In the heady days of the 1990s, "globalization" was a phenomenon requiring "others" to marketize and eventually democratize. Unfortunately, less time was spent considering how globalization, and China's multidimensional entry into the world system, would require change in America itself. This oversight contributed to two problems. Internationally, it turned the United States into a global nanny, telling others how they ought to proceed in making the domestic adjustments globalization seemingly required of them, without paying due attention to the implications for ourselves. Domestically, Americans became complacent about maintaining and enhancing the infrastructure of our own national competitiveness, particularly human capital.

Because of its size, rate of change, unanticipated success and political coloration, China has become the poster child for those aspects of globalization that threaten the United States. For his part, President Bush has a balanced view and is seeking to keep relations on an even keel. In his May 31 press conference, he noted that "the relationship with China is a very complex relationship, and Americans ought to view it as such." But increasingly, as seen in the reaction to the attempted takeover of Unocal by the Chinese National Offshore Oil Corporation, more Americans are beginning to view China in ominous terms. We have witnessed a marked paradigm shift in thinking about China in the last few years, one that threatens to substitute one flawed framework (a "weak China") with another (a "China on steroids"). An April public opinion poll conducted by the Canada Institute of the Woodrow Wilson International Center found that 31 percent of Americans polled agreed with the statement, "China will soon dominate the world."

These perceptions, often exaggerated, have led many Americans, some members of Congress and the top echelons of the Defense Department--all ignorant of the severe problems China faces--in the directions of economic defensiveness and external stridency. In Congress, legislation reminiscent of the Smoot-Hawley Tariff Act of 1930 is given at least superficial consideration. The Bush Administration has unilaterally imposed restraints on Chinese textile imports. Congress reacted negatively to the now withdrawn bid for Unocal. And the national security bureaucracies advance "China threat" analyses. Director of Central Intelligence Porter Goss and Defense Secretary Donald Rumsfeld issued notable warnings in the first half of 2005, though the July Pentagon report on The Military Power of the People's Republic of China was surprisingly measured.

All this gives rise to four questions. To start, why and how has the dominant paradigm about China changed in the last few years? Second, what debate has this shift unleashed in U.S. policy and academic circles? Third, in what respect is China a competitor to the United States and others? And finally, what should the United States and China do to make that competition as constructive as possible?

Paradigm Shift

The contours of the "weak-China paradigm" (China as a weak, developing, politically fragile and transitional economy) were established in contemporary America's first glimpses of China in the final stages of the Cultural Revolution, when President Richard Nixon went there in 1972. At that point, China had only a shade greater share of global GDP than France, a nation with only about 6 percent of China's population. There was virtually no private sector in the Chinese economy. The face of leadership in China was an infirm, eighty-plus-year-old Mao Zedong. China was widely understood in terms similar to those in which we now understand North Korea.

After Mao's death in September 1976, Deng Xiaoping's assumption of power, and the launching of the reform and open policy shortly thereafter, it took time both for the new policies to take root and for the rest of the world even to begin to conceive of China in terms of strength. After all, in 1978, China still accounted for only 0.8 percent of world trade. And China's progress was eclipsed in the world's eyes when East European communist regimes fell, followed by China's suppression of demonstrators in Beijing and elsewhere in 1989, and finally by the implosion of the USSR itself in 1991.

The core reason for viewing China as weak lay in the correct assessment that the country had an enormous institution-building effort ahead (constructing legal, market and regulatory institutions, and cultivating human and social capital). Even a cursory look at incentives and industrial work ethics indicated how far China had to go in the 1970s and 1980s to be competitive. It seemed self-evident that changing all this would take a long time, even without considering the disabilities of the one-party state (corruption) and the natural-resource, environmental and population constraints. All of this argued for reserved predictions about China's progress. Indeed, many of these drags on progress remain, and even today social stability is not to be taken for granted, as recent rather large, albeit isolated, disturbances indicate. In July, for example, a Shanghai suburb exploded into riots over environmental problems, industrial conditions and official indifference.

