China is absorbed in laying the infrastructural underpinnings of a future superpower. It is already commonplace for observers to extrapolate from current growth rates that China will surpass the US as the world's largest economy sometime around 2040. This prediction assumes, of course, that the graphs tracing the country's current trajectory continue their unrelenting ascent. Those who make this assumption do so partly because of the long-range prospects for development that are evident in places such as Chongqing. Another common justification for predictions of greatness is historical determinism - the belief that because China was the world's economic superpower for most of the last two millennia, it is destined to be so again. It may transpire, however, that events do not conform to neat extrapolations.

See case study:

As for historical determinism, the facts are by no means as straightforward as they may seem. Leaving aside for the moment The broader philosophical question of whether history is hardwired to repeat itself, the issue of whether China was ever truly an 'economic superpower' is itself open to debate.
Certainly, its technological prowess has been awesome. Long before the dawn of recorded history, the Chinese mastered techniques not developed in Europe until thousands of years later. Silk fragments discovered recently date from 4,000 years ago - 2,000 years before sericulture spread to the Roman empire . Another discovery suggests that as early as the sixteenth century BC in a bronze foundry in the northern province of Henan that covered an area of 10,000 square metres, the Chinese may have had a prototype of the industrial process, complete with the subdivision of labour that would not become widespread in Europe until the Industrial Revolution. In addition, it is well known that although bronzes were made in the Near East earlier than in China , the single-casting techniques developed in settlements on the central plains and the sophistication of the finished items remained unrivalled for hundreds of years.

As in any country, China 's development went in fits and starts. There were hundreds of years during which little of worth appears to have been invented, followed by an apparently sudden flowering of creative talent. Perhaps the greatest outpouring of such talent came from the tenth to the thirteenth centuries. The inventions from this time include several technologies that either remain in use today or have lapsed from modern life only relatively recently. The windmill, the lock gates that control the flow of water in canals, mechanical clockwork, power transmission by a driving belt, water-powered metallurgical blowing engines, hempspinning machines, gear wheels, sternpost rudders for ships and waterpowered trip hammers for forges are all technologies that originated in China and spread around the world. Other inventions such as gunpowder, printing and various astrological devices were also in evidence in China before they gained currency in the West.

In more modern times, the examples of ships and porcelain provide further evidence of China 's technological superiority. Fifteenth-century shipyards in China made ocean-going wooden traders three times larger than anything the British put in the water before the 1800s. The largest of these vessels, one of the 'treasure ships' used by the Ming dynasty admiral Zheng He on his trading missions to Asia and Africa, weighed a staggering 7,800 tonnes. Nothing approaching that size was built anywhere else in the world until more than 400 years later, when the British engineer Isambard Kingdom BruneI defied legions of sceptics by constructing his 'Great Ship' out of iron in the middle of the nineteenth century.

The example of porcelain shows a similar, enviable precocity. The exact date of porcelain's invention in China is a subject of controversy, but it is clear that by the thirteenth century, techniques were well advanced. By the sixteenth century, most of Europe 's ruling classes were in thrall to this mysterious material which combined a translucent luminosity with a hardness that allowed Chinese artisans to make ceramics that were almost eggshell thin. So enraptured were some of Europe's princes, monarchs and barons by porcelain that the flow of funds from aristocratic coffers to the pottery town of Jingdezhen in central China swelled over time into a flood. One noble, Augustus the Strong of Saxony, spent 100,000 thalers - or enough to pay the annual salary of a thousand skilled craftsmen - to buy porcelain in the first year of his reign alone. (Christopher Cullen, The Dragon's Ascent, 200I, p. 127.)

The economic impact of porcelain imports was such that many of the most powerful families in Europe threw themselves into a desperate quest to discover how the wonderful material was made. They had only vague, second-hand accounts which had trickled back from China to go on: a special clay was required and it had to be fired at very high temperatures. More than that was guesswork. By 1705, a replica had been achieved in France, a so-called 'soft paste'. But it was instantly recognizable as inferior to the real thing.

Augustus the Strong, however, was both resourceful and determined. He set up what would now be called a research and development programme - though one with medieval characteristics - in his castle at Meissen . His researchers worked as captives and his chief technician, Johann Bottger, may have been in fear of his life having made the earlier blunder of promising his impatient patron that he could turn base metals into gold. Alchemy he never managed, but he did, through luck, stumble upon the right ingredients for porcelain. He mixed a certain type of fine clay found near a place called Colditz with alabaster in 1708. It happened that Colditz clay was identical to Chinese kaolin, the hitherto secret ingredient that made porcelain so hard and glassy. Although it would be some years before Meissen porcelain could compete with the exquisite artifacts of Jingdezhen , the discovery nevertheless helped alleviate Europe's first, but not its last, balance of payments crisis with China.

Later, however, the creativity that led to Chinese innovations such as porcelain seemed to dissipate. In the late eighteenth and early nineteenth centuries China lost the technological lead it arguably had held for millennia. This decline was partly relative; the Industrial Revolution had thrown up a tumult of ingenuity that spread across much of Europe . But it was also partly that China itself was growing stale. Theories as to why this happened abound. One suggests that the rigidity of an imperial examination process that channelled intellectual energy into literature and neglected the sciences had an impact on technological inventiveness. Anotl1er maintains that a sharp growth in population made it cheap to hire workers, thereby inhibiting the development of labour-saving machinery. A third points out that deforestation deprived China of adequate supplies of wood, its primary energy source. A fourth theory had it that the regular military campaigns along China 's northern and northwestern frontiers diverted funding and focus away from peacetime pursuits. The Chinese government, for its part, blames its slide from technological pre-eminence on the rapaciousness of Western powers that attacked Chinese ports, peddled opium to its people and occupied parts of its territory. All of these theories would seem to contain a measure of validity. However, the work of Angus Maddison, a leading economic historian, shows that the decline, in terms of individual prosperity, started long before the eighteenth century.

The zenith of Chinese prosperity was in the Tang dynasty (AD 618-906), an era that is also regarded as a golden cultural age. Some of the most moving poetry dates from that era and the ceramic likenesses of courtesans, horses and camels fashioned then remain unsurpassed in their beauty. In those days, the country had several cities with a population of over half a million, whereas Europe 's proudest urban centres could boast of only tens of thousands of residents. The Tang was also an age of internationalism. The Silk Road ran from the central city of Chang ' an, or modern-day Xi'an , to the central Asian cities of Samarkand , Bukhara and beyond. The ports of Quanzhou and Guangzhou on the south coast were heavily engaged in trade, mostly with southeast Asia. Foreigners were present in numbers that were not to be equalled until the first half of the twentieth century. Not only did some 25,000 Turks, Afghans, Tajiks, Jews, Zoroastrians and Christians reside in Chang' an, but non-Chinese even occupied senior administrative, military and commercial positions. In southern trading cities, foreigners may have been even more numerous than in Chang' an. Perhaps as many as 100,000 non-Chinese may have lived in them during the first half of the Tang, before xenophobic massacres in 760 and 879 drove numbers down. (Joe Studwell, The China Dream, 2002, p. 4.)

But a couple of hundred years later, according to Maddison's figures, things started to slowly deteriorate. By 1400, Chinese were still richer on average than Europeans and the size of their economy was also larger than that of Western Europe . At that time, Chinese earned an average of $500 each (calculated at 1985 values) spread across a population of 74 million people, meaning that gross domestic product amounted to the equivalent of 37 billion 1985 dollars. Western Europeans, by contrast, were earning $430 per head and had a population of 43 million, so their overall economic output was worth $18'4 billion. In 1820, however, China 's per capita income remained at around $5°0, but Europeans were by then earning on average some $1,034 each. By 1950, the difference was even more dramatic. The Chinese were by then earning around $454 per capita, less than they had done in the fifteenth century. Europeans, by contrast, were pulling in an average of $4,902 each.(Angus Maddison, Dynamic Forces in Capitalist Development. A long-run comparative view, Oxford University Press, 199I, p. 10.

Even though Europe's population was still smaller than China 's, the value of its economic output was larger by several multiples. These figures show why it might not be appropriate to regard China in history as an economic superpower, at least by contemporary standards. For hundreds of years the country was locked in a cycle of growth without development. Its people, on average, were living the same lives in 1950 as they had done a millennium earlier, in spite of obvious changes in technology, customs and politics. The only impetus behind the expansion of the Chinese economy during those centuries seems to have been the increase in the size of its population. But this did not bestow prosperity and vitality to the people; rather it intensified competition for limited resources, inflated the death tolls from periodic famines and natural disasters and forced the government to expend more and more energy on social control. In short, though China was certainly a large economy and often the largest economy on earth, the lives of the majority of its people rarely rose above the level of subsistence.

There were other ways, too, in which China 's realities were not consistent with the image or idea of an economic superpower. In common usage, the word superpower implies a projection of influence. But China , since the Tang dynasty, has dwelt largely within itself. Although it traded with the outside world, the volume of this trade as a percentage of the size of its economy has been small - no more in the nineteenth century, for instance, than around one per cent of its gross domestic product. Therefore, the effect it had on the world around it was mostly that of a large, brooding presence that fought protracted wars along its borders. This was noticed at various times by various Western commentators but Adam Smith may have summed it up best in his 1776 masterwork, The Wealth of Nations.

China seems to have been long stationary, and had probably long ago acquired that full complement of riches which is consistent with the nature of its laws and institutions. But this complement may be much inferior to what, with other laws and institutions, the nature of its soil, climate and situation might admit of. A country which neglects or despises foreign commerce, and which admits the vessels of foreign nations into one or two of its ports only, cannot transact the same quantity of business which it might do with different laws and institutions. (Adam Smith, The Wealth of Nations, Book I, Chapter 9, in paragraph 1.9·15· 14)

It is neither a coincidence nor a surprise, therefore, that China 's economic ascent since Deng started reforms in 1978 has been accompanied by a level of openness to foreign commerce that is reminiscent of the golden age of the Tang. The fruits of this policy are also visible in figures: in 1975 - the nadir in well over a thousand years of economic history - Chinese earned 'on average just 7.5 per cent of the income of Western Europeans. But by 2000, there had been a startling turnaround, and incomes were back up to about 20 per cent of European levels.14 Which, to put it another way, means that Beijing has succeeded in turning the clock back to about 1850 - the last time that the wealth gap was so narrow.

