This week's startling revelations regarding Beijing's successful test of an anti-satellite weapon provided just the latest evidence of China's growing geo-strategic challenge to the United States. And as I first wrote almost three years ago, the Bush administration seems rudderless in the face of rapidly rising Chinese economic power, military might and diplomatic strength.
For sure, the size, sophistication and aggressiveness of the Chinese military pose a direct threat to American hegemony, especially in the Pacific. The Chinese ASAT test potentially threatens the network of U.S. spy satellites and its backbone of space-based smart weapons systems. The Chinese launch followed within days of the introduction of the new Jian-10 advanced fighter, Beijing's first domestically developed, world-class jet. Just weeks earlier, American media reported that a Chinese submarine successfully penetrated a U.S. carrier battle group, putting the USS Kitty Hawk at risk. Whether or not the Chinese develop and deploy their own carriers as part of a blue water fleet, the American ability to maintain strategic ambiguity regarding the defense of Taiwan is increasingly at risk.
Perhaps more dangerous to the United States is the explosive economic growth of China. Even as the overall U.S trade deficit dipped in November, the American imbalance with Beijing ballooned to $213.5 billion over the previous 12 months. At the same time, China has emerged as banker to the United States, holding billions of dollars of American treasury notes. The insatiable Chinese demand for energy has led the Beijing to lock up long-term oil contracts with Iran, Kazakhstan, and other nations. It's no wonder that legendary Hong Kong investor Lee Shau Kee advised Forbes readers to "hold China, shun dollars."
The impact of Beijing's new-found power extends to the diplomatic sphere as well. Just today, the McClatchy papers featured an analysis of the tightening relationship between China and Washington's traditionally steadfast ally, Australia. A recent poll by the Lowy Institute shows that the Australian people hold the United States and China in similar regard, a clear reflection of Beijing's growing role in the economy of Australia and the Pacific Rim. As Richard Gibbs, chief economist at Macquarie Bank put it:

"Look, a majority of Australians are sensitive and aware that we have a dynamic and powerful neighbor. People do see the ships leaving the ports, and they hear about the iron ore mines opening up."

Meanwhile in President Bush's Washington distracted by the Iraq war, the prospect of Chinese power is greeted with silence. Six years after the collision of a Chinese fighter jet and an American P3 Orion surveillance aircraft produced a diplomatic crisis for the Bush administration, the correlation of forces has clearly moved away from the United States. Only China's economic interdependence with its largest debtor may be keeping the United States from strategic disaster.