2009 was the 60th anniversary of the Chinese revolution. China gained independence from Japan and defeated the nationalists to establish the Socialist people’s republic of China. In the last decade many analysts have viewed the rise of China as America's biggest challenge and some thinkers foresee China as the world’s superpower in the not so distant future. The rapid rise of China on the political map in the last 20 years has shocked many, bewildered others and for some marks the shift of global power from West to East. China has never been a world power and its recent history consists of a brutal occupation by Japan, whose memory defined post WW2 China. The 60th anniversary for the world’s most populated nation marks a unique reality in its history as for the first time it is counted as a world power.

China's development began in 1978 and has been due to military considerations dominating the development of science and technology. This can be traced back to the Mao era. Mao stated his objective of forming a ‘militarization’ complex above all other needs. This ‘militarization’ formed the basis of Deng Xao Ping’s policy. Deng's aim was to diversify the Chinese economy in order for China's industrial base to contribute not just to national defence but also economic growth and civilian prosperity. Deng's famous 16 character guidance in early 1980’s made this clear: ‘integrating military and civilian production; but making sure to balance the military requirements; maintaining military capability; using the civilian economy to serve military modernization.’6 Prior to this the Soviet-style centrally planned economy, was utilized but achieved limited results. Deng then utilized a more market-oriented economy, particularly in the Special Economic Zones (SEZ) located in the Guangdong, Fujian, and Hainan. The results were spectacular. China radically changed its economy moving from producing low quality simple exports to sophisticated high technology goods. The country has changed from an inward backward economy to a global exporting machine, Chinese exports have grown tenfold. Today China has surpassed Germany as the world’s largest exporter, exporting over $1 trillion a year.

Since 1978, China has been reforming its economy from a Soviet-style centrally planned economy to a more market-oriented economy but within the political framework, provided by the Communist Party of China. This system has been called “Socialism with Chinese characteristics” and is one type of mixed economy. These reforms started since 1978 has helped lift millions of people out of poverty, bringing the poverty rate down from 53% of population in 1981 to 8% by 2001.

The execution of China's foreign policy represents an important evolution from Beijing's narrow and reactive approach to global affairs in the past. China is abandoning its long-held victim mentality of 150 years of shame and humiliation and adopting instead a great power mentality (daguo xintai). The natural extension of this is the increasing role of China in global issues. This has been driven by leading members of the Communist party who were not born during the Chinese revolution and hence do not view the world from the perspective of China's history. Leaders, such as the current president Hu Jintao, who was born only a few years before the revolution, was China's first leader not to have taken part in the infamous long march, where the nationalists were defeated in 1949. It is such leaders who believe in the abandonment of China's victim mentality and the adoption of a great power mentality, it is such leaders who are increasingly seeing China more akin to the world’s major powers.

US policy makers spelled out their strategy for China initially in the Defence Planning Guidance (DPG) for fiscal years 1994-99, the first formal statement of US strategic goals in the post-Soviet era "we [must] endeavour to prevent any hostile power from dominating a region whose resources would, under consolidated control, be sufficient to generate global power."7 By the time George W Bush came to office only China possessed the economic and military capacity to challenge the United States as an aspiring superpower. The US developed a policy of containment rather than outright competition with China which would expend US resources, to restrain China within its borders ensuring no-one shares the region with her. This policy of containment was spelt out by Condoleezza Rice while serving as a foreign-policy adviser to George W Bush, then governor of the state of Texas, during the 2000 presidential campaign in a Foreign Affairs article she stated "China is a great power with unresolved vital interests, particularly concerning Taiwan, China also resents the role of the United States in the Asia-Pacific region." For these reasons, she stated, "China is not a ‘status quo' power but one that would like to alter Asia's balance of power in its own favour. That alone makes it a strategic competitor, not the 'strategic partner' the Clinton administration once called it. The United States must deepen its cooperation with Japan and South Korea and maintain its commitment to a robust military presence in the region". Washington should also "pay closer attention to India's role in the regional balance, and bring that country into an anti-Chinese alliance system."8

A decade on however both the US and China have to a large extent become interdependent upon each other. Whilst the US dominated all regions of the world at the turn of the century, Afghanistan and Iraq as well as the global financial crisis has resulted in the US being unable to dominate such regions and its relationship with China. Sino-US interdependency can be seen from the following:

- The US, the world’s largest consumer, imports the vast majority of the goods that come of China’s production lines.

- The US has a trade deficit of $226 billion (2009) with China, as a result US dollars end up in China, which today is over $2 trillion.

- Such huge reserves have resulted in China purchasing US treasury bonds, which funds America’s massive trade deficit.

- In turn this is resulted in the expansion of China’s manufacturing base, China’s need for a larger share of the world’s oil and mineral resources.

- This has also led to the loss of jobs in America’s manufacturing sector to superior Chinese craftsmanship.

US policy towards China has appeared to be contradictory at times because the US has been unable to balance its commercial interests and strategic interests. One faction, the corporate world9, view China from a commercial aspect. They see China's huge population as a money making opportunity and for these reasons have lobbied for the US government to force open China’s domestic market and essentially bring China into the global free market. The right-wing on the other hand have for long viewed China as a threat and continue to attack it’s human rights record, internet censorship and China’s right to Taiwan. From a commercial aspect companies such as Google, yahoo and Microsoft and a number of US banks have benefited from developments in Sino-US commercial relations.

