The core challenge for the United States in the XXI Century is the promotion of a stable and prosperous world. The United States is heavily dependent on global stability and could not maintain its prosperity in a world of turmoil. So in a world facing food, water, population, environmental and global warming challenges, advancing Global Good Governance -- encouraging all nations to develop effective governments -- is not just a principled nicety, it is an imperative. China is the biggest obstacle to this.

China is the biggest obstacle to this, not only exhibiting a visible disinterest in promoting good governance, but actively supporting a number of autocratic and repressive governments. Its primary objective remains protecting the privileged position of its leadership. More than any other country, it is aware of how unstable this position is and very defensive of anything which could endanger it. So it is naturally very protective of sovereign privileges, reluctant to acknowledge any right of one government to label another as illegitimate. It has a high incentive to suppress internal criticism and to avoid any precedents which would give other nations opportunities for such criticism. Any outside criticism has a potential to resonate with internal grievances and challenge leadership authority.

The autocratic Chinese leadership has brought about a momentous evolution from legitimacy based on a foreign Marxist ideology to legitimacy based on socio-economic development. With their impressive economic growth rates, this has provided them a solid basis for governance, moving China into the position of having the second largest economy in the world. However, it is essentially fragile; the leadership has to do everything in its power to promote continuing economic growth. So its diplomatic insistence on keeping political and economic arenas separate makes eminent sense. Its support to Iran, North Korea, and Burma, as well as Sudan, Zimbabwe, and Venezuela, provides it significant economic benefits as well as stabilizing regional governments which will have no inclination to challenge sovereign Chinese interests. But it greatly complicates US efforts to promote good governance.

A secondary source of Chinese legitimacy is nationalism. Acutely conscious of both China's four-thousand-year cultural history and its earlier domination by Western governments, the leadership naturally promotes a strong sense of Chinese identity as it seeks to regain its traditional dominance of East Asia. Even though its claims of sovereignty over Taiwan have only a short historical basis, they serve as a convenient rallying point for nationalist sentiments. While China exhibits little inclination now to reach for global dominance, it is clearly interested in regional dominance. Its naval forces, in particular, have been systematically developing a capability to oppose any foreign presence in Chinese coastal waters. China has also aggressively pursued both land and sea territorial claims. Its relationship with India remains strained, with areas of economic cooperation balanced by confrontational activities in border regions and active diplomacy to promote pro-Chinese policies in Nepal. Its leadership of the Shanghai Cooperation Organization has given it a position of influence in Central Asia. Japan watches China warily, and occasional anti-Japanese demonstrations in China have been one factor in tamping down Japanese investment there. For the leadership, Chinese nationalism also has an adverse face, helping to stir resentment in Tibet and Xinjiang, both of which have had a major influx of ethnic Chinese. Xinjiang is particularly troublesome because unrest there is starting to resonate with global Islamic radicalism.

Leadership legitimacy is also buttressed with its own assertion of good governance. Officially the government supports popular participation in a deliberative democracy, the rule of law, and the elimination of political corruption. Prime Minister Wen Jiabao recently articulated a number of these assertions, "If most of the wealth in a country is concentrated in the hands of the few, this country can hardly [have] harmony and stability....freedom of speech and of media coverage are guaranteed in China....we need to improve the legal system... and [have] an independent and just judicial system...[and] accept oversight by the news media and other parties." This rhetoric obviously clashes with the reality of autocratic government and raises the potential for widespread popular disenchantment if economic growth falters. Corruption is so pervasive that it is of serious concern to the leadership, afraid that it will undermine their own position. There is a steady stream of public trials of corrupt officials, and apparently a steady stream of new officials ready to take their place and continue the tradition.

The Chinese emphasis on economic prowess comes with little concern about its impact on other nations. There have been a long-running disagreements with the United States over the Chinese cavalier treatment of intellectual property rights. The United States also accuses the Chinese government of keeping their exchange rate artificially low, skewing the balance of payments heavily in China's favor. China rejects these complaints as “a kind of trade protectionism” and makes clear that it has no plan to do anything differently. But the misappropriation of intellectual property and the undervalued yuan weigh heavily not only on the United States, but on almost all of China's trading partners, a textbook example of the beggar-thy-neighbor competitive devaluation forbidden by the International Monetary Fund’s charter. With its overarching need for economic success, the leadership consistently follows policies providing maximum short-term benefit to China. Yet by stressing "peaceful development" while demonstrating impressive economic growth with its managed economy, China provides an alternative model to the US free market system; its diplomacy is rivaling the United States not only in Southeast Asia, but also in Africa and even Latin America.

The leadership is also well aware that China faces daunting longer term economic challenges, so is doing its best to stave off any reckoning. China's environmental problems are legion and weigh heavily on the health of its population. The population itself faces a severe demographic challenge; China's strongly enforced one child policy and cultural preferences for male heirs have resulted in a population short in both working age people and women. Water is already a scarce but vital resource in some areas of the nation, and there is a huge economic gap between the countryside and the burgeoning cities. China has also moved away from market reforms. Major economic decisions are increasingly centralized and favor the growth of large industrial areas, but decentralized implementation and poor accountability make enforcement of specific regulations difficult and facilitate local corruption. At the moment, this state capitalist approach has been successful, but it is essentially the same policy which eventually collapsed the Soviet economy as artificial prices, widespread corruption, poor accountability, and misplaced investment undermined economic performance. In fact, significant elements of the centralized bureaucracy were initially modeled after the Soviet system.

