How China, an Emerging Superpower, Will Test the Obama Administration

China's continuing rise as a likely future superpower will be an overriding feature of the foreign policy landscape that Barack Obama will need to maneuver through after Inauguration Day.

Though U.S. dealings with the world's most populous nation did not play a significant role in the 2008 presidential campaign, China's growing heft in international affairs—and its importance in the current global economic crisis—assure that such scant attention will not continue.

In a development unthinkable before Richard Nixon went to China in 1972, China has become a key partner of the United States. It remains under Communist Party rule but is running a mixed economy with plenty of room for capitalist enterprise, though not for what the West regards as political freedom.

The remaking of a once hostile relationship between Beijing and Washington constitutes one of the most significant diplomatic breakthroughs of modern times and means that Barack Obama will inherit a still-evolving partnership upon which American officials, consumers, and businesses have come to depend.

The gains from three decades of increasingly market-oriented reforms and historic growth of about 10 percent annually have ushered China onto the world stage. That partial transformation of a developing society was the subtext for the summer's Beijing Olympic Games. The event signified both Beijing's rising self-confidence and its willingness to carry on a measured opening to the world. "It was a watershed moment for China—their coming out to the world," says Derek Mitchell, a China specialist at the Center for Strategic and International Studies.

China now offers the world's fourth-largest economy and may surpass the size of the world's biggest economy (America's) by 2027, according to a Goldman Sachs study. It has become a key supplier of affordable manufactured goods to America and other developed countries, netting in the process the world's largest holdings of foreign reserves, at $2 trillion. It also holds about $1 trillion in U.S. government debt, a posture that helps enable U.S. deficit spending and deepens the mutual interdependence. Its recent fiscal stimulus package is being touted as a lift for a sagging world economy. Says C. Fred Bergsten, director of the Peterson Institute for International Economics, "China will be at the center of the global economic system."

That economic clout is also being reflected in ways that could spur tension during the Obama White House years: China's defense buildup, its more active foreign policy, and its rapid push for trade, energy supplies, and aid deals everywhere from the Middle East and Africa to South America and Asia.

Still, U.S.-Chinese relations have moved to a far better place than where they seemed to be headed early in George Bush's presidency. He had called China a "strategic competitor." His first foreign policy crisis, in 2001, arose when a U.S. Navy reconnaissance plane collided in midair with a Chinese fighter, killing its pilot and triggering nationalist outrage in China. The American crew members were briefly held on China's Hainan Island, until a deal for their release was negotiated.

That outcome, along with China's support for the United States after 9/11, tempered the administration's initially hard-line instincts, and pragmatism took root. Ultimately, Bush visited Beijing four times, seeing in China a partner not only in the fight against terrorism but in trying to curb the nuclear ambitions of North Korea and Iran. U.S. policy was revised to encourage China to become a "responsible stakeholder" in international politics and economics, as its role expands.

Yet U.S.-Chinese ties will, in all likelihood, be tested at times in the Obama years. Beijing's human-rights record, along with its handling of problems in Tibet, will remain recurring issues, with Beijing essentially telling Washington to mind its own business. United States support for Taiwan will also remain an irritant, with China continuing to oppose arms sales for the island, which it regards as a breakaway province wrongfully separated from the motherland during the 1949 revolution.