administration, the United States reduced its troops in South Korea by 40 percent, removed its forces deployed between the demilitarized zone and Seoul, dramatically reduced the size of the annual U.S.-South Korean joint military exercises and stated in the Department of Defense’s Quadrennial Defense Review that in 2012 the United States would transfer to Seoul operational command (OPCOM) of South Korean forces. These steps, regardless of the administration’s intentions, created a China that was more secure on its periphery.

Now, the Obama administration has reversed course. The transfer of OPCOM to South Korea has been deferred for at least three years. Throughout 2010 the United States conducted a series of high-profile, large-scale military exercises with Seoul, including maritime drills in waters west of South Korea. Later in the year, the United States and South Korea signed the new “Guidelines for U.S.-ROK Defense Cooperation,” which called for enhanced combined exercises and interoperability between the two armed forces. These developments all suggested a determined U.S. interest in reestablishing a significant conventional military presence on the peninsula.

The U.S. security initiative with South Korea has eroded Beijing’s confidence over its strategic relationship with Seoul; China is now increasingly dependent on North Korea as its only reliable ally on the peninsula, and it has become more resistant to Korean unification for fear that it could lead to an expanded U.S. military presence closer to China’s border. Chinese leaders now place ever-greater value on stability in North Korea. Rather than use its economic leverage on Pyongyang in cooperation with U.S. nonproliferation objectives, Beijing has increased its support of North Korean economic and political stability.

And in July 2010, as a U.S.-South Korean naval exercise took place in the Yellow Sea, Hillary Clinton launched a new U.S. strategic initiative for Southeast Asia at an Asian regional-security meeting in Hanoi. After Washington held extensive consultations and planning with all of the claimants of the Spratly Islands except China, Secretary Clinton announced America’s support for a “collaborative diplomatic process” to resolve the dispute. The move constituted a sharp rebuke to Beijing, which has long claimed sovereignty over the territory, and suggested U.S. intervention in support of the other claimants, which have advocated multilateral negotiations. In addition, the United States had previously expressed support for stability in the South China Sea, but only in Washington, DC, at the assistant-secretary level, and never through prior discussion with any of the involved nations.

The administration’s forward-deployed diplomacy also includes strategic cooperation with Vietnam. For over twenty years Washington parried Vietnamese overtures, understanding that Indochina is not a vital interest. Yet, in August, after Clinton’s support in Hanoi for Vietnamese resistance to Chinese maritime claims, the U.S. Navy, including the aircraft carrier USS George Washington, held a joint training exercise with the Vietnamese navy for the first time. In October, Secretary Gates visited Hanoi, where he proclaimed the potential for expanded U.S.-Vietnamese defense cooperation and his hope that Vietnam would continue to participate in military exercises with the United States. Later that month, Clinton returned to Hanoi and declared U.S. interest in developing a “strategic partnership” with Vietnam and in cooperating with the country on “maritime security.” She then visited Phnom Penh and urged Cambodia to establish greater foreign-policy independence from China. In addition, for the first time the United States expressed support for the Indochinese countries’ efforts to constrain Chinese use of the headwaters of the Mekong River.

Beijing is now intent on punishing Vietnam for its hubris in cooperating with the United States. It wants to compel Hanoi to accommodate Chinese power. In 2011 it escalated the frequency and scale of its armed harassment of Vietnamese fishing ships operating in disputed waters, causing increased bilateral tension and damage to the Vietnamese fishing industry. China also stepped up its naval harassment of Philippine economic activities in disputed waters. But in response, the United States has only reinforced its commitment to the Southeast Asian countries. In July 2011 it held another military exercise with Vietnam. Then it again sent an aircraft carrier to visit the country, and the Pentagon reached its first military agreement with the Vietnamese military. The Pentagon is also assisting the Philippines’ maritime intelligence capabilities in the South China Sea. China’s deputy foreign minister Cui Tiankai recently warned that some Southeast Asian countries were “playing with fire” and expressed his “hope that the fire will not be drawn to the United States.”

Washington is thus engaged in an increasingly polarized conflict in Southeast Asia. But more important, independent of the course of the South China Sea maritime disputes, U.S. collaboration with Vietnam’s effort to use America to oppose China is not only costly but also foolish. Vietnam’s common land border with China, its maritime vulnerability to the Chinese navy and its economic dependency on Beijing ensure that the United States will not be able to develop meaningful defense cooperation with Vietnam. But having engaged China in this regional diplomatic tussle, any U.S. effort to disengage from the island conflict by encouraging moderation on the part of its Southeast Asian partners would risk being viewed as a strategic retreat.

The Obama administration’s greater security cooperation with countries on the mainland’s perimeter is a disproportionate reaction to Chinese nationalism. It is not reflective of any recent improvements in Chinese naval capabilities that could challenge U.S. maritime dominance. Nor does it reflect an increased strategic importance of the Korean Peninsula or Indochina for U.S. security. Since 1997, the United States deployed increasing quantities of its most advanced weaponry to East Asia and consolidated security cooperation with its maritime security partners, all the while maintaining significant U.S.-China cooperation. That was a productive policy.

But now Chinese leaders are reevaluating U.S. intentions. They have concluded that the United States is developing a forward-leaning policy of encirclement and containment. Regardless of Washington’s intent, recent American actions have provided ample evidence to support China’s claims.

BEIJING’S NATIONALIST diplomacy is dangerous. America’s ill-conceived response makes it even more so. China is militarily vulnerable to the United States, and the regime is vulnerable to internal instability. At this point, Washington is embroiled in territorial disputes over worthless islands in the South China Sea and is expanding its strategic presence on China’s periphery. And in an era when Chinese cooperation is increasingly important, Washington is needlessly challenging Chinese security.

Just as America expects China to restrain its security partners in the Middle East and Asia from exacerbating conflict with the United States, America has the responsibility to rein in its security partners as well.

The balance of power in East Asia is a vital national-security interest, and the United States must reassure its strategic partners that it will provide for their security, despite the rise of China. The United States military must continue to focus its weapons acquisitions and deployments on maintaining U.S. security in the region. The task at hand for American policy is to realize these objectives while maintaining U.S.-China cooperation. Chinese nationalism will continue to challenge U.S. foreign policy for a long time to come. This will require the administration to acknowledge both America’s maritime superiority and China’s domestic and international vulnerabilities, and thus exercise confident restraint and resist overreaction to Beijing’s insecure leadership.

Robert S. Ross is a professor of political science at Boston College and an associate at the John King Fairbank Center for Chinese Studies at Harvard University.