The process by which China is turning back the clock and joining the world is not pretty or forgiving. It is full of human suffering, alienation and longing. And it starts with men like Wang Qiling, the head of a family of migrant workers. Wang, a slight, wiry man with eyebrows set in a frown, works as a caretaker at a weekend cottage rented by Westerners in a beautiful village on the outskirts of Beijing . The village grew up in the Ming dynasty (1386-1644), when its inhabitants were charged with guarding and tending the tombs of the emperors' favorite concubines. But after the Ming succumbed to an invasion of Manchu nomads from the northern steppes, the tombs fell into disrepair. Bricks from their perimeter walls were pillaged to build houses and the land inside them was used to plant fruit trees or crops. In recent years, one large, intricately carved marble slab that used to be an offertory platform to a concubine's spirit has become a makeshift ping-pong table for village boys.

Wang's home is far from Beijing , in a part of China that is so different it could be another world. He comes from the village of White Horse in a rural county several hours' drive from Chongqing , a place famous for 'hua jiao', the peppers that make 'palace treasure chicken' and other dishes taste numbing on the tongue. His birthplace is hot and humid, full of the shade from broadleaf trees and the sounds of insects. On the outskirts of Beijing , though, the air is dry, the winters long, the food strange and the locals mostly unfriendly. In particular, the couple who own the cottage next door to the one he tends are unpleasant, simply because they can be. They tell him to his face that his thick southern accent, which mixes up the tones that are essential to understanding Chinese, hurts their ears. They tell him he speaks worse than the foreigners he works for and that he should go back home, leaving the concubine tomb village to the people for whom it was intended.

When a macaque monkey which they kept tethered to a tree by their house broke free one day and bit Wang seven times, the couple saw no reason to apologize. They, after all, were successful people with a 100 cc motorbike who had given up working in the fields, borrowed some money and bought a sauna business in the nearby town of Changping . To them, Wang embodied the life they had left behind. He was a person of no consequence, a peasant. In his own way, however, Wang was engaged in the same project as his neighbors. He had walked out of his home village for the same reason as all of the 120 million people who make up the 'blind tide' of migrant workers. To escape. He had left his home, his wife and his teenage son for seven straight years because his job as a caretaker offered some hope of finding a path out of the myriad humiliations of poverty. Whatever the drawbacks of his current work - the loneliness, the way he missed seeing his son grow up and the strangeness of watching weekend guests spend the equivalent of several months' of his salary on an afternoon barbecue - they were not as bad as the memories of a childhood without enough food.

The escape that Wang was plotting was not his own but his son's. Without education or skills beyond farming, his own life was already set in its trammels. But his son had a chance at a future. Ever since he was born he had been costing his father extra; his name, Sifa, was a pun on the words for 'four fine' because, being the third child, his birth had marked the violation of an official quota that limited farming families to two children. The fine for breaking the quota in those days was 400 renminbi, the equivalent of about a year's income and an amount that Wang had been proud to fork out. Sifa had repaid the investment, excelling at school and becoming the first person from White Horse village ever to make it to university. He did not go to a prestigious campus like Peking or Tsinghua universities in the capital but his enrolment at college represented a first step on the single-plank bridge over the chasm that separates those who work with their brains and those who use their hands. All in all, though, it cost around 10,000 renminbi a year to keep Sifa at college more than Wang's annual salary.

That meant that at times Wang's daughters also had to help pay the bills. They were migrants too. One had joined the army of more than 20 million other migrant workers who had found employment in several new cities clustering along the waterways and highways of the Pearl River Delta near Hong Kong . The other, Qiping, had been a nanny to an English family, first in Beijing and then after that for a few years in London . She had come to the capital in the mid 1990s, several years before the 'blind tide's' high water mark. It was a daring move, one which her mother at the time had resisted on the grounds that it was not safe for a young country girl barely out of her teens to try to make a living in an unfamiliar metropolis. But Qiping had insisted, and things had gone her way. The family she worked for were kind to her, and she loved the children whom she looked after. In London they all lived in a nice house next to a park. Looking out over the park's well-tended lawns and arboretums, she did sometimes wonder why so much good agricultural land was being allowed to go to waste.

The most difficult thing about the UK was the cost. Although she was lonely she avoided making friends because of the outlay it entailed. Even a cup of coffee could set you back the equivalent of a week or more of spending money in White Horse. She saved everything she earned and in the four years that she lived in the UK , she did not buy one article of clothing. Even though she had a husband in China , she never phoned him. When he called her long-distance, she would berate him: 'Why do I have to endure loneliness here, away from my family and everything? To make money! But you are wasting our precious money on phone calls,' she remembers telling him on the phone. He would counter that he was using IP cards to call her because they were cheaper than the usual rates. He had to hear her voice, he would say. 'I am keeping these IP cards as a token of our love,' he told her once.

Aside from helping with Sifa's education, Qiling also kept some of her money for herself. Her savings - like those of all young female migrant workers - had a value beyond their nominal worth. Young women in rural China have to contend not only with the privations of poverty but also with an entrenched patriarchal system. When a rural woman marries, she leaves her own parents behind and becomes the property of her husband's family. 'A woman marries outward, in the same way that [waste] water is thrown from the house,' as an old saying puts it. She is expected to work for and obey everyone in the male line - her husband, his father and his brothers. Her only hope of changing this disenfranchised state is to give birth to her own power base, a son. But even if she manages this, she has to maintain vigilance towards her mother-in-law, who is often wary over her daughter-inlaw's growing influence. The mother-in-Iaw/daughter-in-law relationship has been a mainstay of literary tragedy, and for good reason. Although family hierarchies have loosened up in the cities, the countryside remains a cruel place for young women joining society.

Suicides among young rural women rank as one of China 's greatest social ills. The number of women who commit suicide about 500 a day on average - is much higher in both absolute and relative terms than in any other country. Some 56 per cent of the world's female suicides are in China, according to a study by the World Bank, Harvard University and the World Health Organisation. (Elizabeth Rosenthal, 'Study links rural suicides in China to stress and ready poisons', New York Times, 29 November 2002.) This figure, of course, does not include the very large numbers who try to kill themselves but fail. Swallowing pesticide, which is readily available, is the most common means employed. It yields a quick and intensely painful death, which can be averted if the woman's stomach is pumped in time. Although the general cause of suicide is a feeling of hopelessness and rejection, the trigger is often physical abuse. Newspapers are full of stories of gruesome matrimonial violence.

What women lack most in rural China is power and status, as the prevalence of suicide shows. The money that they earn, therefore, in factories on the coast or as housemaids and nannies in the large cities, or as prostitutes in bars, 'leisure centers' and motels all over the country is often spent on their return home in compensating for this deficiency. They buy things that confer an aura of importance. When Qiping got back from Richmond Park with the fruits of her youthful labor, about $10,000, she spent it on a house. Not just any house, but a four-storey, white-tiled building with I20 square metres of space on each floor. She could have fitted her London bedroom into one of its toilets. There was a large, flat-screen TV in one room, complete with a branded sound system. Elsewhere there was a DVD player and mod cons which she never used. The house had used all of her savings and some $ 5,000 in borrowings besides. But it was definitely worth it. Everyone now knew that she was a woman of substance, not a person to be trifled with. It was surely no accident that the home of her brother-in-law, just across the road from her own, was a full storey shorter than hers.

The story of Qiping is not quite typical. Most migrant workers are not nannies and they do not generally go abroad. They toil in factories in the Pearl and Yangtze River Deltas, or in steel towns such as Jinfeng, making heavy industrial goods or the things that fill the shelves in Wal-Mart, Metro, Target, Carrefour and other Supermarkets around the world. Few of them get welfare benefits, many work shifts of 12, 15 or even 18 hours a day and most of them earn Industrial Revolution wages. But still there are millions upon millions of rural people who are willing to do such work, not because they are attracted to it but because they are driven to it by the material and social privations bequeathed by Chinese history. Centuries of poverty and oppression have made village life in China anything but a rural idyll. Thus, people such as Qiping, her sister and her father in the concubine tomb village near Beijing are, in some sense, not so much economic migrants as émigrés from a cruel past.

Enter Prato. (spelled “Prada” in the August 2006 blockbuster movie with Meryl Streep.)

Prato has the second-largest Chinese population of any city in Italy , after Milan . Prato also has been the centre of the European textiles for more than 700 years and its brand was enriched by a history that no advertising could buy. Centuries of Florentine courtiers, including Machiavelli - the most sharply dressed of them all - had swathed themselves in its cloth. Prato also had designers that were second to none in the industry, and a glamorous list of clients: Armani, Prada, Ferre, Gucci, Max Mara, Patrizia, Pepe, Banana Republic, Valentino and Versace had all done their shopping here. Now, with the presence of the Chinese, it had another enviable advantage - access to probably the cheapest and most determined labour force in the world. Men, such as those outside the Xiaolin supermarket, for example, were willing to work nearly double the hours of their Italian counterparts for about half the compensation. A Chinese cloth and garment cutter, for instance, would expect to take home about 1,000 euros for a month of sixday weeks at fifteen hours a day, without any pension or welfare payments.

But  blessed by this confluence of good fortune and hard-earned expertise, Prato could not compete with textile towns in China, then what hope, ultimately, was there for the rest of a European industry which employed around 2.7 million people in twenty-five countries and had a turnover of 225 billion euro a year. And, by extension, what would the outlook be for the rest of European manufacturing? There are various estimates of the size of the Chinese immigrant population in Prato and all are complicated by the fact that many illegal immigrants do not register with the local authorities. The estimate of 20,000 is based on official publications and may well be on the conservative side. (Bruce Stokes, Italian textile town braces for the worst', National Journal, 2 October 2004.)

