So, the costs of willfully creating instability-indeed, of upheaval unrelated to Chinese actions-have risen now that China's economic engine is powered by capital inflows, global markets and reliable energy supplies. And the constraints imposed by such dependence will not diminish even though China will be less susceptible to economic sanctions as rising incomes expand the internal market.

Another side effect of economic success that is far more challenging for Beijing is the extent to which Deng's reforms have transformed Chinese society. To ensure its survival, the CCP needs to maintain a monopoly on political power, a litany of social controls and communist ideology, all increasingly at odds with a complex, modern and materialistic society. This contradiction will have to be resolved. The far-reaching transformation of China will aggravate the tension between a static and repressive polity on the one hand, and a dynamic society and economy on the other, which are not only jettisoning the avowed ideals of the CCP, but also rendering the party itself an anachronism. Whether this occurs through sporadic clashes between the rulers and the ruled (the Tiananmen massacre was an early harbinger of this possibility, and recurrent protests by workers and peasants show that that event was not necessarily an aberration), the shedding of totalitarianism for a light-touch Singapore-style authoritarianism, the gradual emergence of a democratic polity or the breakdown of the system is hard to predict. But the problem is as substantial as it is undeniable.

VERY FEW of the Sinologists who have been daring enough to venture predictions about China's future have picked the last of these outcomes; rather, most assume that the regime will manage the problems it faces and that they are a sideshow to the main event: China's emergence as a superpower. Not Gordon Chang. He believes China is headed for a crack-up and offers a long list of problems to back his claim. The banking system, forced for political reasons to lend money to sustain loss-making, state-owned enterprises-millions are employed in these companies-is vulnerable to what in the antiseptic language of economics are called "non-performing" loans, and Chang is convinced that the banks' insolvency will spark an economic crisis. Along with the benefits it brings, accession to the WTO introduces competition from abroad, affecting production and employment at home. China's rapid economic growth has raised living standards for millions, but has also created deep divides between the coastal regions and the interior and west, as well as between the poor peasants and workers and urban elite, something that the leadership and Chinese academics have noted with growing concern, viewing these chasms not only as unfortunate by-products of the economic boom, but also sources of social strife. These concerns are well-founded, judging by the increasing incidence of demonstrations-some violent-by poorer Chinese who feel that they have been denied their fair share of the burgeoning wealth or who have been evicted from their lands to make way for new homes and factories. Chang, like Shirk, also argues that an increasingly nationalistic generation of Chinese places pressure on the leadership to stand tall when tested by foreign adversaries-or to lose what is fast becoming its principal source of legitimacy.

One manifestation of the inequality accompanying the skyrocketing economy is the so-called "floating population" of 140 million, consisting primarily of people who have fled the poverty of the countryside only to find themselves living on the margins of life in large cities, without rights to permanent residence and identity cards, and lacking reliable sources of income, decent housing and access to social services. Moreover, city dwellers view them, not without justification, as contributing to the increase in crime and believe that their willingness to work for less pushes wages down.² Perhaps sustained economic growth will solve such problems. To ensure this-a precondition for social stability-the regime needs investment capital, but there will be other claims on such funds. Now that birth rates have fallen sharply for the past several decades (on average, Chinese women now have 1.7 children, less than the 2.1 needed to maintain the current size of the population), the aged account for an increasing proportion of China's population (the median age was 22 in 1980 but is estimated to increase to 41 in 2030).³ They must be cared for by the state or entrusted to their children, reducing net savings and investment in either case. Then there are environmental problems: It will also be exceedingly expensive to ameliorate the health problems rampant pollution is producing; water shortages are becoming severe and will worsen as a result of further economic growth and urbanization. The price tag of the multiple effects of environmental damage is estimated to be between 8 and 12 percent of China's GNP, and continued economic growth will surely increase the burden.⁴ Finally, there is what might be called the Tiananmen-Falun Gong problem. The increasingly modern and educated citizenry created by the economic miracle will start chafing under the regime's panoply of political restrictions and gain the confidence to make its dissatisfaction known, the more so if socioeconomic inequality and environmental problems continue to increase, widening and deepening popular discontent.

None of these difficulties in themselves will necessarily bring down the regime. Indeed, its success in managing numerous problems is striking. But their persistence and combined effects could take China down a road not anticipated by the orthodox "China rising paradigm." The Soviet Union's rapid disappearance should serve as a cautionary tale: The unexpected can occur, catching everyone off guard, and China's current rulers, like their predecessors, could lose the "mandate of heaven."

NO MATTER what happens, Japan cannot help but be affected. If China's ascent is uninterrupted, no other state will feel the consequences more, given the realities of demography (China's huge advantage in population), geography (China's proximity to Japan) and history (the legacies of conflict between China and Japan). So what will Japan do in the face of a China that seeks to rearrange the regional balance of power and defies the predictions of those who claim that its common sense and growing stake in stability will lead it to choose statesmanship over saber-rattling? Two important books, Securing Japan by Richard J. Samuels and Japan Rising by Kenneth Pyle, superbly assess the choices Japan is likely to make, while placing them in historical context.

Most observers expect little or no change in the way Japan has pursued security since 1945 and predict that it will continue a variant of the Yoshida Doctrine, promulgated by Japan's first post-World War II prime minister, Yoshida Shigeru, which involved concentrating on economic development and trusting in American protection.

But while Japan may continue this "trading state" strategy, the assumption that it has no other realistic choice is not borne out by its history, a case that I have also made recently, and that Samuels and Pyle develop in more detail. (Though they do not believe that Japan will shift course as dramatically as I do-going beyond beefing up its military power toward a strategy of autonomy, propelled by an increasing awareness that the American commitment to defend Japan is becoming less reliable.)⁵

The two most important conditions that could place Japan on a new path are China's emergence as a front-rank power and Japan's loss of confidence in America's protection, or even its robust presence in northeast Asia. The Japanese officials and experts who believe that the American guarantee could become unreliable are not of one mind. Some believe that economic conditions in the United States (persistent budget and current-account deficits and mounting social problems) may prompt it to scale back military spending and commitments. Others doubt that the United States can be counted on to the degree it has been in the past because China's growing might will require it to take increasing risks on behalf of its allies in the North Pacific.

To this list I would add the possibility that the United States will recast its own grand strategy. As I argue in The End of Alliances, for most of its history, the Republic was led by individuals who were chary of the expenses and obligations that accompany permanent alliances. Seen thus, the Cold War strategy of assuming expansive military commitments and forging open-ended alliances changed the prior pattern of American statecraft; since it was a fundamental change, a new orientation could scarcely be excluded. While neither Pyle nor Samuels predict so far-reaching an American reassessment-that is not the purpose animating their books-they show that the possibility is much discussed in Japanese national-security circles these days.

Samuels delves deep into Japanese political dynamics and reveals how Yoshida's game plan, while still dominant, is now fiercely contested. Those who favor minimal additions to Japan's military budget and forces still hold positions of power and the belief that there is no need to supplant a solution that has worked so well for so long is shared by most Japanese. Moreover, there are some points of convergence between Yoshida's disciples and the pacifist left, particularly when it comes to preserving Article IX of the constitution, which commits Japan to renouncing the implements of war. (Japan skirted the literal wording of this provision in response to Washington's reassessment-particularly evident after the Korean War-that its earlier decision to demilitarize Japan had to be abandoned because of the threats posed by China, the USSR and North Korea. Yoshida acceded to American wishes with great reluctance but insisted that Japan's military power and obligations be placed within narrow bounds.)