This poses a significant danger and an opportunity to the United States. Any major reduction in economic legitimacy would leave the Chinese leadership an obvious option of turning to a more virulent nationalism. This would inherently entail a confrontational policy towards its rivals; the United States would have to be increasingly painted as an overtly hostile power. In extremis a new arms race could easily transpire. The United States is very protective of its position of global dominance which is now clashing with China's natural interest in a strong military presence in its own area of the world. Systematic Chinese improvements of capabilities for naval interdiction, communications disruption, and cyber intrusion certainly challenge US military capabilities in the Western Pacific. But responding with major military efforts would validate the fears of Chinese hard liners and almost certainly provoke Chinese responses in kind. Hard liners in both countries could drive a vicious circle of deteriorating antagonism. It would be a new Cold War, not focused on global domination, but economic ascendancy and would be ruinous for both the Chinese and US economies. Most importantly, it would preclude any systematic effort to address global economic challenges or avoid widespread turmoil.

Alternatively, economic problems could pressure the Chinese leadershipto modernize its control and address internal challenges and the United States can help facilitate this. It is definitely in the US interest to promote continuing Chinese political evolution towards more participative government and to avoid the dangers of political turmoil and upheaval. So the United States has a large stake in the stability and success of the current Chinese leadership. Uproar within China would probably result in some kind of military government, even less able to manage the economy and more inclined to be confrontational. Not only is there no alternative leadership in view, but the present leadership has done a credible job of leading Chinese development while carefully avoiding any direct challenges to US global primacy. But the relationship is an uneasy one. The more one side hedges its bets by building up military assets, the more likely that confrontation will become a self-fulfilling prediction.

A first step in avoiding such a detrimental outcome could be a strong, authoritative statement by the United States of what it wants from China - economic development that provides prosperity for its own people and promotes global development. The statement needs to stress the US belief that good governance is a critical element, that governments derive their just powers from the consent of the governed. While cultural heritages will shape governments, the United States firmly believes that all men are created equal and that peace and prosperity are best guaranteed by the development of mature democracies. These US ideals are compatible with China's own professed values of popular participation, the rule of law, and the elimination of corruption. So the United States does not seek to impose any specific measures on China and wants to support the existing leadership in its drive to modernize China. But it will not support repressive measures and will talk directly to the Chinese people, inviting the Chinese leadership to talk directly to the American people as well. The United States must continue to cooperate on topics of mutual benefit, while continuing to encourage Chinese political evolution, insisting that the leadership live up to its own stated ideals. The Chinese leadership ultimately has to answer not to the United States, but to its own citizenry. This is a central point of disagreement: Chinese insistence on dealing only with governments and ignoring any citizen repression versus a US attitude that it is ultimately responsible to the citizens of a country, deals with governments as the representatives of their citizens and expects leaders to promote good governance.

There is already a wide range of cooperative efforts, by one count up to 60 bilateral dialogues and working groups, including a top-level Strategic Economic Dialogue set up by President George W. Bush. This should be reinforced by coordination within the National Security Council on a comprehensive strategic approach incorporating not just military options but the full range of civil capabilities. The US government working with a wide spectrum of US commercial and nongovernmental organizations can offer the Chinese leadership cooperative programs to help address its key internal challenges, including rural development, environmental stewardship, minority development and educational expansion. Additionally, the United States must improve coordination with its allies in developing common approaches to China, reinforcing positive Chinese actions and bringing multilateral pressure to bear on problem areas, convincing China that it needs to take a more positive role as a "responsible stakeholder" in the international community, and encouraging China to continue its active involvement in no proliferation activities. So, for example, the United States must take a much more active role in various Asian political and economic forums. A prosperous world would benefit everyone. As stressed in a joint editorial by Secretary of State Clinton and Secretary of the Treasury Geithner,"few global problems can be solved by the U.S. or China alone. And few can be solved without the U.S. and China together." China has to be encouraged, enticed and pressured to acknowledge that its own modernization cannot succeed without global prosperity.

This will necessarily be a long struggle, but needs to be kept peaceful if not always friendly. At the moment, China and the United States are actually engaged in an asymmetric cyber war. China probes US networks for commercial and military information while developing capabilities to degrade US communications and infrastructure systems. The Department of Homeland Security has an active federal program to counter China and others, while a Cyber Security Industry Alliance works to protect commercial interests. The United States, on the other hand, promotes open information flows. Google is now involved in a confrontation with the Chinese government over censorship of web searches. Official Chinese sources complain that, “It is unfair for Google to impose its own value and yardsticks on Internet regulation to China, which has its own time-honored tradition, culture and value.” Official US reaction to the ongoing controversy has been muted. The extent to which the US government or private companies may be clandestinely developing and distributing software to complicate Chinese censorship efforts remains unknown. This is the modern equivalent of the Cold War radios beamed into the Soviet Union. It is the central battleground with China and the United States should do this openly, extensively, and enthusiastically, driving what Michael Greene and Daniel Twining have termed the balance of influence. The final arbiter on this will be the Chinese people themselves as the complex and evolving nature of the internet continuously challenges official efforts to control information flow. This is exactly the type of warfare we need to wage, to make it increasingly difficult for the authorities to compartmentalize economic and political development.

Broad and visible cooperative programs can also make it difficult for the Chinese leadership to blame the United States and its allies for internal problems, but instead give it incentive to work even more closely with its foreign partners on broad socio-economic development. Broad based exchanges can also help to foster such cooperation. During the height of the Cold War, the US government promoted a wide range of programs devoted to increasing knowledge and analysis of Russian language and Soviet institutions. Such updated programs promoting better awareness of China would also be a very positive step.

The bottom line is simple, the United States faces a major strategic challenge, how to promote positive change in China and avoid a confrontational outcome. If it cannot develop a positive and mutually beneficial relationship with China, it will cost the United States and the world dearly.