The first illegal immigrants began to arrive in the mid to late 1980s and, according to an artist who was among the first to arrive, children on the streets would look at them as if they were extraterrestrials. The numbers then were relatively small and they were absorbed naturally by the town's textile factories. But by the early 199os, they had become a potent economic force of some 10,000 cheap and often skilled workers. The combination ofItalian flair and Chinese labour fostered a mini-boom and the number of textile companies rose to around 6,000 in the mid 1990S from some 4,000 at the start of the decade. But the local Italian bosses had no way of knowing at the outset quite what they had let themselves in for. It would not have seemed worthy of note to them then that most of the people they employed to sweep the floors, cut the cloth and sew on labels came from Wenzhou , probably the most entrepreneurial place in all China .

Wenzhou is a port city in the province of Zhejiang south of Shanghai . A ring of high mountains that stand between it and the rest of China have inculcated into its people something of an enclave mentality. For centuries they have been more likely to look outward than inland for their opportunities, rather in the same manner as people from Goa, Malacca or Djibouti . Free trade has been their lifeline, and the city was one of the last places to submit to Communist rule after the 1949 revolution. Indeed, Communism always seemed an alien contrivance. During the Cultural Revolution - when merely talking about private enterprise could land you in a labor camp - some Wenzhou families owned their own farm animals, traded on the black market or provided services for a fee. With the advent of free-market reforms, the city was among the first to blossom and today it is a national centre for several industries, including shoes, agricultural valves, lighters, spectacles and garments, for which it seems to have no comparative advantage aside from the sheer force of will. Its businessmen are daring, diligent and sometimes ruthless. But what makes them unusual is the degree to which they work together. Thus if a Wenzhou businessman in some far-flung corner of China or somewhere else in the world has an idea that he thinks will fly, he can usually call upon quick, concessionary financing from an informal network of relatives and business associates. This is what happened in Prato . After a few years working on the factory floor, one after another of the Wenzhou workers decided to set up businesses on their own.

The numbers of Chinese-run firms registered at the House of Commerce in Prato rose from 2 I 2 in 1992 to 1,753 in 2003. Indeed, the same thing was happening elsewhere too. In Empoli, a Tuscan town that makes leather goods and garments, several hundred Wenzhou businesses also sprang up and in the Emilia-Romagna region embracing Bologna , Modena and Reggio Emilia, the number of Chinese-run factories also proliferated. Stories of how immigrant laborers in threadbare clothes walked off the factory floor one week and set up in competition with their former bosses the next began to fill the business pages of local newspapers. Of course, there were ups and downs and success did not always come easily to Prato 's newest type of entrepreneur. Wang Liping, for example, raised money from associates and relatives in Wenzhou to finance the purchase of a $35,000 container of thread. But when it arrived in Prato , he discovered it was too thick for Italian spinning machines. 'I lost every cent I invested,' he said. But six months later he tried again, this time borrowing from different associates. Now he runs a business selling thread and sewing machine accessories with annual revenues of around $1 million.

Another entrepreneur, Wang Yihua, a young woman with a company called Great Fashion, came to Italy in 1989 after a journey organized by snakeheads. On her first attempt, she had been caught hiding in the train's toilets in Erlian, a town on China 's border with Mongolia , and police sent her back home with a severe warning. But a few months later, still aged nineteen, she tried the same journey again and was successful. Now she drives a soft-top Volkswagen with furry dice dangling from the mirror, wears designer sunglasses and speaks fluent Italian. As well as the Chinese workers in her factory, she has also employed an Italian designer.

For a while, everyone seemed to benefit from Prato 's growing associations with China . The cheap thread and cloth that was coming out of Wenzhou, Nantong, Hangzhou, Suzhou and other textile towns was available not only to start-ups like Great Fashion but also to the long-established companies of the Pratese. As costs went down, business flourished and it seemed as if this mid-sized town in Tuscany had found an elusive formula, a way of harnessing the energy of a rising China to serve its ends. The local government embraced its unexpected good fortune. It set up an immigrant service centre to help those who arrived - illegally or otherwise - with their first few steps in Italy . It recognized the Wenzhou chamber of commerce in Prato as a local organization and cemented a sister-city pact with Wenzhou in China . As a demonstration of sincerity, Prato even funded the restoration of a Ming dynasty temple in Wenzhou by craftsmen sent over from Italy.

But the bonhomie was not sustainable. The illegal immigrants turned-entrepreneurs began to put their former Italian bosses out of business. Of the 6,000 or so textile companies that existed in 2000, less than 3,000 remained in mid 2005. Several Italian companies with more than a hundred years of history are hanging on by a thread. The main reason for this is that whereas in the past only one part of the process of making a garment was outsourced to China , now almost every step in the production process is being moved offshore. As spinning, weaving, cutting and sewing moves to Wenzhou , the Chinese factory bosses in Prato are better suited to the transition than their Italian counterparts. us had been founded on cloth. Outside the window was a statue of Francesco di Marco Datini, a fourteenth-century cloth merchant and philanthropist. The building in which we were seated was an old textile palace with trussed ceilings and alabaster statues of Roman emperors looking out from alcoves in the main hall. Delfino was philosophical about his town's visitation from China . He could see the diligence and agility of the people from Wenzhou , but he could also see, first in their arrival and now apparently in their gradual departure, that they threatened an indigenous culture. He did not know what the future held but he was sure that, somehow, the Pratese would find a way through.

Prato's predicament is common throughout the European textile trade and in all of Italy 's artisan industries. In Biella , a wool town near Piedmont , Chinese competition is forcing closures of factories that have lined the river there since the thirteenth century. Other companies, such as the cashmere garment firm Fratelli Piacenza, have moved production to lower-cost countries. In Montebelluna a cluster of companies that produced sports shoes have shifted production to an industrial park in Romania ; and in the south of the country, the footwear centre of Barletta , home to some 2,300 shoe companies, is reeling from stiff foreign competition.

Towns and industries such as these have faced competitive threats from overseas on several occasions before and on each occasion they have found ways to outmaneuver their rivals, either by moving into higher value-added areas or by emphasizing the excellence of their brand or concentrating on new designs. But this time there is no obvious refuge. China is competing in every area of textiles, as well as other manufacturing and artisan industries. At the low-cost end, huge Chinese factories are widely acknowledged to enjoy unassailable advantages. But even in haute couture - the preserve of famous brands such as Givenchy, Yves Saint Laurent, Versace, Valentino, Ungaro, Chanel and others the influence of China is palpable. It is not that Chinese brands have begun to compete in these areas; that may not happen for many years to come. Rather it is that several brand owners have undertaken large-scale outsourcing to China in an effort to offer good-quality fashion at more affordable prices. The result have been a narrowing of margins at the high end of the fashion industry and a Europe-wide dilemma over whether to follow the outsourcing trend at the risk of diluting brand values.

If most of the cloth available these days in Prato comes originally from China , then why would a fashion house not go directly to China to buy the same thing for less money? One problem they face, however, is that in the eyes of most of their customers, a large part of a brand's appeal lies in the knowledge that what they are wearing was made by artisans in traditional ways by companies with hundreds of years of history. The other problem with outsourcing is that when work is sent out to China , some key technology and know-how usually follow so that quality can be assured. But to transfer technology is to nurture competitors, and when those competitors reach a critical scale, the pressure for the whole industry to relocate to the cheapest, most efficient production centre becomes intense. (Suzy Menkes, China: Catastrophe for creativity or luxury opportunity?, International Herald Tribune, 27 September 2005.)

Such are the dynamics of global capitalism; the process is the same whether the industry in question is textiles, or autos, or shipbuilding or almost anything else. Only reactions to it vary. Some people are unsentimental about the social capital that is lost when a whole industry shuts down or moves away, but others feel they have lost part of themselves when a community to which they have given their life packs up and disappears.

The beautiful lake town of Como in northern Italy is a case in point. Since Roman times, Como has been a centre of the silk industry. The sensual cloth that flows in liquid harmony with the body's movements was a favorite of Cleopatra, the mistress of Julius Caesar and Mark Antony. The material she wore, which Pliny the Elder, the scholar, believed came from the 'hair of sea sheep' was imported from China both overland and by ship. By the fourth century AD it had become a common accoutrement in all civilized outposts of the Western world and the money spent on it was draining the wealth of a declining empire. In one of the first examples of industrial espionage, the emperor Justinian is said to have commissioned Persian holy men to smuggle the eggs of the bombyx mori, the silkworm, and mulberry seeds into Constantinople in 550. By the end of the sixth century the enigma of sericulture was being unraveled in many parts of Europe and Como flourished as a place that produced silkworm cocoons, spun silk and created finished garments. By 1840 the countryside around the town was given over to more than 3 million mulberry trees, the leaves of which supply the silkworm's only food.

When the Chinese silk industry started to recover about two decades ago, it became obvious that the silk material harvested and spun from Chinese silkworms was cheaper and of similar quality to that made in Como . So the first thing to be outsourced to China was the spinning and weaving work. Then much of the garment making went too and, later, some companies in the small town of Shengzhou in Zhejiang province got hold of the same computer controlled looms that gave Como an edge in quality control. Within a few years the Chinese, who run their looms all day and all night, were starting to put Como companies out of business and in the space of just seven years the number of computer-controlled looms in Shengzhou has jumped from eight to 670. The Chinese town single-handedly produces almost half of the world's silk neckties, while Como 's industry appears to be in terminal decline. The change has been so swift. To many in the Italian town it seems like only yesterday that Bill Clinton was seen on television around the world taking the oath of the presidency in a silk tie that came from Como .