It is hard to say when the paradigm shifted toward that of a strong China (a modernizing, highly competitive, rising power). Perhaps it was China's intervention in the Asian financial crisis in 1997-98, when Beijing initially acted more boldly than Washington to help shore up liquidity in Thailand and Indonesia through the International Monetary Fund (IMF). Perhaps it was when Premier Zhu Rongji proposed, from 2000 to 2002, a free trade area for China and the Association of Southeast Asian Nations and then a timetable for its realization. Perhaps it was in 2002, when China became the number-one export market for both Taiwan and South Korea, supplanting the United States. Perhaps it has been the steady double-digit increase of Beijing's military budget since 1990 and its record of 9 percent-plus economic growth for nearly a quarter of a century. Perhaps it was the smooth transition to technocrat Chinese leader Hu Jintao in 2002-05, supported by an impressively trained, young and dynamic set of leaders at subordinate levels throughout the country. Perhaps it was in 2003, when China became the third nation to put a man in space. Perhaps it was in 2003-05, when it became clear that Washington was pinning its hopes for a denuclearized North Korea on wished-for Chinese pressure on Pyongyang. Perhaps it was when Americans broadly recognized that China held more U.S. debt instruments than any other foreign country except Japan.

Data from the World Bank, the IMF and the Organization for Economic Cooperation and Development (OECD) provide further shape and form to the "strong-China paradigm." China's trade with the world has grown eight times as fast as world trade. China accounted for 68 percent of global growth in demand for oil in the 1995â€"2003 period.

One of the things that most worry Chinese leaders is that the strong-China paradigm makes it easy for foreigners to lose sight of China's genuine problems. In June, I was in one of China's poorer provinces--Jiangxi--the cradle of the Chinese communist revolution. Overall, it is twenty or more years behind the coastal areas, both in terms of economic development and popular outlook. One of China's most thoughtful public intellectuals, Zheng Bijian, talks about China's "division and multiplication problems." The division problem is that even large aggregate resources become small per capita resources when divided by 1.3 billion people. The multiplication problem is that even small problems become incredibly large when multiplied by 1.3 billion. Chinese leaders look at foreign policy from the perspective of how it can facilitate resolution of these domestic challenges.

Nonetheless, the cumulative result of Beijing's genuine progress has been that China is now viewed in far different terms today than it was only a few years ago. This has important consequences, because for policymakers the paradigm defines the policy problem. Under the weak-China paradigm, the problem was to nudge China along a constructive course, not to push too hard, to be relatively open to exchange and technology transfer, and to place emphasis on basic social and political institution-building. The full implications of the paradigm shift remain to be seen, but the impulse in America (and notably Japan, where development assistance to China is declining and the military posture is becoming more forward-leaning) is to raise questions about past policy. As China's strength grows, Beijing increasingly will be expected to deal with the consequences of its actions (or inadequate actions, as with North Korea) and contribute more to the maintenance of an international system from which it is deriving considerable benefit. Beijing will also be expected to help constructively manage the interdependent systems on which we all increasingly depend. The degree to which it does not will contribute to friction with and debate in America.

As the debate proceeds it is important to keep one overriding reality in mind: China can be weak and strong simultaneously. A population of 1.3 billion, with a middle class perhaps numbering 250 million-300 million, can simultaneously be an enormous competitive force, a global economic engine and also have one billion less-fortunate people who are a huge developmental and humanitarian challenge.

The Debate

For seven administrations, U.S. policy toward China has been remarkably stable and could be called "hedged integration." The concrete manifestation of this policy has been the combination of "balance" and "integration", as Joseph Nye put it in a recent address at the Johns Hopkins School of Advanced International Studies. "Balance" refers to the use of all instruments of power, particularly hard instruments, to prevent the dominance of others, while "integration" refers to the use of all instruments of power, particularly soft ones, to bring China into an interdependent international system in which it hopefully will develop shared responsibility for system maintenance.