The Chen Guangcheng drama overshadowed the recent round of the United States-China Strategic and Economic Dialogue (SED).
This media-friendly story of a blind activist being oppressed in China revealed more about domestic politics within the United States and China but little about the potential for significant geopolitical changes between the world's two largest economies. The US-China SED is perhaps the most important bilateral summit in the world. One must read carefully into the statements made at the SED in order to understand the changing dynamic of US-China relations.
The latest round of the SED brought together US Secretary of State Hillary Clinton, US Secretary of the Treasury Timothy Geithner, Chinese President Hu Jintao and a host of other high-ranking American and Chinese officials in Beijing late last week.
This was the first SED since Clinton famously called for a US strategic "pivot" towards Asia. The American government has a stated policy objective to perpetuate its dominance in Asia in all aspects. The Barack Obama administration openly seeks "... to lock in a substantially increased investment - diplomatic, economic, strategic, and otherwise - in the Asia-Pacific region." 
"Otherwise" in this context is almost certainly a diplomatic term for "military". China views this American strategy with suspicion - it seems unlikely that such a major investment in economic, political, and military effort is solely aimed at containing North Korea.
Hu's speech at the SED hints at deep, underlining concerns on the Chinese side. The Chinese government is keenly interested in avoiding conflict with the United States at this time. During his opening remarks at the SED, Hu made a forceful appeal for the leaders of the two countries to avoid the "outdated thinking" that powerful countries must inevitably have an adversarial relationship. He called for unshakable, lasting cooperation:
"Whatever changes may take place in the world, and no matter how the domestic situations in our two countries may evolve, China and the US should be firmly committed to advancing a partnership of cooperation." Hu openly called for a durable cooperation that can withstand any domestic or international developments. Hu blamed the difficulties in the relationship on the particular qualities of the nations themselves, rather than differences in objectives or interests: "Given the different national conditions, it is impossible for China and the US to see eye-to-eye on every issue ..."
Herein lies the real substance of Hu's words. The differences in "national conditions" between the United States and China are the main source of tensions. And what exactly are the main differences in the national situations in these two nations? Besides obvious differences in history, culture, and political systems, the main difference is in geopolitical trajectory.
China is a growing global power, while the United States is commonly believed to be in relative decline. This trend is especially evident with regards to the economies of the respective nations. China's sustained, rapid growth in its gross domestic product (GDP) is a stark contrast to the ongoing economic malaise in the United States.
Furthermore, the United States has spent massive military, economic, and political capital in the last decade fighting the various conflicts of the so-called "War on Terror" while the impressive economic achievements in China are starting to have profound strategic and military implications for the entire world, especially the Asia-Pacific region.
The US military is openly concerned about the increasing military expenditure in China. The US military claims that China seeks "greater control of the sea lanes off its coast and wants to protect the heavily populated and increasingly wealthy cities on its coast".  The Pentagon wants to boost military capabilities in order to effectively project United States power into China's coast and counter China's defensive measures.
With regards to increased Chinese military investments, the New York Times also mentions: "That gap has reinforced the realization that the United States may not remain the singularly dominant power in the Asia-Pacific region if Chinese military spending keeps escalating." 
It is in this geopolitical situation that we can understand the Obama administration's much-touted "Asian pivot" and Hu's call for sustained peace and cooperation at the SED.
Imperialism by any other name
China has a clear interest in challenging the United States' self-perceived position as the "singularly dominant power" in China's backyard. How would regional and world powers react if China sought to become the "dominant power" in, for example, South America?
This scenario is not as far-fetched as it may seem. Just as many of China's neighbors have worries about China's increasing dominance, many nations in South America have a historically uneasy relationship with Brazil. If China stationed tens of thousands of soldiers in the nations that border Brazil with the goal of containing Brazil's rising power, then the Chinese could hardly be surprised when the Brazilians started expanding their own military capabilities for defensive purposes.
This thought experiment becomes much more interesting if Brazil was the largest purchaser of China's government debt.
From China's viewpoint, the US "pivot" towards Asia is an aggressive stance meant to threaten and contain China. These troops serve no purpose in defending America from attack. The planned deployment of 2,500 marines to Western Australia, naval cooperation with the Philippines, the open goal of increasing the United States' naval capabilities on China's coastline, and the continued presence of roughly 50,000 US military personnel in Japan are all seen as unnecessary provocations. One can imagine the American response if China stationed massive military forces in the Caribbean.