In one sense, there is a historical symmetry to the rise of Shengzhou and the concurrent decline of Como ; it is as if the moth of the bombyx mori has decided after a I,500-year sojourn in Europe finally to fly back home. But for Moritz Mantero, whose company makes silk for ties sold by brands such as Ralph Lauren and Brooks Brothers, such observations are abhorrent. He has been to Shengzhou and found the smokestacks, concrete-block buildings and pollution of the place 'horrible'. At home, he has watched as some 20,000 silk industry jobs have disappeared since 2001 and dozens of long-established firms gone under. His company, he is confident, can survive by concentrating on precision manufacturing and excellent design. Walking around the stone mansion that has been the company headquarters since his grandfather's day, Mantero pointed out a room that holds the key to the company's future. Inside were some IO,OOO volumes of old design samples, many of them purchased from failed textile mills. He grasped one leather-bound volume, the 1893 spring collection of a defunct French garment maker. The patterns inside still seemed modern; a geometric sequence of ellipses which was at once reiterative and mystic. (Peter S. Goodman, China's Silk Noose Tightens, Washington Post, 18 December 2003.)

But even in design, the Chinese are catching up. When a Como corporate customer of Babei, the largest of Shengzhou's I,IOO tie makers, encountered difficulties in paying for the silk he had imported from China, Jin Yao, Babei's President, took his compensation in the form of the Italian company's design shop. In so doing, he bought access to the only segment of the industry in which the Chinese are not yet dominant. Now, back in Shengzhou, he will be able to marry designs from hundreds of years of Italian creative tradition to his company's ability to churn out 20 million ties a year. That is a combination that might just finish Como off.

Enter The Diplomats.

It is said that in state-to-state diplomacy there is no such thing as friendship, only periods when mutual interests coalesce. But when Chines President Jiang Zemin and his wife, Wang Yeping, visited France , Chirac invited them to a weekend at Chateau Bity, the sixteenth-century home in the Correze region of central France that Chirac and his wife, Bernadette, usually keep sequestered from their political commitments. Indeed, when Hillary Clinton visited the local town of Sarran , of which Bernadette is deputy mayor, she was given a tour of favourite Chirac haunts in the town but never made it as far as the family chateau. The special treatment for the Jiangs was extended later to the whole concept of China . The Eiffel Tower was illuminated in the red of the Chinese flag to mark a 'Year of China' in France, and, as part of a reciprocal 'French Culture Year' in China, eight jets from the French airforce swooped over the Great Wall, leaving tricolour trails behind them. Chirac maintained in a speech at Jiang's alma mater in Shanghai that things were getting so close between the two nations that a state of 'brotherly love' had developed. (See, Chirac calls for closer ties, Shanghai Daily, 12 October 2004.)

Was all this merely politics as usual, or did Chirac really harbour special feelings for Jiang and the Chinese people? Certainly, he cannot have been oblivious to the commercial utility of friendship with Beijing; in late 2004 the French companies that accompanied his visit to China garnered contracts for Airbus planes, Alstom trains, water treatment plants, hydroelectric equipment and wheat that were valued at 5 billion euros. (James Kynge and Martin Arnold, 'Chirac hails Beijing as trade deals are set up', Financial Times, 11 October 2004 and 'French firms sign big deals with China', Business Daily, 11 October 2004.)

 But from another perspective, his overtures to Beijing were far from universally popular at home. Alain Madelin, President of the Liberal Democratic Party, likened Jiang to the former Chilean dictator Augusto Pinochet and said there should be a limit to the red-carpet treatment he received in France . Similarly, Wei Jingsheng, China 's most famous exiled dissident, poured scorn on Chirac's appreciation of Jiang's calligraphy. 'Everyone in China knows that Jiang writes like a child,' he said. 'Chirac is making a fool of himself.( Chinese president's visit throws Chirac into hot water, Agence France-Presse, 22 October I999·)
 Perhaps, after all, Chirac's willingness to suffer the slings and arrows of domestic criticism proved that his ardour was genuine.And then again, perhaps not. Only a few months after he assured Beijing that China 's rise was a wonderful thing that offered rare opportunities for French growth and job creation, the French President completely changed his tune. Sitting next to Gerhard Schroder, the German Chancellor, at a meeting to discuss the future of Europe, he said: 'We have a real problem in Europe . The considerable increase in Chinese textile exports to our countries calls into question the jobs of thousands of workers. We cannot accept a death blow to the jobs of a significant number of workers in our countries. (Chirac says EU measures on Chinese textiles not enough, AFX Asia, I9 May 2005.)

So why the volte-face? The commercial relationship between France and China had not objectively changed and the 'friendship' between the two countries was still nominally intact. What was different was Chirac's perception of his political interests. France was about to vote in a referendum, and the issues of jobs and competitiveness were paramount.

Ostensibly, the subject of that referendum was whether or not to approve a new European Constitution which opened the way for an expansion of the European Union beyond its twenty-five member states. But, in reality, the vote in France was generally about whether people were satisfied with their lot and, more particularly, whether they felt that the previous EU expansion from fifteen to twenty-five members had benefited them. The answer to these questions, first in France and then in the Netherlands , turned out after the vote to be an emphatic 'no'. Various theories have been advanced as to why both countries voted against the adoption of the European Constitution and the further enlargement of the Union . But the dominant concern appears to have been unemployment, and especially the migration of jobs to the new EU members in Eastern Europe . The referendum result was, fundamentally, a conservative cry against the loss of social benefits and a decline in the prevailing quality of life.

The referendum rejection was a painful political blow for Chirac and it threw the whole European project into crisis. Several politicians have since tried to reignite the cause of greater European unity and to point ways out of the current malaise. UK Prime Minister Tony Blair, for instance, warned of 'failure on a grand, strategic scale' if EU member nations were to drift apart, turn their back on globalization or ignore the need for reform of Europe's institutions. (Europe's new protectionism - Charlemagne, The Economist, 2 July 2005 and, among many others that reported this speech, Nicholas Watt, 'Wake up and change, Blair tells EU', Guardian Weekly, I July 2005.)

The way to inject new growth and energy into Europe , he said, included investment in knowledge, in active labor market policies, in science parks and innovation, in higher education, in urban regeneration and in help for small businesses. In a speech to mark the UK Presidency of the EU, he added that the Union's social model needed to be modernized and a system of farm subsidies that claims 40 per cent of EU budget revenues gradually overhauled.But Blair, in common with other Establishment EU politicians who have addressed the subject, has failed to give an accurate accounting of the competitive threat Europe faces. The impact of China 's rise is not something that can be mitigated by a few incremental reforms, some reallocation of budgetary resources and the launch of several initiatives to spur innovation. It is a challenge unprecedented in the annals of global capitalism; the product of epoch-making changes under harsh conditions in the world's most populous country. The events unfolding in Prato and Como are merely early soundings of the shape of things to come. One early example of trade friction was the 'bra wars' spat over the entry of super-competitive Chinese textiles to Europe . Tomorrow it will be electronics, motorbikes, steel, chemicals, cars and cartoon animations. The simple, unpalatable truth is this: that in many areas of manufacturing, European companies cannot compete in the longer run - no matter what countermeasures they or the EC may take.

Some examples illustrate this point. An Italian company, Seves SpA, had two factories making heavy glass insulators in Europe, one in Italy and one in St- Yorre, France . It had to decide which one to close after competition from China convinced the management that manufacturing in Europe was not sustainable. It chose to close the French factory because its workers were 57 per cent more expensive than those in Italy and worked 19 per cent fewer hours. (March Champion. French Socialist Works to Keep Voters in "No" on EU Constirution Legislator Taps European Frustration with Leaders, Bloc's Recent Growth - Chirac Makes a Televised Appeal', Wall Street Journal Europe, 27 May 2005.)

What surprised the management were the savings they gained when they built a new plant near Shanghai . The starting salary for a production line worker was 2,600 euros a year, compared to 17,000 euros in St-Yorre. The company offered to rehire any of its French workers willing to make the trip to Shanghai , but none volunteered.

Schiess, a 140-year-old maker of heavy-duty lathes and boring machines based in the East German town of Aschersleben , typifies the 'Mittelstand' machine tool makers who are the backbone of the German economy. But even though Schiess is in the former East Germany , where wages are lower than in the West, the differential between Germany and China is still large. A skilled worker in Aschersleben makes $2,000 to $2,600 a month, while in China a worker of similar ability gets $400 or less. That is why Shenyang Machine Tool decided to shift many of Schiess's jobs back to China after it bought the company in early 2005.

ABB, the Swiss engineering giant, plans to hire 5,000 new employees by 2008 in China and more than half of these will be engineers. They would be in addition to the 7,000 employees currently working for the company in China in different divisions in thirty large cities. During the same time, there are no explicit plans to hire any workers in Europe . 'Our feeling is that we are over-invested in Europe and under-invested in low-cost countries like China ,' Jiirgen Dormal, the chief executive, said. 'We have too many factories in Europe and buy too many of our raw materials in high-cost countries.' Similarly, IBM has announced a plan to layoff its 13,000 workforce in Europe . There is no end in sight to the trend that these examples illuminate. Faced with Chinese competition, companies either shift production to places such as the Pearl River or Yangtze Deltas, or move to one of the new members of the ED in Eastern Europe such as Poland , Hungary and the Czech Republic . The deepening of the employment crisis in 'core' European countries that results from these actions represented one of the biggest electoral challenges facing several European politicians such as Schroder and Chirac. Germany is in the grip of its worst employment crisis since before World War Two, with over 12 per cent of its workforce, or around 5 million people, without a job. Throughout the EU, the unemployment rate is around 9 per cent, and real wages in sectors such as manufacturing are falling. A further complication is the relatively low number of those laid off who are able to find new jobs in the service sector. This is partly because jobs in accounting, law, financial and risk management, healthcare, information technology and several other service areas are also in the process of migrating to India and China .

