China will be ... to some extent it already is... "a" world power, but it will not be "the" world power.
It is dependent for food and fuel on trade. If that came to a stop, so would China.
It owns a massive amount of treasuries, but because of that it has to fear that the US either won't pay, or will inflate away the value of those treasuries. In a certain sense, we own them, not the other way around.
The current China is a weird combination of Communist dictatorship whose legitimacy to rule is built upon the fruits of a capitalist economy. The government does not rule by the consent of the people, but rather by the barrel of a gun. Its rule is thus brittle, but continues because it has allowed some of its people to become more well off through the capitalist economy. Having built that economy on low margin business, however, it is vulnerable to having its factories become unprofitable if the yuan appreciates in value much at all, if foreign currencies depreciate in relation to it, or if other countries with cheaper labor out compete it. If the Chinese economy were to suffer a significant hit, and it is inevitable that it will someday, the people who tolerate the illegitimacy of their government for the economic prosperity will likely throw the Communists out violently when that prosperity disappears. Even now there are frequent instances of civil disobedience and even riots in China every year, and the government knows full well that if that happens in what is now the best of times, there will be an explosion if things go wrong.
And remember that it was thought that the Japanese were going to rule the world twenty five years ago, but where are they now?
Modern China certainly has its strengths, but never forget that there are weaknesses too.
Last edited by picturerock; 11/28/10.
