The rise of an economic superpower: What does China want?

According to senior US naval officers, China may soon be able to do just that, using its new antiship ballistic missiles to enforce "anti-access and area denial" close to Chinese waters. Using such weapons as part of a defensive strategy, "China can reduce US strategic options very significantly," warns White, should Washington ever want to come to the aid of Taiwan or other allies in Southeast Asia.

That puts China's neighbors in an awkward position. All of them, from Japan to Laos, know that their economic future depends on China, Asia's powerhouse. China's success will be their success. But for centuries, countries such as Vietnam and Korea lived under the yoke of a successful China, points out Linda Jakobson, a researcher at the Lowy Institute in Sydney, Australia, "and nobody in the region wants to go back to that,"

PROFIT MOTIVE OR GEOPOLITICAL MOTIVE?

If China's political leaders know that they still lack what it takes to play a decisive role in world affairs, Chinese business titans are even more aware of their limitations.

"There is a perception that China is buying up the world," says Andre Loesskrug-Pietri, a Franco-German businessman whose private equity company in Beijing helps Chinese firms make foreign acquisitions. "But it's not true."

Chinese overseas investment is growing by leaps and bounds, doubling annually, and high-profile deals such as Lenovo's purchase of IBM's personal computer division grab headlines. But China's total foreign direct investment remains low – about the same as Denmark's (1 percent of the global total compared with the 22 percent US share). And 60 percent of overseas deals are for resources, such as stakes in oil-shale fields in Canada, coal mines in Australia, gas fields in Argentina, and copper mines in Zambia.

Very few Chinese firms have the skills and experience needed to become competitive multinationals, says Thilo Hanemann of the Rhodium Group in New York and author of a recent study of Chinese foreign investment. "What corporate China is doing at the moment is catching up," he explains. "Chinese companies are disadvantaged in technology, staff, human resources, brands, and intangible value."

They also have to learn new ways of doing business, very different from their habits in China, where the key to success is often a close relationship with the government officials who can offer easy credit and light regulation – for a consideration.

"The longer I live here, the more relaxed I am about the so-called threat perceived in the West of China taking over the world," says Mr. Loesskrug-Pietri. "Many Chinese investors are unfamiliar with foreign business cultures, and we are still a long way away from seeing executives and companies that are truly global."

Not one of the Top 100 global brands ranked by Businessweek magazine and the consulting company Interbrand comes from China. Though 61 of the top Fortune 500 companies are Chinese, hardly any have any foreign directors; most are state-owned companies whose leaders are named by the Communist Party. And most of the Chinese companies going abroad are doing so, says Loesskrug-Pietri, to acquire what they need in order to compete better in the market they find most attractive – China.

A handful of Chinese firms are developing a genuinely global presence: Lenovo is one; Huawei, a telecom-networking firm selling its products in 140 countries, is another; Haier has begun to sell a significant number of its household appliances in America and Europe, as well as in Asia. And the larger, reputable private companies stretching themselves internationally tend to get high marks from their foreign partners.

"I've been very impressed," says Henri Giscard d'Estaing, chief executive officer of Club Med. The French tourist resort owner sold a 10 percent stake to Fosun, a Chinese conglomerate, earlier this year. "They behave like normal long-term share-holders; they've concluded that we know our business and they let us get on with it. Doing business with Fosun has been more banal and more basic than most people would think" business with a Chinese firm would be, Mr. Giscard d'Estaing adds.

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