As people fear for their jobs, understandable conservative reflexes - such as those displayed in the French and Dutch referendum votes - can fuel protectionism and jealousy. At this point, it can take all the energy and determination of political leaders to prevent a general regression into chauvinism. The pain inflicted by the type of deep and structural reform that Europe needs can make such reforms difficult to sell to the electorate. The nature of the European malaise so harshly exposed by China 's emerging prowess is that the working populations of 'core' Europe are - by many multiples - compensated too generously for producing too little. But, for politicians, it can be tough to sell a promise of downsizing, off shoring, outsourcing and falling real wages to European electorates already saddled with 20 million unemployed. Intellectually, many in Europe may find it distasteful that the EC runs a subsidy under which cows get more than $2 a day - more than the average daily income of 700 million Chinese. But when the consequences of any rapid unraveling of the agricultural subsidy system - the mass bankruptcy of small farms, the decline in land values and the distress of rural communities - are contemplated, the appetite for change may wither. China was able in the five years from the onset of the Asian financial crisis in 1997 to layoff more than 25 million workers from its inefficient and heavily subsidized state-owned enterprises Jack Ewing and Dexter Roberts, Chinese Are Coming  to Germany; Mainland companies are opening up shop - and setting their sights on the manufacruring sector. (Business Week, 21 February 2005.)

The fruits of that stern therapy are now evident in the competitive shock that is hitting Europe and America . But China is not a democracy. The state did not have to seek the permission of its people to 'smash the iron rice bowl' of socialist welfare or turn its back on the ideology of Communism. When workers rioted, protested, petitioned or dissented, it answered with well-honed authoritarian tactics. The result has been that state-financed social welfare has in the space of less than a decade ceased to be a millstone for the corporate sector. The housing, schooling, healthcare and pension obligations that over 300,000 state companies used to meet on behalf of their workers have now been eliminated, reduced or privatized. China today is a great deal less socialist than any country in Europe; the 120 million or so migrant workers, for instance, receive no welfare at all.

Not only is the cost of employing a Chinese worker a fraction of that in Germany, France and Italy - and roughly between one-sixth and a quarter of the going rates in Eastern Europe's EU members - but also state expenditure in China is lower as a proportion of gross domestic product than in the countries of Western Europe. That means that the taxes the government levies on its corporations and its people can also be lower. In Germany, for instance, state expenditures came to 47.8 per cent of gross domestic product in 2004- An accurate figure for China is more difficult to calculate because of various categories of quasi-governmental financing, such as funding by state banks for state infrastructure projects, which are not normally included in the official figures. Nevertheless, narrowly defined Chinese state expenditures, as a percentage of gross domestic product, come to less than half of German levels. Total government expenditure has been around 2 I per cent of China 's gross domestic product in recent years. (See 'China risk: Macroeconomic risk', Economist Intelligence Unit, 15 November 2005.)

These discrepancies define the challenge China presents to the social democratic model that Europe so painstakingly constructed from the ruins of World War Two. But it is far from clear whether, faced with this challenge, Germany and France - and to a lesser extent, the other countries of Western Europe - possess the will or ability to smash their own 'iron rice bowl'. Sometimes, the rhetoric seems to be moving in the opposite direction. Just as Marx and Engels are losing their Far Eastern constituency of 1. 3 billion, they may be gaining ground back in their ancestral homeland. Franz Muntefering, Chairman of the ruling Social Democratic Party, told listeners in Berlin in 2005 that 'the growing power of international capital' with its 'unbridled greed for profit' represented a 'threat to democracy'. (Theil, Capitalism? Nein' Schroder and his Social Democrats rediscover Karl Marx. Alas, it's more than election opportunism, Newsweek International, 9 May 2005.)

This was followed a few days later by President Schroder taking issue with the evils of an 'unrestrained neo-liberal system'. Other politicians warned of 'predator capitalists', while Muntefering later lambasted faceless foreign investors who were descending on Germany like 'swarms of locusts'. From the context of his remarks, he appeared to be pointing the finger at the UK and the US, but he could just as easily have been talking about China.

Conclusion

From a global perspective, China 's emergence is of enormous economic benefit. The value created by the release of 400 million people from poverty, the migration of over 120 million from farms where they perhaps raised chickens to factories where they churn out electronics, the quantum leap in educational standards for tens of millions of children, the construction of a first world infrastructure, the growth of over forty cities with populations of over one million, the commercialisation of housing and the vaulting progress up the technology ladder have helped unleash one of the greatest ever surges in general prosperity. The prime beneficiary of this has been China itself, but the mobilisation of wealth on such a scale is necessarily, in aggregate terms, lifting the fortunes of the planet. Some specific advantages are already evident. Beijing's towering pile of foreign currency reserves, which in late 2005 stood at over $7IO billion, has been used to a large extent to buy US Treasury bonds. Not only has that helped the American government to finance public spending and pay for the war in Iraq , but it has also assisted in keeping interest rates low. The depressed level of US interest rates has, in its turn, set a standard for the world and led to a property boom in most developed countries. At the same time, the manufacture of ever cheaper products such as those on sale in Yiwu has meant that people's purchasing power has strengthened.

Regionally, however, the benefits are unevenly spread. Generally, the countries that have gained most are those that are rich in energy and other resources but do little in the way of manufacturing. Africa has seen particular advantages. Trade between China and the countries on the African continent has tripled in the last three years and helped power a boom that was expected to carry African growth in 2005 to its highest level in thirty years. (Ernest Wilson III, Senior Research Fellow, Center For International Development and Conflict Management, University of Maryland. Influence of China in Africa . Congressional Testimony. Committee on House International Relations Subcommittee on Africa , Human Rights and International Operations, 28 July 2005.)

In Asia, too, the picture is generally positive. Trade with the ten member nations of the Association of Southeast Asian Nations was expected to exceed $130 billion in 2005, up by about a third over one year earlier. In northern Asia, things have been equally vibrant, with South Korea and Japan now both counting China as their largest trade partner. Australia has been a clear winner, exporting iron ore, alumina, natural gas and a host of other resources and commodities. In Latin America, the picture is more mixed, with a surge in commodity and resources trade offset somewhat by the impact of bruising competition with the manufacturing industries of Mexico and Brazil. ('Asian-China ties in 2020: stronger and deeper?' The Nation, Thailand, 29 November 2005.)

But Europe and America had a much more turbulent time, and, because of the way that global power is distributed, it is here that a key challenge to China 's future may reside. With trade amounting to more than two-thirds of the size of China 's economy (compared to around a quarter for other large economies), Beijing is clearly vulnerable to the protectionism that might follow a removal of the West's goodwill. Many of the achievements of the last twenty-seven years might not have been possible without the infusions of overseas capital, expertise, technology and the access to foreign markets. But America and Europe, in large part due to homegrown deficiencies, are finding it increasingly tough to identify a net advantage from their engagement with China. A key question for the future, therefore, is not so much how China 's rise will affect the world but to what extent the world will allow China to continue its ascent. While a general shutdown in trade would have a catastrophic impact on the global economy and is therefore unlikely, even a partial pruning of commercial links or a gradual upsurge in Western protectionism towards China would have profound effects on the world's wellbeing and create tensions that could spill over into other areas. From an economic perspective, such an outcome would be irrational because a curtailment of trade hurts the protected as much as those they are seeking protection against. But such decisions rarely come down to dispassionate economic analysis; they turn instead on the perceptions of electorates - people such as those in Rockford, Illinois or Prato in Tuscany or a thousand other places reeling from China's manufacturing might. And therein lies the rub.

Generally speaking, Americans, and to a lesser extent Europeans, do not  credit the Chinese for the improvements that they have brought to their lives. A lot of the 'good' that China does to the economies of the US and the EU is less visible than the blame it attracts for its deleterious impact on jobs. Thus, if a politician runs for office promising to prevent the outsourcing of jobs under 'unfair' trade conditions to a Communist behemoth that fails to uphold intellectual property rights, fixes its currency's exchange rate and exploits its own workers, he can be virtually assured of tapping into a ready-made, populist agenda. By contrast, a case built on the accurate but more nebulous argument that free trade benefits those who engage in it may not achieve the same pulling power.

China is peculiarly vulnerable here. It cannot allow independent trade unions to be formed because they might pose an intolerable challenge to the Party's authority. Neither does it have much leeway to allow free fluctuation of the currency, because even a modest appreciation could wipe out the profit margins of manufacturers who have yet to build up their brands. And as for being a Communist behemoth, well, that is difficult for Beijing to address because although it is no longer Communist, it is still ruled by the Communist Party. All of this points to an uncomfortable paradox: that China owes its emergence in large part to the free-trade system created by America since the war, but in many ways it is still not a creature of that system. In several aspects, its economy, political system, culture, military posture and values are different from most of the other nations that have reached maturity under the Pax Americana.

In the past, this may not have mattered much. China's differences with the West have not caused the West to turn away from China during the last two and a half decades (with the exception of a brief period after the Tiananmen massacre in 1989), so why should they start to make a difference now. The answer to that question is linked to early 2004 when the manhole covers were disappearing from drains all over the world to feed the churning hunger of Asia 's rising giant for scrap steel. At that time, a Rubicon was crossed. China 's future was destined to be different from its past. Even though the central government did not control the nation's appetite, it had no option but to do everything in its power to satisfy it. Failing to do so could have precipitated panic or a sudden economic collapse of the sort that could shake the timbers of Party authority. Whatever else happened, China had to be fed.

A new era in international relations dawned, one defined by the geopolitics of scarcity. Greater and greater competition, both commercial and political, began to set one country against another in pursuit of finite resources and energy. As recently as five years ago, Beijing 's leaders hardly had to worry about where and how their companies would secure supplies of oil, gas and a host of traded commodities and resources. In those days, the country's demand, though significant, was relatively easily accommodated on world markets. But now it is the second-largest importer of oil in the world after the US. Its imports of aluminium, nickel, copper and iron ore have risen from an average 7 per cent of world demand in 1990 to a predicted 40 per cent by the end of this decade. (David Zweig and Bi Jianhai, 'China's global hunt for energy', Foreign Affairs, September/ October 2005, p. 25.)

