The Middle Kingdom Reasserts Itself

China has also suffered from America's economic meltdown, but the country's leaders continue to assert themselves on the global stage, both economically and politically. Some Chinese even see the problems in the U.S. as an opportunity for China to fill the void being left by the U.S.

The latest example of China's new confidence is a remarkable story buried on page A5 of this Tuesday's New York Times--"China Urges New Reserve to Replace the Dollar."

"In another indication that China is growing increasingly concerned about holding huge dollar reserves, the head of its central bank has called for the eventual creation of a new international currency reserve to replace the dollar."

The official argued that a new currency reserve system controlled by the International Monetary Fund would be "more stable and economically viable."

As the Times observes, "the proposal suggests that China is preparing to assume a more influential role in the world."

This is a theme I develop in The End of the American Century, where I describe China's opposition to "hegemonic" and "unipolar" power politics--code words for U.S. domination--and the country's growing efforts to promote its "soft power" influence in Asia, Africa, and elsewhere. The "peaceful rise" of China is supported by the population as well: in a 2003 poll in the country, 40 percent picked China as "the most prominent country in the world."

As London's Economist observes in its cover story on "How China Sees the World," "there is a sense in Beijing that the reassertion of the Middle Kingdom's global ascendancy is at hand." Prime Minister Wen "no longer sticks to the script that china is a humble player in world affairs" and now talks of China as "a great power."

The main reason for the proposal for a new international currency is China's growing concern about the safety and stability of its own vast holdings of the U.S. currency. China holds an estimated $1 trillion in U.S. government debt, the world's largest holdings. Earlier this month, the Chinese prime minister, Wen Jiabao, publicly expressed concern about the "safety" of these investments and asked the Obama administration for assurances that these securities would maintain their value.
(See the New York Times story "China's Premier Seeks Guarantee from U.S. on Debt").
Last January, Mr. Wen criticized the "unsustainable model of development characterized by prolonged low savings and high consumption." There was no question about which country he was referring to.

When Premier Wen hosted Secretary of State Hillary Clinton in Beijing in February, it was clear that this was a meeting of equal, sovereign states. Next month, at the meeting of the "G20" economic powers in London, the most important business will be that between Presidents Barack Obama and Hu Jintao. The Middle Kingdom is back.