Nevertheless, China has no interest in military confrontation with either its regional neighbors or the United States in the short to medium term. Instead, China is focused on internal economic development and domestic stability. China has no interest in foreign adventurism so long as it continues its rapid economic growth - economic growth, it should be noted, that relies heavily on international trade. The ongoing military buildup by the Chinese government is meant primarily to project power into the South China Sea, an area that China views as its own integral territory, and deter any outside interference.
The contentious issue of sovereignty in the South China Sea is the most obvious area in which the United States sees an opportunity to roll back China's growing influence. China claims the South China Sea in its entirety as an integral part of China itself. This claim is disputed by the Philippines, Vietnam, Brunei, and Malaysia. These countries, especially the Philippines, seek US support in order to effective challenge Chinese power.
A recent military standoff between Philippines and China in the South China Sea exemplifies the security issues that trouble China-US relations. In March Chinese naval vessels reportedly threatened to ram a Filipino research ship in the disputed waters, prompting the Filipino military to dispatch its navy and air force to the scene of the confrontation.
After this incident, the Philippines government has sought increased military cooperation with the United States, and the US has seized the opening to project its power. The US proposed sending PC3 Orion spy planes to patrol the area on the Philippine's behalf.  Clinton, in a recent trip to Manila, even went as far as to call the disputed maritime region "The West Philippines Sea".
China views these developments as a direct threat to Chinese authority. China claims the South China Sea it its entirety; therefore by projecting power into the region China believes it is merely protecting its own sovereignty. From the Chinese perspective, the territorial disputes in the South China Sea are a series of bilateral issues between China and the other relevant nations.
The Chinese government views American involvement as a provocative interference and a threat to China's internal security. China is expanding its military capabilities in order to counter US forces in and around what China views as its territorial waters. China fears that Washington may wish to instigate conflict in the South China Sea in the near term, while the United States is still in a position of relative power.
China's strategy: Economic development and integration
Despite the ongoing tensions in the South China Sea, China does not view the United States as an inherent adversary. Bilateral trade between the United States and China stands at roughly $450 billion a year, constituting the largest trade relationship between two countries in human history. Massive investments flow between the two countries. Tens of thousands of Chinese students graduate from US universities every year. Many American businesspeople, professionals, and young college graduates view China as a land of economic opportunity.
It is interesting to note that all of the major agreements reached at the latest round of the US-China SED were related to trade and investment. The most profound policy change to come out of the SED was the Chinese decision to "allow foreign investors to raise their stakes in joint venture securities companies and joint venture futures companies to as much as 49%". 
This is a significant change from the previous cap for foreign ownership in securities firms of 33%. Policies such as these reveal the most important facet of Chinese geopolitical strategy.
The economic aspect of the China-US relationship is highly valued by both sides. Treasury Secretary Geithner even made public rare American praise for Beijing's economic policy at the SED, saying that "China has acted to move toward a more flexible exchange rate system in which the market plays a greater role. It is intervening less in exchange markets. China is also moving to liberalize controls on the international use of its currency and on capital movements into and out of the country." 
Clearly, US-China relations are still far from a zero-sum game.
China, while increasing her martial capabilities, employs a subtler tactic for efficiently countering US military and political dominance. China is seeking to further integrate the two nations' economies. The United States and China already heavily rely on each other economically. China wants to ensure that any military conflict can be avoided not only through the means of a credible deterrence, but also by economic self-interest. As Hu said at the opening of the SED:
We should, through creative thinking and concrete action, prove that the traditional belief that big powers are bound to enter into confrontation and conflict is wrong and seek new ways of developing relations between major countries in the era of economic globalization.A military confrontation between the world's most powerful nations would inevitably result in a historically unprecedented international economic crisis. Neither country's political leadership would stand to benefit.
As the eurozone malaise deepens, China and America need each other more than ever before. So long as China can increase its power through economic development, it has no interest in international conflict.
China cannot hope to match America's military might in the medium term, so the Chinese government wants to effectively disarm America's tactical advantage by creating a situation of near-total economic mutual-dependence.
A clear message emerges from the diplomatic pleasantries of the SED. China seeks to create a new world order in which major powers' military conflict is rendered obsolete by economic integration.
1. America's Pacific Century, Foreign Policy, November, 2011.
2. Hu urges discarding outdated thinking, China Daily, May 4, 2012.
3. Continuing Buildup, China Boosts Military Spending More Than 11 Percent, New York Times, Mar 4, 2012.
5. Manila offers US. wider military access, seeks weapons, Reuters, Mar 29, 2012.
6. 'Significant' results gained, China Daily, May 5, 2012.
7. 'Significant' results gained in China-US dialogue, China Economic Net, May 5, 2012.
Brendan P O'Reilly is a China-based writer and educator from Seattle. He is author of The Transcendent Harmony.