Beijing has therefore become anxious in case supplies of crucial inputs run out or are diverted to other countries, thus threatening the growth that produces the 24 million new jobs it must create every year. Thus scarcity, or finding ways to alleviate it, has in a few short years leapt up Beijing 's agenda to become the key motivator of foreign and domestic policies.

The imperative to tend to its cravings has brought China more and more into strategic and diplomatic conflict with the US . Because it has no slack in the decisions of where to sate itself, Beijing has had to strike deals for access to resources as they have become available, wherever they have been. 12 Many have been with countries that are rivals of the US or designated as pariahs by Washington . Thus America is watching with rising angst to see if Beijing enters agreements that impinge upon vital interests or threaten its own established energy supply lines. So far, the situation has not revived the dynamics of the Cold War, when great powers jockeyed for influence in third-world countries around the world, but the conditions are there for it to become so. Take, for example, the Latin American nation of Venezuela , the world's fifth-largest oil producer. It is run by Hugo Chavez, a socialist ally of Cuba 's Fidel Castro who accuses Washington of plotting a coup to kill him and seize his country's oil resources. He has used the forum of the United Nations to brand America a 'terrorist state' and has pledged at home to reorientate his economy away from its dependence on the US . But in spite of this, Venezuela is an important source of oil for the US , supplying some three million barrels a day to the world's superpower.

Recently Chavez started trying to find alternative clients for the oil exports and China is top of his list. He was invited to Beijing in 2004 for a warm welcome and, while there, signed agreements that could bring Chinese investments in Venezuela 's oil sector to $3 billion, double the existing amount. In 2005, the new affinity continued, with Zeng Qinghong, the Vice-President, receiving a friendly welcome from Chavez in Caracas . The Venezuelan President told Zeng his country had an 'extreme interest in becoming a safe supplier of oil and oil derivatives to the People's Republic of China'.

The not-so-safe subtext, though, was that if long-term supply contracts with China are eventually signed, they may be honoured at the expense of the US supplies and Washington is already on tenterhooks. As Condoleezza Rice, the US Secretary of State, has said, the US 'welcomes the rise of confident, peaceful and prosperous China' but hopes it will be 'able and willing to match its growing capabilities to its international responsibilities'. In other words, it does not want to see Beijing befriending Washington's rivals in order to divert away the oil supplies that sustain American growth. (Glen Kessler, 'Rice Puts Japan at Center of New US Vision of Asia; China Challenged in Major Speech', Washington Post, 19 March 2005.)

Elsewhere, the issue is not that China may impinge on US supply lines, but that in its alacrity to shore up supplies, it is forging ties with countries that Washington has made a policy of isolating. Sudan is a case in point. In 1997, when the predominantly Muslim government in Khartoum was engaged in a gruesome war against Christian rebels in the south, Washington imposed a ban on US companies from doing business in the East African country. This gave the Chinese a clear run at tapping into its oil reserves. In the years since, Sudan has become China 's largest overseas oil project and China has turned into Sudan 's biggest supplier of arms. Chinese-made tanks, fighter planes, bombers, helicopters, machine guns and rocket-propelled grenades have added new impetus to the civil war between the north and south of the country which has already lasted for two decades. The money to buy those weapons, meanwhile, has come from oil revenues generated largely by the activities of the state-run China National Petroleum Corporation.

China National Petroleum owns 40 per cent, the largest stake, of the Greater Nile Petroleum Operating Co., a consortium that dominates Sudan 's oilfields. Another Chinese firm, Sinopec, is erecting a pipeline over hundreds of miles to Port Sudan on the Red Sea, where China 's Petroleum Engineering Construction Group is building a tanker terminal. The total investment runs into billions of US dollars and as production increases, Sudan has come to furnish China with 10 per cent of its total oil imports. But the benefit derived from this has to be weighed against the cost to Beijing 's reputation. Not only has China become the chief supporter of a government that has perpetrated repeated instances of genocide but, according to human rights groups and locals quoted by Peter Goodman, a reporter for the Washington Post, the construction of Chinese oil rigs has also led directly to the slaughter of Sudanese people. (Peter S. Goodman, 'Blood and oil: China's involvement in the Sudan oil industry contributes directly to a regime that is widely accused of systematically massacring civilians, critics charge', Washington Post, 24 April 2005.)

The US-funded Civilian Protection Monitoring Team, a nongovernmental organisation, has asserted that government troops have sought to clear a cordon sanitaire around oil installations by moving out the mostly ethnic Nuer and Dinka tribes who lived there. On 26 February 2002, the Nuer town of Nhialdiu was wiped out during one such operation to make way for a Chinese well that now functions in the nearby town of Leal . Mortar shells landed at dawn, followed by helicopter gun ships directing fire at the huts where people lived. Antonov airplanes dropped bombs and roughly 7,000 government troops with pro-government militias then swept through the area with rifles and more than twenty tanks, according to Goodman's report, which was based on numerous local sources. 'The Chinese want to drill for oil, that is why we were pushed out,' Goodman quoted a local, Rusthal Yackok, as saying. Yackok added that his wife and six children were killed in the operation. The chief of Leal, Tanguar Kuiyguong, who lost three of his ten children on that day, told Goodman that around 3,000 of the town's 10,000 inhabitants died and every house was burned to the ground.

There is no evidence, however, that the Chinese government or its largest oil company had any advance notice of the Sudanese government's scorched-earth strategy at Leal. Beijing also brushes off any suggestion that it is complicit in Sudan 's genocide. As Zhou Wenzhong, a Deputy Foreign Minister, said in 2004: 'Business is business. We try to separate politics from business. I think the internal situation in Sudan is an internal affair, and we are not in a position to impose upon them.' A few months later, though, Chinese diplomats successfully diluted the impact of a United Nations resolution condemning Khartoum , thereby undermining Washington 's efforts to threaten sanctions against Sudan 's oil industry in protest at other waves of genocide in the Darfur region of the country. Having watered the resolution down, however, Wang Guangya, the ambassador to the United Nations, denied that his actions had anything to do with a desire to protect Chinese state oil interests in the country. (UN Security Council Deadlocked over New Sudan Resolution, Dow Jones International, 18 March 20°5. See also Evelyn Leopold, 'UN Council votes for sanctions on Darfur offenders', Reuters, 29 March 2005.)

But expecially in a report early  Summer (2006) Amnesty International sayd that China's highly secretive arms exports were estimated to be worth more than one billion dollars a year. Recent deals brought to light by Amnesty included the sale of more than 200 Chinese military trucks to Sudan in August 2005 which it says were normally fitted with US Cummins diesel engines.The report cites "regular Chinese military shipments to Myanmar," including 400 military trucks sent in August 2005 despite "the torture, killing and forced eviction of hundreds of thousands of civilians."China's deals with Nepal in 2005 and 2006 included the sale of 25,000 Chinese-made rifles and 18,000 grenades at a time when the government was brutally repressing civilian demonstrators. Thus China's behavior could pose an obstacle that civil society maybe cannot overcome on its own. Civil society can exert pressure on the multinationals, but not on China or India. The energy policy pursued by these countries will require the attention of government.

Sudan is by no means the only country in which Beijing has pursued energy and resources at the expense of its international reputation. When the President of Uzbekistan, Islam Karimov, visited Beijing in 2005, the government rolled out the red carpet for him in spite of the fact that just twelve days earlier the Uzbek army had killed hundreds of civilian protesters in a town square in the east of that Central Asian nation. The feting that Karimov enjoyed in the Chinese capital contrasted with an outcry elsewhere in the world, and with the calls for an international inquiry from the US and its North Atlantic Treaty Organization allies, which at that time maintained military bases on Uzbek soil. In Beijing , however, Karimov got a twenty-one-gun salute in Tiananmen Square and there was never a public mention of the events that had unfolded in Andijan, the city in the Fergana Valley where the atrocity had taken place. It was not long, however, before clues emerged as to the real motivations behind China 's courting of a 'reliable friend', as the state media referred to Karimov. The Uzbek President had brought with him a $600 million deal that allowed China National Petroleum access to twenty-three Uzbek oilfields. (China Strengthens Alliance with Embattled Uzbekistan Leadership', Voice of America , 26 March 2005. See also 'Guest of dishonour', Globe and Mail, 28 May 2005 and Mark Magnier, 'Slaking the dragon's thirst. China 's energy quest', Los Angeles Times, 7 August 2005.)

A couple of months after Karimov, it was the turn of Zimbabwean dictator Robert Mugabe to accept a twenty-one-gun salute, a small loan and some encouraging words from Hu Jintao. Much more substantive than these ties with either Uzbekistan or Zimbabwe , however, has been China 's warming relationship with Iran , another country high on Washington 's list of pariah states. Iran supplies 11 per cent of China 's oil imports, so it is already a crucial resource partner. But the level of reciprocal interest is set to surge as Sinopec, the second largest state oil firm, implements an oil and natural gas agreement with Tehran that is said to be worth as much as $70 billion - the biggest' energy deal yet by any member of OPEC, the cartel of oil-producing companies.Under this agreement, Beijing is committed to develop the giant Yadavaran oilfield and buy 250 million tonnes of liquefied natural gas over the next thirty years. Tehran has also agreed to export to China some 150,000 barrels of oil per day at market prices for twenty-five years. (Iran Leaves Europeans Out in the Cold', Pet1'oleum Intelligence Weekly, 7 March 2005.)