On the other hand those who view China's rise as a threat have pushed for the US administration to develop an anti-Chinese ring around China to contain it. The US has upgraded security relations with Japan and has supported Japanese calls for nuclear development, this would mean abandoning the decades old constitutional defensive policy; for the US this would act as a military counter weight on China’s Eastern flank. On the Western flank India has been wooed with economic deals, the transfer of nuclear technology and ambitions of permanent Security Council status. The US in a similar manner has normalised relations with Vietnam burying its historical conflict and forming bilateral partnerships with it. The US has successfully manoeuvred the Vietnamese to increase interaction with it, breaking the age old Chinese links to the pacific region. Vietnam continues to have a territorial dispute on its northern border with China. The US has also used its conflict with North Korea to contain China. The US has been considerably silent to the nuclear progress in Pyongyang compared to Iran, whilst China has been pursuing six party talks trying to ensure its back door is not set on fire. The statements from such meetings have been contradictory where China has been remarking pessimistic talks with distance on issues to the US remarking successful negotiations. This gives a suitable justification for sustained and substantial US presence in South Korea. The US has also announced in September 2009 a shift in policy towards Myanmar (Burma). It plans to move beyond the current sanctions regime to include direct engagement with the military government. Myanmar is playing a central role in China's overseas energy strategy and through direct engagement the US is attempting to minimise the expansion of a Chinese sphere of influence in Asia.

In China’s 5000 year history it has never been a superpower and has never influenced the global balance of power. Even when it adopted Communism it never carried this beyond its borders and never influenced any of the regions of the world. Much of China's 5000 year history is composed of internal wars and struggles in order to unify the homeland. China’s foreign policy is centred on domestic economic development and procuring all the necessary raw materials to achieve such aims. China has challenged America’s containment policy by attempting to weaken the nations the US is attempting to use to contain China. This is through using trade and developing bilateral ties to loosen US relations with the likes of Australia, India, Japan and South Korea.

Due to this reality China has focussed on its region and as of yet has shown little ambition beyond the region. China’s string of pearls policy is its first venture beyond the region. The policy was described by the US government as follows: “The “String of Pearls” describes the manifestation of China’s rising geopolitical influence through efforts to increase access to ports and airfields, develop special diplomatic relationships, and modernize military forces that extend from the South China Sea through the Strait of Malacca, across the Indian Ocean, and on to the Persian Gulf.”10 The sea lines run through the strategic choke points of Strait of Mandab, Strait of Malacca, Strait of Hormuz and Strait of Lombok as well as other strategic naval interests along Pakistan, Sri Lanka, Maldives and Somalia. All of these are key strategic routes for oil and gas and will inevitably lead to a clash with the US.

China currently has shown little global ambition in constructing an alternative global system. It has in fact amalgamated into America’s global system of trade - WTO, security – United Nations and finance – IMF and the World Bank. China appears to be working to achieve its interests from the existing system rather than attempting to replace it. With such a narrow view China will politically never be able to challenge the US. If China has any plans to become the world superpower then it will not just need to challenge the US, but solve a number of domestic issues which would otherwise cause a massive fracture domestically, these include:

- China’s development is rooted in Deng Xiaoping’s attempts at creating special economic zones (SEZ) which allowed foreign investment and technology and became a new source of wealth. China today is an export oriented economy and dependent on foreign countries to continue importing from it. Therefore whatever the size of China’s currency reserves, no matter how cheap its labour force or its technological developments, China relies on foreign nations to import from it and physically ship them – A naval blockade would cripple China. The world imports from China at the cost of closing down their own factories, as long as no other nation produces the worlds goods cheaper than China, China will remain the world’s workshop. China today is the world’s industrial workshop; it remains totally dependent on the world to continue buying from it rather than anyone else, this is a very fragile model of development.

For centuries, China has attempted to hold together a vast multi-cultural and multi-ethnic nation despite periods of political centralization and fragmentation. But cultural and linguistic differences have worsened due to uneven growth and a massive misdistribution of wealth. Physical mistreatment, imprisonment, lax labour laws and pitiful pay and the fact that the Chinese government is seen not to have addressed the economic needs of the vast bulk of the population is causing internal strife and calls for political succession. In 2005 China handled 87,00012 cases of social unrest; this is public disturbances, demonstrations and civil strife. Domestically China is a bomb that could go off at any time.

China domestically is ruled by Communism, this is why it still has a one party system, but economically it is moving more and more towards the free market. At the same time China is nationalist led which has led to calls for separation by some regions. Until China decides what its national identity is, the nation will continue to be pulled in different directions and China will never be able to pose a threat to the world's superpower. The imposition of the ethnic Hans over the other ethnicities only contributes towards the problem. If the US felt China poses an immediate threat to its interests it could with much ease support one of the minority groups and cause internal problems for China.

China currently posses an economic challenge to the US, for these reasons they are engaged in a number of trade disputes. The US has placed restrictions on Chinese tyre imports, and currently China is on the receiving end of a number of World Trade Organisation (WTO) cases into anti-competitive practices.

For the US China posses a threat in South East Asia and hence the US wants to restrict potential Chinese political ambitions but at the same time wants to benefit from the 1.4 billion domestic market. US central intelligence estimates and quadrennial reviews constantly propose the US to increase military expenditure in the face of Chinese threats. China as a threat to the US is overblown when China has for the moment restricted its interests and ambitions to its region – it is questionable whether a nation that has never been a world power, who never expanded beyond its borders, even has global ambitions. China is in a strong position to shift its economy from external focus to domestic development, the size of its population would solve its economic dilemma.

Currently China poses an economic challenge to the US, therefore it is unlikely China will be replacing the US as the worlds superpower any time soon.