The ballast that this deal has given to bilateral ties has made Beijing a loyal friend of Tehran in the UN Security Council, where China is one of only five countries with the power to veto any resolution that is proposed. It has put that power, or the aura of it, to work over the last couple of years in deflecting successive attempts by the US to impose sanctions through the UN on Iran 's energy sector. Washington suspects that Iran may be developing nuclear weapons technology and had hoped to use the threat of sanctions to force Tehran to demonstrate to the UN's nuclear watchdog that it has not broken the Nuclear NonProliferation Treaty, an international agreement that seeks to stem the spread of nuclear weapons and weapons technology. But this avenue now appears effectively blocked by China 's maneuvering in the Security Council. The anxiety this causes in the White House is hard to overestimate: preventing Iran from developing the bomb has long been a cornerstone objective in the State Department's global view.

It is true that fostering warmth between peoples may not, ultimately, be sufficient to prevent outbreaks of violence between states, but it can inhibit the escalation of peacetime competition into outright hostility. And that could be crucial for China and the West, because the competition that is already roiling commercial and diplomatic relations is of a powerful nature and is set to intensify.

In China today, elementary school students learn that the first among ten 'must-know' historical facts is that Communist China was founded on 'one hundred years of Chinese people opposing foreign aggression'. (Leslie Chang, China Battles the Present with the Past - "Us Against the W orId" Mentality Dominates the Nation's History Lesson, Asian Wall Street Journal, 24June I999,p. 7)

There is also no suggestion in Chinese school books that Japanese people of today may be different in their attitudes to the soldiers of the Imperial Army that swept through China before and during World War Two. But this is one of the subjects that will be continued in our extensive case study below.

China's emergence is of  economic benefit however. The value created by the release of 400 million people from poverty, the migration of over 120 million from farms where they perhaps raised chickens to factories where they churn out electronics, the quantum leap in educational standards for tens of millions of children, the construction of a first world infrastructure, the growth of over forty cities with populations of over one million, the commercialization of housing and the vaulting progress up the technology ladder have helped unleash one of the greatest ever surges in general prosperity. The prime beneficiary of this has been China itself, but the mobilization of wealth on such a scale is necessarily, in aggregate terms, lifting the fortunes of the planet. Some specific advantages are already evident. Beijing's towering pile of foreign currency reserves, which in late 2005 stood at over $7IO billion, has been used to a large extent to buy US Treasury bonds. Not only has that helped the American government to finance public spending and pay for the war in Iraq , but it has also assisted in keeping interest rates low. The depressed level of US interest rates has, in its turn, set a standard for the world and led to a property boom in most developed countries. At the same time, the manufacture of ever cheaper products such as China's willingness to elevate the agendas of resource-rich pariah states to the United Nations Security Council is a major departure in the way that it conducts itself. But so far, Washington's warnings have gone unheeded, In June 2005, Chris Hill, the Assistant Secretary of State for East Asian and Pacific Affairs, told a subcommittee of the US House of Representatives that an important task for the United States and its Asian allies was 'to ensure that in its search for resources and commodities to gird its economic machinery, China does not underwrite the continuation of regimes that pursue policies seeking to undermine rather than sustain the security and stability of the international community'. ('US seeks China as global partner, assistant secretary of state for East Asian and Pacific Affairs says', US Fed News, 7 June 2005.)

A few months later, with no observable change in China 's behavior, Robert Zoellick, the US Deputy Secretary of State, was more blunt. ' China 's involvement with troublesome states indicates at best a blindness to consequences and at worst something more ominous,' he said. He added that if Beijing tried to use its influence to 'push the US out, they would get a counter-reaction'. (Daily Press Briefing for 8 March - Transcript, State Department Press Releases and Documents, 8 March 2005.)

The first ripples of that 'counter-reaction' may already be evident. The failure of the bid by CNOOC, the oil firm, for its US counterpart, Unocal, in the summer of 2005 was an indication of how sensitive American public opinion has become towards a rising and potentially threatening China . That is because by objective reckoning, the approach of China 's third-largest oil company to the mid-tier American producer did not represent a threat to US national security in any way at all. The total output from Unocal's American oil wells, after all, satisfied just one per cent of US consumption. But in a democracy, it is emotion rather than objectivity that counts. With China courting US rivals in several parts of the world, issuing statements calling upon the US to get out of its military bases in central Asia and absorbing outsourced American jobs, Congressmen, understandably, did not find themselves in a mood to assist its oil companies. Neither was CNOOC's cause enhanced by the comments of a Chinese general just days before Congress was due to vote for or against CNOOC's bid proceeding. In prepared remarks to international journalists, the general, Zhu Chenghu, warned that if 'the Americans draw their missiles and position-guided ammunition onto the target zone on China 's territory, I think we will have to respond with nuclear weapons. We Chinese will prepare ourselves for the destruction of all the cities east of Xian [in central China ]. Of course, the Americans will have to be prepared that hundreds of cities will be destroyed by the Chinese.' It was no surprise after that, that the House of Representatives voted 398 to 15 to refer CNOOC's bid for review by the President on national security grounds.

Statements such as General Zhli's make a strong impression, no real matter how representative or otherwise they may be of Beijing 's real intentions. The CNOOC failure, though important, was just one deal. But it illuminates the much larger and very real danger that, one day, the US Congress and the American electorate will come to see China unequivocally as an enemy in prospect. If that perception begins to gel, then it may start to condition Washington 's thinking on a panoply of strategic and commercial issues and lead to the step-by-step reversal of the policy of engagement that has underpinned China 's rise over the past twenty-seven years. If the sense of China as an adversary permeates deeply enough into the US political psyche, then a whole range of familiar anti-Beijing arguments - that it is an unfair trader, a manipulator of its currency's value, a pirate of intellectual property, an exploiter of its own workers, a beneficiary of subsidised financing from its state banks and others - may grow in potency. But Beijing, goaded on by its insatiable appetite, may have no room to concede ground to American public opinion, creating an impasse that could trigger progressively stronger counter-reactions from the White House.

To some, this scenario will seem far-fetched. But there is in fact ample justification for the view that strategic and military competition between China and the United States is intensifying. There are two interrelated issues that underlie this competition. The first is an established but incendiary rivalry over Taiwan and the second is a much newer expression of Beijing 's growing assertiveness: the desire to guarantee the safe passage back home of the oil and resources it acquires in foreign climes.

On Taiwan , things are regressing appreciably. The background to the problem is ostensibly straightforward: China claims that Taiwan is part of its territory and threatens to invade if the island's leaders ever declare formal independence. The US accepts that Taiwan geographically belongs to China but wants reunification to happen peacefully and is obliged under an American law, the Taiwan Relations Act, to come to Taipei 's assistance if the mainland ever decides to attack. Beyond these outline dimensions, however, things get more nuanced and emotional. Taiwan's position bestride the sea lanes that skirt through the South China Sea and then head towards Japan make it of crucial strategic importance for trade and the projection of military power in the region. Its attraction to Washington is further enhanced by its democratic government and the assiduous courting of US Congressmen by its senior officials. For China , the issue is also highly emotional and nationalistic. Beijing sees the island as a lingering slight on its prestige, a reminder that the humiliations it suffered at the hands of foreign powers in the 109 years before 1949 have yet to be reversed. The cause of reclaiming Taiwan , which it lost in 1895 after a war with Japan , has become a shibboleth of Communist rule.

With the two powers so implacably opposed, any shift in the military balance across the Taiwan Straits is a cause for concern throughout the Asia-Pacific region. That shift has now unambiguously taken place. David Shambaugh, a US expert on the Chinese military, says that following the aggressive upgrading of the People's Liberation Army's capabilities, the balance of military power across the strait has tilted decidedly in China 's favour. (David Shambaugh, 'Lifting the China arms ban is only symbolic', Financial Times,5 March 2004. The point about the shift in the military balance was made in conversations with the author in late 2005.)

According to estimates by the US Pentagon, China now has more than 700 missiles near its southeast coast facing Taiwan and is accelerating the build-up by adding seventy to seventy-five missiles a year, up from its previous annual increase of around fifty. Such a deployment, some US and Taiwanese analysts say, could be consistent with intentions to launch a lightning 'decapitation' strike against Taiwan , using accurate, guided weapons to disable the government, disrupt communications and force Taiwan to the negotiating table within hours - before the US Navy has had time to sail to Taipei 's rescue. (Robert S. Ross, 'Assessing Ll1e China Threat', The National Interest, I October 2005.)

More recently according to the US State Department study Spring 2006, the Chinese have stationed almost 800 short-range missiles at garrisons opposite Taiwan. Beijing, however, understands that the main challenge to any Chinese attack on Taiwan remains the U.S. Navy. More important, so long as the U.S. Navy controls the waters near China, the country will remain vulnerable to a naval blockade. This did not matter to Maoist China, whose international trade was relatively unimportant. However, for a China that is deeply engaged in international trade, most of it by sea, U.S. naval capabilities present a serious potential challenge to its interests.

The Chinese, according to this report, are not responding by building a fleet capable of challenging the Americans -- something that would take too long and be too technologically daunting and expensive. Rather, the Chinese are deploying long-range missiles designed to attack U.S. surface vessels and submarines, as far out as Guam. According to the report, China "is engaged in a sustained effort to interdict, at long ranges, aircraft carrier and expeditionary strike groups that might deploy to the western Pacific." China reportedly is developing its own weaponry as well as buying Russian systems. According to Peter W. Rodman, assistant secretary of defense, the Chinese are developing these weapons for "contingencies other than Taiwan."

Rodman also said that while the United States believes China's pledge that it would not be the first to use nuclear weapons, the Defense Department is concerned that as Chinese capabilities evolve and strategic realities shift, Beijing's doctrine might shift as well. The DoD view is that there is a major debate under way in China on the subject right now.

From the American point of view, therefore, China is threatening U.S. naval hegemony as well as threatening to become more dangerous with its nuclear force. Either of these views, if sincerely held, means that the United States must act to counter the threat. Obviously, a China capable of and prepared to engage in a first strike represents a crisis of the first order. However, even if that is saber-rattling, the threat that the Chinese are posing to U.S. control of sea lanes is of enormous geopolitical significance.

The United States has dominated the world's oceans since the end of World War II. This has been the foundation of American national security. The Soviets tried and failed to challenge American naval power. As a result, the United States projects its force outward. Others cannot project force inward upon the United States, except as terrorists or in a nuclear strike. But if the Chinese are able to neutralize the U.S. Navy to a distance of several thousand miles from China's coast, the regional balance obviously would be shifted. If the Chinese can increase that range and combine it with a first-strike capability, the entire balance of military power shifts: Nuclear parity plus an open contest for maritime hegemony would introduce an entirely new era.

What the DoD document has said is that the fundamental long-term threat to American interests and security is not the intermittent threat of terrorist strikes by Islamist militants, but the emerging threat to the global naval and nuclear balance that is posed by China. Put differently, if the Pentagon really believes this report, it is fighting the wrong war in the wrong place. The jihadists are a threat to American lives, but China threatens fundamental, global American interests.

Whether the Pentagon's view of the Chinese threat is accurate or not is not the key point right now. That this is the view of the Chinese threat means everything. If this is the view, then it follows that U.S. military expenditures should not go toward Iraq and Afghanistan, but toward securing U.S. control of the western Pacific sea lanes through increased technologies focused on naval and space power.

Obviously, DoD is not suddenly trying to back out of Iraq and Afghanistan. But Defense officials certainly are saying -- whether they know it or not -- that the time has come to close out the war with the jihadists and shift emphasis to containing Chinese power projection. But over the next few years, this view will generate a completely different U.S. military posture.

This was highlighted recently with the refusal for China to back  UN sanctions against Iran. Not strong enough  to pose immediate dangers to the U.S. It appears therefore that the U.S. is currently, planning its policies based on this fundamental understanding.

Thus where  in the 1950s, the Southeast Asian Treaty Organization (SEATO) was formed as a parallel to NATO. Its members-Australia, France, Great Britain, New Zealand, Pakistan, the Philippines, Thailand, and the United States-were drawn together to defend themselves from the Soviet Union and China. A formal mutual defense treaty such as SEATO is probably beyond our reach, but one might be able to achieve SEATO's goals without the formality of a treaty.

See also:

In spite of the stand-off over Taiwan , though, the US and China have managed since they established diplomatic ties in 1979 to avoid painting each other as future enemies. But this too may be subtly changing. On a visit to Singapore in 2005, Donald Rumsfeld, the US Defense Secretary, asked an open forum why it was that China was expanding its missile forces so that it could reach targets in many parts of the world, not just the Pacific region: 'Since no nation threatens China, one must wonder: Why this growing investment?' A senior Foreign Ministry official in the audience countered him, also with a question: 'Do you truly believe that China is under no threat whatsoever from any part of the world?' Later in the year, on a visit to Beijing , Rumsfeld returned once more to the theme, asking his senior army interlocutors why China was spending, by the Pentagon's estimate, as much as $90 billion a year on strengthening its military. His host told him that the Pentagon had got its figures wrong, and that the Chinese military budget for 2005 was actually only $29 billion, a mere fraction of what the US spends every year. Nevertheless, these exchanges serve to underline America 's growing anxiety.

Anxiety levels are set to rise further as Beijing seeks to deepen its military footprint in the Asia-Pacific, a region in which the US has been the undisputed arbiter of security since the war. China is not trying to incite Washington , but it has no option but to seek to shore up its oil supply lines from the Middle East through the Strait of Malacca, the sea channel between Indonesia and Malaysia through which almost all of Asia 's imported oil passes. The potential for a conflict with the US over Taiwan means that Beijing cannot rely on American ships to police the Strait of Malacca for it. It needs to set down its own naval support network in the region, and it has gone about this task with speed and determination.

China has started to implement a strategy to strengthen diplomatic and military ties with countries dotted like a 'string of pearls' along the route that its oil tankers take on their journey from the Middle East, according to a report prepared for the Pentagon by Booz Allen Hamilton, the defence contractor.25 Each pearl denotes a military facility or a listening-post that the Chinese may use or are in the process of building. One pearl is Gwadar, a Pakistani naval base that Beijing is helping to construct. When it is finished, diplomats assume, the Chinese Navy will enjoy regular access to dock its vessels. In nearby Bangladesh , a container port is under construction with Chinese help in Chittagong , another strategic port along the vital sea artery from the Middle East . In Myanmar (Burma), where the government receives generous military assistance from Beijing every year, electronic listening posts have been installed on islands in the Bay of Bengal so that the Chinese can monitor the activities of the Indian and US Navies in the areas around the Strait of Malacca.

Of course, none of this means that a conflict between China and the US is imminent or even likely. But it does represent a significant heightening of tensions and mutual suspicions. If these spill over into the realm of commerce, as they did quite clearly during the CNOOC bid for Unocal, then slowly but surely, the freemarket assumptions of the West that have facilitated China's remarkable ascent since 1978 could start to be undermined. If this happens, the biggest economic event of the second half of the twemtieth century could be thrown off-course in the first half of the twenty-first, causing dislocations that would convulse not only China but also much of the rest of the world. That prospect, so damaging for so many hundreds of millions of people, is made possible by globalization’s most fundamental limitations - which is that, although trade increases the mutual economic dependence of the countries that engage it in, it does not make the peoples of those nations any fonder of each other. Thus, when relations deteriorate because of issues that have nothing to do with commerce, each side starts to resent its dependence on the other, and goodwill can rapidly unravel.

The most worrying contemporary example of this is the relationship between Japan and China . The two countries are engaged in an economic convergence unprecedented in its rapidity and depth. Some 16,000 Japanese firms do business in the Chinese mainland and sharply increased trade with China has lifted Japan 's economy out of a decade of feeble growth and recurring recessions, while imports from China have lowered costs for Japanese consumers. More than 150,000 Chinese students attend Japanese universities and a million Chinese work in Japanese companies. In Shanghai, where their business presence is growing sharply, there may be as many as 100,000 Japanese residents. But in spite of all this, the two Asian giants are no better reconciled diplomatically or emotionally than they were in 1978, when Japanese business involvement in China was virtually zero.

In fact, politically, the neighbors are diverging as fast as they are coalescing commercially. Popular nationalism in both countries is driving politicians to pander to their constituencies, exacerbating the existing ill will. In Japan , Junichiro Koizumi, the Prime Minister, makes regular visits to the Yasukuni Shrine, thus insulting Chinese who know all too well that several of the war criminals who committed atrocities during the Sino-Japanese war are commemorated there. In China , senior officials who normally prevent street demonstrations from taking place, grant regular permission for screaming crowds of anti-Japanese protesters to gather outside Tokyo 's embassy. It stands to reason that at some stage deteriorating political and diplomatic ties will spill over into commerce, and the Chinese people may launch sporadic boycotts of Japanese goods just as they did in the 1930S and 1940S when the war was being fought. One day, it is possible that one of these boycotts could flare into something bigger, more long-term and more damaging. in the aftermath of NATO's bombing of the Chinese embassy in Belgrade . With smoke still rising from the rubble of the Chinese embassy complex, Washington issued a statement saying that the bombing had been a tragic mistake, a case of a pilot under pressure using an outdated map. But Beijing scorned this notion; a politburo meeting was held during which it was decided that the Pentagon had deliberately targeted their embassy, killing some of the staff inside. When this was announced to the people, genuine fury engulfed not only Beijing but most of the country. Indignant crowds of students and ordinary citizens gathered outside the US and UK embassies within hours of the news being released, and as the first day of protests wore on, the frenzy mounted. The Chinese military and police guards who are stationed all year round to protect foreign embassies just stood by as the demonstrators started to hurl rocks, paint and bottles over the walls. When a good thrower managed to hurl a projectile across the width of the embassy forecourts and smash a window, triumphant cries welled up from the rest of the crowd and at times, even the guards would join the jubilation.

Meanwhile, foreign residents of Beijing found themselves subject to closer than normal questioning from Chinese as to which country they came from. If the answer was the UK , the US or other NATO countries, the reaction was never favourable. Suddenly, the number of self-professed British and Americans in Beijing started to drop precipitously, while those calling themselves Australians, South Africans and Canadians surged. One senior British diplomat I knew, when accosted by an angry mob not far from the embassy's front gates, said that he was Albanian. Others in their desire for bland anonymity adopted an Icelandic identity..But this is where our case study continues:

Sociology of the New Nationalism in China Today P.1: As we have seen from the beginning on this website, many world conflicts are deeply rooted in history and memory for the parties involved. In fact national history and collective historical memory are a nation's ‘deep culture,’ a key factor in the evolution and resolution of how it behaves in conflict situations. Today, U.S.-China relationship have become one of the most important bilateral relationships in the world. The evolution and management of this relationship will have a decisive impact on international peace in the twenty-first century. The research we present this week could help both the U.S. and China to develop more effective mechanisms for managing the conflicts that will inevitably arise in the future, improving their ability to handle future crises. Six Questions, more Answers.

We started this eight part investigation after we realized how China's humiliating modem history has been used by the Communist government to conduct national ideological re-education. The Campaign of Patriotic Education, which started in 1991, is one of the most important maneuver that the Party launched to redefine the legitimacy of the post- Tiananmen leadership and has been used to fill the spiritual vacuum after the bankruptcy of the official Marxism and Maoist ideology. The ruling party has skillfully and successfully made the education available at all times and everywhere in people's daily lives so that the masses can be influenced and nurtured. And that during the process, the content of history and memory has become institutionalized and embedded in China's education systems, popular culture and public media.

Sociology of the New Nationalism in China Today P.2: It's a Conspiracy Theory.

 Sociology of the New Nationalism in China Today P.3: The Chinese Dilemma.

Sociology of the New Nationalism in China Today P.4: "Foreign Powers".

Sociology of the New Nationalism in China Today P.5:Tradition.

Sociology of the New Nationalism in China Today P.6: New Propaganda.

Sociology of the New Nationalism in China Today P.7: Final Analysis.

Sociology of the New Nationalism in China Today P.8: So what next.